2006-01-AU Audit of the County of Hawai‘i's Recycling and Diversion Grants Program

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Chapter 3 DIVERSION GRANT PROGRAM Finding f. DEM issued contracts to vendors to process materials for which the vendor did not hold proper DOH permits. A permit violation letter from DOH to BSH dated November 8, 2004, required the contractor to submit an application within 30 days to modify its permit to reflect a new glass crushing location and operation and to include its plastics operation. DEM's program file contains no documentation as to resolution of the violation or corrective actions taken by the contractor or the department. A warning letter from DOH to BSH dated February 22, 2005, instructed the contractor to cease accepting, processing, and storing of plastic bottles at its Auwae Road facility and to remove all stored bottles to its new Kea`au facility. DEM's program file contains no documentation as to resolution or corrective actions taken by the contractor or the department. 2. The exemption of Diversion Grant Program contracts from State and County procurement laws is unclear. • It is unclear whether the contracts issued for the Diversion Grant Program are exempt from the State procurement code under HRS §103D- 102(b)(2)(A), as grants issued from departmental budgets to for - profit entities are not addressed by Charter or Ordinance. It is unclear whether grant contracts issued by the County are limited to the $900,000 allocated annually for grant by the County Council directly to non -profit organizations to support programs of public benefit under Hawaii County Code chapter 2, article 25. 3. Contracts were not timely issued with contractors commencing diversion activities prior to finalization of contracts and issuance of notices of award. • Contract No. 000 13 9, for the semi - annual period July 1, 2004 to December 31, 2004, was not fully executed until September 14, 2004. However, documentation attached to invoices shows that work was being performed without a fully executed contract from July 1, 2004 to September 13, 2004. Query: How did the grantee know that it would be awarded the grant contract? Why was the contractor allowed to perform work without a signed contract? Why is there such a long delay before a contract is issued? • Contract No. 000143 for the semi - annual period July 1, 2004 to December 31, 2004, was not signed until September 14, 2004. However, documentation attached to invoices shows that work was being performed without an executed contract from July 1, 2004 to September 13, 2004. See above query. + Contract No. 000301 for the semi - annual period January 1, 2005 to June 30, 2005, was not signed until March 24, 2005. However, documentation attached to invoices shows that work was being performed without an executed contract from January 1, 2005 to March 23, 2005. See above query. 22