The head of Minnesota’s Department of Administration – the state agency responsible for overseeing state purchasing contracts – acknowledges his department missed early warnings about repeated overcharges on police vehicle purchases that may have cost state taxpayers nearly three-quarters of a million dollars.
“Taxpayers, I think, are understandably alarmed by this, as am I,” Commissioner Matt Massman told KARE 11. “What happened is I think we misdiagnosed the warning bells, if you will.”
Last month, a KARE 11 investigation detailed how local police and sheriff’s agencies across the state were double-billed for vehicle options that were already included in the master state contract.
The overcharges continued for years, even though a whistleblower told KARE 11 he warned state officials in 2015.
A criminal investigation is underway. In addition, Minnesota’s Legislative Auditor has announced it will be reviewing why the Department of Administration, the state agency responsible for overseeing the police vehicle contract with Nelson Auto Center of Fergus Falls, did little to stop the double-billing.
Massman told KARE 11 reporter A. J. Lagoe that his department missed the early warnings about the contract because they assumed police departments had simply made mistakes on their orders.
Massman: “We concluded at that time with the information that we had that it was an isolated incident. Errors on the part of the ordering agencies rather than overcharging on the part of the vendor."
Lagoe: “Your opinion has changed on that now?”
What is not so clear is the true scope of the problem. Massman says officials are still trying to determine how many departments were overcharged and how long the overbilling went on.
Lagoe: “Have you been able to put a firm dollar figure on the overcharges yet?"
Massman: “We have not.”
KARE 11 reviewed recent SUV purchases of 20 different police and sheriff’s departments and discovered examples of double-billing at every one of them.
Nelson Auto has estimated the overcharges on recent contracts could total $700,000. The dealership has promised refunds and has said it has fired the manager they claim was responsible.
But authorities say Nelson Auto has been selling vehicles to Minnesota agencies since the early 2000s, and they’re trying to expand the investigation to determine when the overbilling started.
“Our agency has been a victim of this overcharging as well,” Massman said. “We are determined to get the money returned, assist with the criminal investigation and rectify this so it cannot happen in the future.”
Expanding the investigation to earlier years won’t be easy, however. Police and sheriff’s departments may not have kept their purchase records from that far back – and certainly don’t still have the cars – to check if they got what they paid for.
The Department of Administration says a big part of preventing this sort of problem in the future is moving away from current paper-based records to a more modern electronic system. The Department requested $10 million for a so-called "eProcurement” system, but the funding still hadn’t been approved as the state legislature faced its deadline for adjournment.