Audit Report 2012-3 Airport Authority (Immokalee Regional Airport - Fill Dirt) GO�`IE,R COUNT
Internal Audit Department
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Audit Report 2012-3
Collier County Airport Authority
Immokalee Regional Airport —
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Fill Dirt
March 2013
wight E. hock
lerk of the Circuit Court
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Suite#402
x Naples, FL 34112-5746
www.eollierclerk.com
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Prepared by: Megan Gaillard,Internal Auditor
Report Distribution: Board of County Commissioners
Leo Ochs,Jr.,County Manager
Mark Isackson,Director,Corporate Financial&Management Services
Nick Casalanguida,Administrator,Growth Management Division
William Lorenz,Director CDES Engineering Services,Comprehensive Planning
Len Price,Administrator,Administrative Services
Joanne Markiewicz,Interim Director,Purchasing Department
Chris Curry,Executive Director,Airport Authority
Jeff Klatzkow, County Attorney
Colleen Greene,Assistant County Attorney
Cc: Dwight E.Brock,Clerk of the Circuit Court
Crystal K. Kinzel,Director of Finance&Accounting
TABLE OF CONTENTS
BACKGROUND 2
SUMMARY 4
OBJECTIVE 5
SCOPE 5
SCOPE LIMITATION AND EXPANSION 6
OBSERVATION, RECOMMENDATION & MANGEMENT RESPONSE 7
CONCLUSION 15
ADDITIONAL MANAGEMENT COMMENTS 15
The files and draft versions of audit reports remain confidential and protected from public records requests during an
active audit under Nicolai v. Baldwin (Aug. 28, 1998 DCA of FL, 51/7 District) and Florida Statute 119.0713. Work-
papers supporting the observations noted within this report are public record and can be made available upon request
once the final audit report has been issued.
1
The Draft Audit Report 2012-3 was originally provided to the Department for management response on
December 4, 2012. Chris Curry, Airport Executive Director, provided all management responses
December 17, 2012 and December 21, 2012. The revised Draft Audit Report 2012-3 was provided to the
Department on March 12, 2013. Chris Curry, Airport Executive Director, provided all management responses
(noted in purple)on March 14,2013 and March 19,2013.
BACKGROUND
The audit of Immokalee Regional Airport disposition of fill dirt was requested based on a report of concern received
on December 16, 2011, regarding potential theft, permit non-compliance, and violation of regulations. Additional
review for the Aircraft Apron Expansion construction was completed based on a citizen concern received on
January 15,2013.
The Collier County Airport Authority (CCAA) was created by the Collier County Board of County Commissioners
(BCC) as a governing body through Ordinance 2004-03.
CCAA received the following two grants: the Office of Tourism, Trade, and Economic Development Rural
Infrastructure Grant in FY 2005 ($454,143) and the USDA Rural Business Enterprise Grant in FY 2005 ($450,000)
for a total awarded grant funding for the project of$904,143.The grants required a County match to complete Phase
I of the Lake Project. Phase I of the Lake Projection included construction of the detention pond and permitting
requirements. Construction for the detention pond commenced in FY 2007.
On January 8, 2007, Collier County issued a Development Excavation Permit for the project, which stated no
excavated materials may be removed from the project site.
On June 14, 2007, a notice of award was issued to Quality Enterprises USA, Inc. for $588,683.75. Contract
07-4129, finalized September 4, 2007, was a project specific contract for the construction of Phase I of the Lake
Project. On September 18,2007,the Notice to Proceed with construction was issued for Phase I of the Lake Project.
On December 13, 2007, change order 1 was approved and signed by the Purchasing Department and CCAA (not
approved by the BCC), increasing the services included in the scope of work, with a project cost increase of
$100,000 bringing the total contract to $688,683.75. The change order does not appear to have been approved by
the USDA, grantor agency.
On December 13, 2007, change order 2, a "zero dollar change notification by letter" was approved and signed by
CCAA(not approved by the BCC), the engineer of record, and the contractor increasing the services included in the
scope of the project and increasing the project total cost by$240,000. Instead of making a monetary payment for the
additional services, an exchange of 120,000 cubic yards of fill dirt($2 per cubic yard) would be provided to Quality
Enterprises USA, Inc. (CCAA Resolution 08-08). The zero dollar change letter also extended the contract to
August 18, 2008 for additional construction including additional excavation. On December 18, 2008, a Site Plan
Reviewer completed a field inspection for the excavated project and reviewed the as-built plans. The change order
does not appear to have been approved by the USDA,grantor agency.
On January 7, 2008, the Development Excavation Permit expired. The Development Excavation Renewal Permit
was completed on December 12,2008.
On June 11,2008, Quality Enterprises USA,Inc. submitted the final invoice and final project documentation (Phase
I of the Lake Project) for the contract and change order 1, bringing the total invoiced amount to $688,683.75. The
Clerk's Office paid all of the invoices and retainage based on the scope initially contracted under Phase I of the
Lake Project,as approved by the department.The USDA grant was fully expended.
2
On June 24, 2008, the BCC approved a budget amendment to increase the Airport Authority's Capital Fund in the
amount of$192,000 for the construction of an aircraft expansion project.
On August 1, 2008, change order 3 was approved and signed by the Purchasing Department and CCAA (also
approved by the BCC), increasing the scope of the contract for an aircraft parking apron expansion. Change order 3
states the total cost for the expansion of the aircraft apron will exceed $1,000,000. It appears the additional work
was outside the original scope of the contract and grant applications/agreements.
On September 21, 2009, change order 4 was approved and signed by the Purchasing Department and the Airport
Executive Director(approved by the BCC), increasing the scope of the contract to include the installation of South
Florida Water Management District (SFWMD) permit required storm water structures and inspections with a
project cost increase of$46,745.00.
On October 23, 2009, change order 5 was approved and signed by the Purchasing Department and the Airport
Executive Director (approved by the BCC), increasing the scope of the contract to include paving for SFWMD
required storm water structures and FAA required testing with a project cost increase of$7,797.50.
According to logs provided by Airport Staff, Quality Enterprises USA, Inc. did not begin removing fill dirt until
January 21, 2009. It does not appear that a commercial excavation permit was obtained for this removal.
On January 19, 2012,Airport Staff emailed Quality Enterprises USA,Inc. stating fill dirt may no longer be removed
from the Immokalee Regional Airport because it is in violation of the original permit.
3
SUMMARY
The following audit observations were generated during the review:
1. The Purchasing Policy and Finance Requirements appear to have been circumvented by the department issuing
a"zero dollar change notification by letter"for"bartering"of$240,000 worth of additional services.
2. Change Orders appear to be outside of the original bid/contract scope and avoided the bid process.
3. Contractor appears to have completed development excavation(required for extracting materials)on an expired
permit.
4. It does not appear that a permit for Commercial Excavation (required to remove extracted materials from site)
was obtained and/or maintained.
5. It appears the department did not comply with grant assurances/conditions.
6. As-builts do not appear to meet the terms of the contract.
7. The potential for theft exists.
8. Lack of an Audit Trail
9. The County may have an unrecorded liability to the vendor.
It appears all Federal, State, or local regulations/requirements allow for the competitive purchase and/or sale of
airport fill dirt (excavated materials); however, grantor agencies should be notified and approve project changes for
grant funded projects. Compliance with Florida Statutes, BCC Ordinances, CCAA Resolutions, Purchasing Policy,
grant agreements/assurances,permits,permitting requirements,contracts,and proper accounting is required.
County commodities/assets should be tracked, validated, controlled, monitored, reconciled, and safeguarded to
ensure theft and/or misappropriation of assets does not occur.
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OBJECTIVES
The initial objectives of the audit were to determine whether there was theft of fill dirt, whether the removal of fill
dirt was permitted, whether the project was in compliance with permits, and if violations of regulations occurred
with regard to the Immokalee Regional Airport Phase I Lake Project.
During review,additional violations were discovered.
Subsequent review was completed for the construction of the aircraft apron expansion. Objectives of the additional
review were to determine whether construction was consistent to design documents and whether the project was
appropriately funded.
SCOPE
The audit consisted of,but was not limited to review of the following:
• Office of Tourism,Trade, and Economic Development Grant Agreement/Amendments/Assurances;
• USDA Grant Agreement/Letter of Conditions/Assurances;
• USDA Grant documentation,pay requests,and design plans;
• Finance Department's Grant Files for the USDA grant and OTTED grant;
• Federal Aviation Administration(FAA)regulations and audit reports;
• Florida Attorney General Advisory Legal Opinion(AGO's);
• Florida Statute 255.20—Local bids and contracts for public construction works;
• Board of County Commissioners(BCC)Ordinance 2004-03;
• Board of County Commissioners(BCC) Ordinances regarding excavation;
• Applicable Collier County Airport Authority(CCAA) Resolutions;
• Collier County Airport Authority Adopted Budgets for applicable fiscal years;
• Comprehensive Annual Financial Reports (CAFR) for applicable fiscal years for single audit/schedule of
expenditures of federal awards and state projects;
• Collier County Permit 59.791-1 /AR-8865 and renewal documentation;
• South Florida Water Management District Permit;
• Finance Department records for purchased equipment with regard to the grants;
• Quality Enterprises USA, Inc. grant attestations;
• Phase I Lake Project construction details, bid documents, proposal, and scope of work schedules, including
pricing;
• Quality Enterprises USA,Inc. contract and change modifications;
• Construction Notices to Proceed;
• Applicable Collier County Airport Authority Meeting Minutes;
• Airport Department records for removal of fill dirt and communications with Quality Enterprises USA,Inc.;
• Finance Department's payment records for Quality Enterprises;
• Collier County Growth Management Division—Planning and Regulation Fee Schedules for permits;
• Collier County Growth Management Division — records and documentation for the Phase I Lake Project and
Airport Apron Expansion Project;
• Collier County Purchasing Policy;
• Observation of the fill dirt site(multiple site visits);
• Observation of the aircraft apron expansion site;
• As-built documentation and records;
• Interviews with Collier County Airport Authority staff;
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• Interviews with County staff;
• Interviews with concerned citizen;
• Review and compile a timeline history for Phase I of the Lake Project;
• Collier County Property Appraiser Aerial Maps; and
• Contract Indebtedness Court Case 2012-CA-004345 — Quality Enterprises USA, Inc. versus Collier County
Airport Authority.
SCOPE LIMITATION AND EXPANSION
The scope of the audit was limited to review of the implications, regarding grant assurances, grant letter of
conditions, grant agreements, vendor contracts, vendor change orders, Collier County ordinances and resolutions,
excavation limitations, and accounting records relating to fill dirt from the Immokalee Regional Airport Phase I
Lake Project.
The audit scope was expanded to include a citizen concern for the construction of the aircraft apron expansion.
Additional review was completed for the source of funding for the aircraft apron expansion.
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OBSERVATIONS
1) The Purchasing Policy and Finance Requirements appear to have been circumvented by
the department issuing a "zero dollar change notification by letter" for "bartering" of
$240,000 worth of additional services.
On December 13, 2007, change order 1 was approved and signed by the Purchasing Department and CCAA
increasing the services included in the scope of work, with a project cost increase of$100,000,bringing the contract
total to$688,683.75.
On December 13, 2007, change order 2, a "zero dollar change notification by letter" was approved and signed by
the CCAA, the engineer of record, and the contractor circumventing purchasing policy, increasing the services
included in the scope of the project and increasing the project total cost by$240,000.
A "barter"transaction is the exchange of assets/services for assets/services from a vendor. In this case, $240,000 of
fill dirt (120,000 cubic yards of fill dirt at $2 per cubic yard totaling $240,000) was contracted to a vendor in
exchange for$240,000 of additional services to construct an aircraft parking apron (CCAA Resolution 08-08). The
barter held a monetary value and should have followed the policies and procedures for contract changes.
The purchasing policy requires contract changes exceeding 10%of the contract must be BCC approved.The change
letter for $240,000 is approximately 35% of the total contract ($240,000 / $688,683.75); therefore, the change
should have been processed through the change order process as stated in the purchasing policy. It does not appear
the zero dollar change notification by letter followed the purchasing policy.
As a result of a "barter" transaction, supporting documents and/or invoices were not received by the Finance
Department to record the expenses or the liability. This may result in misstatement of the financial records as
expenses are understated by the$240,000 exchange value.
Recommendations:
• The department should comply with the purchasing policy.
• Expenses and liabilities must be reported and recorded at the time of occurrence.
• Proper documentation for the expenses and liability incurred must be provided to Finance for proper recording.
Management Response:
Chris Curry: This issue occurred prior to my arrival to manage the Collier County Airports in September 2010. I
agree that the Airport Authority should comply with the recommendations listed above and will adhere to
policies, reporting and recording practices in the future.
2) Change Orders appear to be outside of the original bid/contract scope and avoided the
bid process.
Contract 07-4129 appears to be a project specific contract and states "the content of work included in this contract
consists of relocation of the canal, construction of a detention pond (lake), fill existing pond, install landscaping
with irrigation and associated improvements." It does not appear the aircraft parking apron expansion was included
in the contract scope of work.
On December 13, 2007, change order 2, a "zero dollar change notification by letter" was approved and signed by
CCAA(not approved by the BCC), the engineer of record, and the contractor increasing the services included in the
scope of the project to include the expansion of the aircraft parking apron and increasing the project total cost by
$240,000.
7
On June 24, 2008, the BCC approved a budget amendment to increase the Airport Authority's Capital Fund in the
amount of$192,000 for the construction of an aircraft expansion project.
On August 1, 2008, change order 3 was approved and signed by the Purchasing Department and CCAA (also
approved by the BCC), increasing the scope of the contract for additional aircraft parking apron expansion with a
project cost increase of$182,451.88. Change order 3 states the total cost for the expansion of the aircraft apron will
exceed$1,000,000.
On September 21, 2009, change order 4 was approved and signed by the Purchasing Department and the Airport
Executive Director, increasing the scope of the contract to include the installation of South Florida Water
Management District(SFWMD) permit required storm water structures and inspections with a project cost increase
of$46,745.00.
On October 23, 2009, change order 5 was approved and signed by the Purchasing Department and the Airport
Executive Director, increasing the scope of the contract to include paving for SFWMD required storm water
structures and FAA required testing with a project cost increase of$7,797.50.
Contract 07-4129's total project cost increase was $476,994.38 for the additional scope of services regarding the
aircraft parking apron expansion.It does not appear that this construction was in the original bid or original contract
scope.
2008 Florida Statute 255.20 for local bids and contracts for public construction works states a county of the state
seeking to construct or improve public buildings, structures, or other public construction work must competitively
award to an appropriately licensed contractor each project that is estimated to cost more than $200,000.00.
It does not appear the expansion of the aircraft parking apron was put out to bid. The project cost of$476,994.38
was completed through multiple change orders to an unrelated project contract rather than through a separate
contract/bid solicitation process.
Recommendations:
• The department should ensure compliance with bid documents and contracts.
• The department should comply with applicable Florida Statutes.
Management Response:
Chris Curry: This issue occurred prior to my arrival to manage the Collier County Airports in September 2010.
The Airport Authority will comply with county policy related to bid documents and contracts. We will also
comply with Florida Statutes in the future.
3) Contractor appears to have completed development excavation (required for extracting
materials) on an expired permit.
On January 8, 2007, Community Development and Environmental Services Division (now Collier County Growth
Management Division) issued a Development Excavation Permit to the Collier County Airport Authority (CCAA)
for development excavation for the Phase I Lake Project. The development excavation permit expired on
January 7, 2008. The development excavation permit was renewed on December 12, 2008, 11 months after the
permit expired.
Quality Enterprises USA, Inc. submitted invoices for construction work completed on this portion of the project
through June 2008, indicating construction was not complete on January 7, 2008. It appears the contractor was
completing excavation on an expired permit.
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Recommendations:
• Proper documentation and project monitoring should occur to ensure compliance with permit requirements.
• When excavation work is not complete prior to a permit expiring,the permit should be renewed.
Management Response:
Chris Curry: This issue occurred prior to my arrival to manage the Collier County Airports in September 2010. I
agree that the proper permits should be obtained and monitored prior to and during the performance of any
associated work. It is the goal of this current management team to comply with BCC ordinances and permitting
requirements.
4) It does not appear that a permit for Commercial Excavation (required to remove
excavated materials from site) was obtained and/or maintained.
On January 8, 2007, Community Development and Environmental Services Division (now Collier County Growth
Management Division) issued a Development Excavation Permit to the Collier County Airport Authority (CCAA)
for development excavation for the Phase I Lake Project.
The development excavation permit states "No excavated material shall be removed from the project site" and
requires adherence to Collier County Ordinance 04-55, Section 2.E. The ordinance states no fill dirt may be
removed from the subject property. It also states that excavated material in an amount of up to 10% (with a
maximum of 20,000 cubic yards) may be removed from the site provided the intentions to remove the material are
clearly stated during the development's review and approval process.
According to department provided records, that were unable to be validated, 21,676 cubic yards of excavated
material were removed from the project site beginning January 21, 2009. The Phase I Lake Project bid documents,
proposal, and original contract did not indicate an intention to remove excavated material from the project site.
Removal of excavation material (not exceeding 20,000 cubic yards)under a development excavation permit must be
approved prior to removal of the excavated material.
BCC Ordinance 04-55 states commercial excavation is any excavation wherein the excavated material is removed
from the subject property. Issuance of commercial excavation permits requires "Applications for commercial
excavation permits shall be reviewed the b by t e community development and environmental services administrator, or
his designee, and by the environmental advisory council for recommendation and approved by the board. When a
request is made to remove surplus fill material from previously approved development excavation, the requirement
for review by the environmental advisory council shall be waived, but dependent on haul route and amount of fill to
be hauled, staff may require approval by collier county planning commission." It does not appear the project was
approved by the Collier County Planning Commission.
It does not appear a commercial excavation permit was obtained (or maintained for the period of removal of
excavated materials)prior to the removal of excavated material or that the proper approval process occurred.
Recommendations:
• Intentions to remove excavated material (i.e. fill dirt) from a project site should be properly documented and
approved prior to the commencement of construction projects.
• Projects should be compliant to BCC Ordinances and permitting requirements.
• A commercial excavation permit should be obtained for the removal of the excavated material.
Management Response:
Chris Curry: This issue occurred prior to my arrival to manage the Collier County Airports in September 2010. I
agree that the proper permits should be obtained prior to performing any associated work and prior management
9
should have complied with BCC ordinances and permitting requirements. It is the goal of this current
management team to comply with BCC ordinances and permitting requirements.
5) It appears the department did not comply with grant assurances/conditions.
The United States Department of Agriculture Rural Development(USDA-RD)funded$450,000 of the Phase I Lake
Project through a Rural Business Enterprise Grant.
The USDA-RD grant conditions required "any changes in project cost, source of funds, scope of services, or any
other significant changes in the project or application must be approved by Rural Development (RD) by written
amendment."
The "zero dollar change notification by letter" changed the scope of services, increased the total project cost, and
provided an additional source of funding(fill dirt sale). It does not appear that the grantor was notified or provided a
written amendment to the grant.
The grantor required the grantee to provide evidence of compliance with all applicable Federal, State, or Local
requirements including permitting. The contractor completed excavation on an expired Development Excavation
Permit. The development excavation permit was renewed 11 months after the permit expired (Refer to Observation
3). It does not appear that a commercial excavation permit was obtained for removal/sale of fill dirt (Refer to
Observation 4).
The grantor allows for the sale of excavated material (real property) with a unit acquisition cost of less than $1,000
or for use of the real property for other activities without reimbursement to the Federal Government; however, when
the grantee sells property obtained from the grant (i.e. fill dirt from excavation paid for with grant funds), the
grantee must obtain the highest possible price through establishing sales procedures. It does not appear notice was
provided to the public or additional vendors to determine whether$2 per cubic yard was the best price.
The USDA RD grant states any changes to the project not approved by RD shall be cause for discontinuing the
grant or for repayment of grant funds with interest.
Recommendations:
• The USDA should be notified of possible grant assurance/condition violations and all changes to the project. A
written waiver for changes to the project and waiver of violations should be obtained.
• Sale of the excavated material should be put out to bid to ensure the best possible price is obtained.
• Compliance with grant assurance/conditions is required for all projects paid for by grants.
• The department should comply with local permitting requirements.
Management Response:
Chris Curry: This issue occurred prior to my arrival to manage the Collier County Airports in September 2010. I
agree that the Airport Authority must comply with grant assurances and conditions requested by the regulatory
agencies. It is the goal of this current management team to comply with Grant Assurances and Conditions.
6) As-builts do not appear to meet the terms of the contract.
Contract 07-4129 with Quality Enterprises, the construction contractor, required them to complete an as-built
survey as follows: "Contractor to provide pre-excavation and as-built survey of all excavated and fill areas, drainage
structures, by registered surveyors as required to determine quantities, conformance of the final earthwork with the
Drawings and certification of SFWMD."
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On January 7, 2013, Hole Montes, design engineer, stated they had no involvement in the as-built information
submitted and only created the proposed lake designs. The County was unable to provide copies of the as-built
documentation for the Phase I Lake Project.
URS, Quality Enterprises' engineer, was contacted and copies of the as-built drawings were requested. URS
provided unsigned documents that contained handwritten totals. No calculations were present on the documents to
determine that the required contract average end area method was used for the calculations. The documents
provided were originally created by Holes Montes, design engineer, for the proposed lake project. The
documentation was not certified by a registered surveyor as required by the contract.
As-built drawings were obtained from the grantor agency. The original designs completed by Hole Montes were
stamped "as-built drawing" then submitted by URS. The designs have handwritten totals on the "proposed" initial
designs. The computations to show the average end area method calculations are not provided and typically would
be completed in a CAD computer program. The method for calculation cannot be determined because only the
totals are handwritten on the drawings. It does not appear the designs were professionally completed and they do not
appear to comply with contract requirements.
The as-built drawing submitted by URS reflects "The information included has been provided by the contractor's
surveyor." The surveyor is not identified and it cannot be determined who completed the drawings. It appears URS
signed off on the documentation on behalf of Quality Enterprises.
Without having as-built drawings as required by the contract, including the average end method calculation that is
needed to determine the excavated volume, it cannot be determined how much fill dirt material was excavated.
Without being able to determine the excavated material, the payments made to Quality Enterprises for excavation
cannot be validated. It is possible Quality Enterprises was inappropriately paid with regard to excavated materials
total volume.
It appears Quality Enterprises is in violation of their contract because non-compliant documents were submitted as
final documentation. This may cause the project to be in non-compliance with the terms of the USDA grant and
could result in the USDA requiring repayment of the grant funds with interest.
Recommendations:
• The USDA should be notified of possible contract violations. A written waiver for violations or corrective
action should be completed.
• The department should verify all final project documentation to ensure compliance with contract terms.
• The vendor should provide documents that comply with the contract.
• The department should determine if the vendor was appropriately paid.
Management Response:
Chris Curry: This issue occurred prior to my arrival to manage the Collier County Airports in September 2010.
We have been unable to locate "As Builts"associated with the project. Prior management should have ensured
the contractor for the project met the responsibilities under the contractual agreement. It is the goal of this
current management team to verify that contractual obligations for vendor's are satisfied.
7) The potential for theft exists.
Excavated materials (i.e. fill dirt) are a commodity/asset with a resale value. County commodities/assets should be
tracked,monitored,controlled, and safeguarded to prevent theft or misappropriation of assets.
CCAA Resolution 08-08 states the contractor will acquire full title to each subject of the 120,000 cubic yards of fill
material upon each yard's removal from the Immokalee Regional Airport. This indicates that until the fill dirt is
11
removed from the Immokalee Regional Airport, it remains an asset of the airport, which should be appropriately
tracked,monitored,controlled, and safeguarded.
An attachment to CCAA Resolution 08-08 states that Quality Enterprises USA, Inc. will provide quality
measurement and assurances for the fill dirt removed. Records were not available when requested from the
Department. It does not appear that records were received by Airport Staff.
Airport Staff indicated they did not track the removal of fill dirt prior to August 2010. When Airport Staff began to
track the removal of fill dirt, logs were maintained in the main terminal and all prior removal totals were obtained
from the vendor and incorporated into the logs. The information contained in the log includes the date and the total
truck loads removed.
Airport Staff stated all truck loads removed were documented each day(at the main terminal)by the truck removing
them. Individual truck load removal tickets were not obtained by Airport Staff. The log maintained by the
department cannot be validated. The log does not include the name of the vendor removing truck loads, individual
truck tickets with the destination, the size of the truck load, or signature from person removing the fill dirt. It
appears the log has been maintained based on the "honor system" (vendors removing dirt will report what has been
removed).
On January 19, 2012,Airport Staff stopped Bluewater Underground from removing fill dirt from the project site and
notified Quality Enterprises USA,Inc. on January 20,2012, via email,that fill dirt no longer would be allowed to be
removed from the project site.An individual truck load ticket was obtained for two truckloads(18 cubic yards each)
removed by Bluewater Underground. There is no contract or authorization for a vendor, other than Quality
Enterprises USA, Inc., to remove fill dirt from the project site. A concerned citizen said they observed a minimum
of five truckloads being removed at this time. Airport Staff has no record of the additional three truckloads. The
potential for theft exists without proper monitoring and documentation of the fill dirt project site.
Airport Staff indicated they were unaware of the Airport's responsibility to manage access and safeguard fill dirt.
The fill dirt is a commodity/asset and is the responsibility of the department. Airport Staff should track, monitor,
control,and safeguard the asset to prevent theft or misappropriation.
It cannot be determined who has removed fill dirt from the project site, when fill dirt has been removed, or how
much fill dirt was removed. It is possible that theft of fill dirt has occurred. The potential for theft is present, as a
result of not properly tracking removal, monitoring,controlling,or safeguarding assets and/or commodities.
Recommendations:
• Assets should be tracked,monitored, controlled, and safeguarded to prevent theft or misappropriation of County
assets.
• Immediate action should be taken to secure the County asset.
• Airport Staff should validate and monitor removal of fill dirt at the time it is removed and maintain proper
supporting documentation.
• The department should complete reconciliation for commodities/assets on a yearly basis.
Management Response:
Thomas Vergo: This situation is not a frequent occurrence here at the Immokalee Regional Airport, however
staff will design a logging system utilizing the recommendations of the Auditor to make potential future
validations easier. In addition to utilizing closed circuit video surveillance, the Airport has installed a vehicle
security gate and associated concrete blockades as additional safeguards to prevent theft.
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8) Lack of an Audit Trail
The Phase I Lake Project proposal from Quality Enterprises USA, Inc. showed excavation of 250,000 cubic yards of
material for the project. Additional excavation was added through change modifications. Airport Staff has been
unable to provide documentation accounting for the excavated material. The only records provided by the
department were unable to be validated, and the documents only accounted for 21,676 cubic yards of excavated
material removed from the project site.
Individual truck load removal tickets have not been obtained by Airport Staff. A spreadsheet log is maintained.The
log cannot be validated as it only includes the date and total truck loads removed and does not identify the party
removing fill dirt.
The USDA grant assurances/conditions require, at a minimum, a description of the property (i.e. fill dirt—250,000
cubic yards), source of the property (i.e. obtained through Phase I Lake Project),who maintains title to the property
(i.e. CCAA), acquisition date or period(i.e. construction FY 2007-2008), total value (i.e. 250,000 cubic yards at$2
per cubic yard totaling$500,000),unit acquisition cost/resale price(i.e. $2 per cubic yard),records for disposal(i.e.
truck removal logs, department logs, etc.), amount removed (i.e. 36 cubic yards—2 truckloads), date removed, and
signatures(i.e.Airport Staff and the vendor removing).
Airport Staff stated that management did not track the removal of fill dirt prior to August 2010 and that they do not
have proper documentation to support the starting amount of excavated material, how much excavation material
was used for County projects,and/or how much material was removed from the project site.
Without a proper audit trail, the County may be in violation of grant assurances/conditions and may not have
properly recorded expenses, liabilities, or revenues. Proper records must be available to ensure misappropriation of
assets does not occur.
Recommendations:
• Airport Staff should obtain documentation and complete a reconciliation to account for all fill dirt used on
County projects or removed from the project site(s).
• Department logs for tracking removal/purchase of fill dirt should meet the minimum grant assurance/condition
requirements.
• Proper documentation should be provided to Finance to ensure expenses, liability, and revenue are properly
recorded.
Management Response:
Thomas Vergo: The only fill that was authorized to be removed from the dirt piles at the Immokalee Regional
Airport was removed by Quality Enterprises, Blue Water Underground (a prior authorized sub-contractor with
Quality), and Airport Staff. Quality Enterprises removal privileges were in place prior to my arrival at the Airport
and a logging system was in use to keep track of the amount of fill removed by Q.E. and their sub-contractors.
Airport staff utilize fill from the dirt pile for Airport maintenance needs to include but not limited to: erosion
control, ditch maintenance, safety area maintenance, access road creation and maintenance, and surface water
system maintenance. Airport staff continues to utilize the fill for on-Airport projects. The amount of fill utilized
in the past and for current projects is unable to be tracked as the Airport has no way of accurately measuring the
amounts of dirt we remove for on Airport maintenance projects.
This situation is not a frequent occurrence here at the Immokalee Regional Airport, however staff will design a
logging system utilizing the recommendations of the Auditor to make potential future validations easier.
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Internal Audit Response:
Quality Enterprises lawsuit regarding this issue indicates more fill dirt was removed than shown on the
Airport's records.The lack of an appropriate tracking system can create conflicts.
9) The County may have an unrecorded liability to the vendor.
The CCAA (Resolution 08-08) contracted with Quality Enterprises USA, Inc. to complete additional work for a
total value of$240,000 in exchange for fill dirt. It appears the work has been completed,but Quality Enterprises did
not invoice the County. Quality Enterprises filed a lawsuit against the CCAA for payment of work completed in
December 2012.
Quality Enterprise Total Contract and Payments:
Initial Contract Amount = $588,683.75 Lake Project Phase 1
Change Order 1 = 100,000.00 Lake Project Phase 1
Change Order 2 = 240,000.00 Aircraft Parking Apron Expansion
(120,000 cubic yards at$2.00 per cubic yard)
Change Order 3 = 182,451.88 Aircraft Parking Apron Expansion
Change Order 4 = 46,745.00 Aircraft Parking Apron Expansion
Change Order 5 = 7,797.50 Aircraft Parking Apron Expansion
Total Amount of Contract = $1,165,678.13
Cash Payments = (925,678.13)
Fill Dirt Removed = (43,352.00)-(21,676 cubic yards of excavated material at$2 per cubic yard)
for the Aircraft Parking Apron Expansion
Potential Liability = $196,648.00-(or 98,324 cubic yards of excavated material)
Quality Enterprises USA, Inc. has been paid $969,030.13 for the completion of Phase I of the Lake Project
($688,683.75) and for the aircraft parking apron expansion ($280,346.38, including $43,352.00 exchanged in fill
dirt).
Recommendations:
• The County should determine the total amount of liability to the vendor.
• Contract close out should include an accounting for excavated materials.
Management Response:
Chris Curry: This issue occurred prior to my arrival to manage the Collier County Airports in September 2010. I
agree with the recommendations stated above.
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CONCLUSION
It appears the transactions may violate Florida Statutes, BCC Ordinances, CCAA Resolutions, Purchasing Policy,
grant agreements/assurances, permits, permitting requirements, and the contract. It does not appear development
excavation or the removal of excavation (commercial excavation) materials has complied with the permitting
requirements.
County commodities/assets should be tracked, validated, controlled, monitored, reconciled, and safeguarded to
ensure theft and/or misappropriation of assets does not occur. When a department does not report expenses,
liabilities, or revenues in the periods they occur, the financial records may be inaccurate. Care should be taken by
the department to ensure all financial transactions are documented and provided to Finance at the time of
occurrence.
Audits do not relieve management of their responsibilities. It is the ultimate responsibility of management to
understand and implement the proper internal controls to limit the risk of fraud, error, and misappropriation of
County assets. When there are control deficiencies or controls are circumvented, it is possible that there could be
misappropriation of County commodities/assets, theft may occur, and/or grant assurances may be violated. The
Clerk's Office may suggest recommendations in audit reports, but it is the duty and decision of management to
formulate processes to ensure compliance.
Additional Management Comments:
Chris Curry: This issue occurred prior to my arrival to manage the Collier County Airports in September 2010.
Thomas Vergo also commented on this audit report because he is the manager of the Immokalee Airport and he
was assigned to that position prior to my arrival in Collier County. Therefore, he has more history than I
although it was for only a month longer. Our current management team will strive to follow County ordinances
and policies, State of Florida statutes and Federal regulations to run a professional Airport system and not
duplicate past actions that result in non-compliance.
Internal Audit Comments:
Internal Audit acknowledges the cooperation and assistance from the Airport Authority. The Airport
Authority's responses to requests for information greatly assisted with the Audit.
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