Chattanooga taxpayers paid more for city office supplies over the last three years because former Mayor Ron Littlefield ordered that a local company get the contract, an audit shows.
City Auditor Stan Sewell said some of the procedures used to award COS Business Products & Interiors two bids three years ago could just be "sloppy work."
But Sewell said the bidding procedure used "doesn't look good unless you're trying to do something for a friend."
"I'm not saying anyone did anything wrong. It just doesn't look good," Sewell said.
The internal audit of office supply expenditures for the period between July 2010 and December 2012 shows the city did not follow state guidelines as outlined in the Internal Control and Compliance Manual for Tennessee Municipalities related to bidding. Sewell said the purchasing department had the contract bids on its calendar as a standard procedure.
It was released publicly last month and given to the city's Audit Committee, which is reviewing it.
The city awarded COS, formerly known as Chattanooga Office Supply, two contracts for basic office supplies and toner cartridges in 2010. The contracts have been renewed each year since.
$400,000: Average annual expense for office supplies
$20,084: Estimated 2012 savings if low bid adopted
$3,635: Estimated overcharge by Chattanooga Office Supply
Source: Chattanooga internal audit
The audit says COS' bid for the toner cartridges contract was higher than one by Unistar Purchasing Solutions of Louisville, Ky. But city purchasing director Dan Thornton told auditors the bid was changed from the low bidder to COS at "the direction of the mayor's office."
COS' average price for cartridges was $126.08 to Unistar's $115.54, the audit states. The city could have saved more than $20,000 in 2012 had it gone with the lowest bidder.
No justification for going with the higher bid was placed in the bid's files, which is required, the audit said.
The city also was overcharged by COS by an estimated $3,600 for office supplies because the company charged the city more than the bid on some purchases, the audit states. Auditors told the purchasing department that COS should reimburse the city, records show.
Littlefield, reached by phone Thursday, said there is nothing shady about awarding contracts to local firms.
"Whenever I could, I always wanted to go with someone I could wrap my hands around their throat if need be," he said.
Sewell said his office will conduct a post-audit review in six months to find if the suggestions had been followed up.
Skip Ireland, president of COS, said Friday he has not heard from the city about the audit findings. He said he put together a package of an excellent product at a good value, but said the company in no way tried to influence the bidding.
"I put the best deal I can," he said. "I did not know if I was low or not low."
Councilman Larry Grohn, chairman of the City Council's Audit Committee, said he is aware of the audit but had only glanced over it. There are red flags, he said.
"It looks like a sweetheart deal," Grohn said.
Contact staff writer Cliff Hightower at firstname.lastname@example.org or 423-757-6480. Follow him at twitter.com/cliffhightower or facebook.com/cliff.hightower.