JAMM AQUINO / JAQUINO@STARBULLETIN.COM One of the city's $773 "Cadillac of trash cans" was being put to use yesterday on Kalakaua Avenue in Waikiki.

$773 for a trash can

A city auditor says $300,000
could have been saved

The city bought durable, graffiti-resistant trash cans at $773 apiece, probably the most expensive outdoor rubbish containers available, the city auditor says.

"They bought the Cadillac of trash cans," city Auditor Les Tanaka said.

And the city purchased 90 of them without going out for bid.

Sole-source criticisms City Auditor Les Tanaka criticized the city procurement of items that were purchased without soliciting bids: » $666,841 for 990 trash cans » $384,000 for processing 21,950 workers' compensation claims in a year » $433,432 to apply decals with rainbow designs to 91 buses » $217,710 for last-minute repainting of 10 new hybrid diesel-electric buses » $50,000 for Brunch on the Beach contract coordinator

The $73,349 contract for the litter receptacles was one of several nonbid purchases Tanaka's office cited in an audit released yesterday as violating the state procurement code and city policies.

The auditor said the contract, which included the cost of freight, did not meet procurement standards because there was no justification to funnel the contract to a sole vendor instead of going through competitive bidding.

The report does not specify a total amount of taxpayers' funds wasted, but the auditor noted that for an earlier contract for litter receptacles, his office contacted several manufacturers and found some priced at half the cost. Tanaka said that had the city gone out and sought competitive bids for the trash cans, it could have saved $300,000.

The audit examined the city's sole source, and emergency and professional services procurement practices because there was more potential for abuse due to subjective judgments, Tanaka said.

He said he initiated the audit after hearing rumors about some city contracts.

The procurement code allows for nonbid contracts in certain circumstances such as in an emergency or when a vendor is the only one that provides a particular item or service. But in some cases the city failed to meet that criteria, according to the audit.

"Some of this is really a stretch," Tanaka said, referring to the city's justification for nonbid purchases.

Besides the trash cans, other nonbid purchases that were questioned in the audit were:

» The city Industry Safety and Workers' Compensation Division's continual use of the same company to process workers' compensation claims without seeking competitive bids.

» Rainbow decals applied to 91 city buses.

» Last-minute repainting of 10 diesel-electric hybrid buses.

» The city contracting with the Waikiki Improvement Association to coordinate Brunch on the Beach.

STAR-BULLETIN The cost of putting rainbow designs on city buses was also criticized yesterday by the city auditor.

Waterhouse said the city administration agrees with some of the auditor's findings and has already taken steps to address them.

Waterhouse noted that the audit was conducted before Mayor Mufi Hannemann took office.

"We, too, are concerned about how public money is spent. Essential to that is giving contractors and vendors a fair and full opportunity to do business with the city," Waterhouse said in a written statement.

Tanaka said it is now up to the Hannemann administration to change things. "I hope the new administration will clamp down on some of these egregious types of the purchases," he said.

Tanaka said the trash cans appear to be the most "egregious" purchases because while the city tried to justify them as "unique" to award a sole-source contract, trash cans are a common item that many manufacturers supply.

"In its explanation why other sources did not meet its needs, the (city) wrote that there are no other manufacturers that combine durability, aesthetics and a design that inhibits graffiti," the audit said.

Prior to the purchase of the 90 trash cans in November 2002 for Waikiki and Kapolei, the city also used a sole-source contract for a much larger purchase of trash cans for Waikiki, downtown and bus stops throughout Oahu -- 900 trash cans at a cost of $593,492.

The audit also found that the trash can purchases violated the city's debt policy because it used bonds to purchase an item that costs below $5,000. Because of the use of bonds, the city will end up paying more than the purchase price, after interest payments.

City Council members said they are concerned about the audit's findings.

"I think the Council will be saddened to learn that there were anti-competitive practices which broke the law and cost the taxpayers money," Chairman Donovan Dela Cruz said.

Budget Chairwoman Ann Kobayashi said that during hearings she had questioned many of the issues brought up in the audit.

"We need some safeguards. We need some transparency in how our money was spent," she said. "There was no accountability."