LINCOLN, Neb. (AP) — An agency that oversees Nebraska contracts failed to collect more than $60,000 owed to the state by a Lincoln-based paper-recycling company, Auditor Mike Foley said Thursday.
Foley said Shredding Solutions Inc. should have paid a market-rate value for the paper, which it collects from state offices, shreds, and sells for other uses.
The company has since repaid $27,000 to the Department of Administrative Services, which oversees recycling in states offices, but Foley said the firm still owes the state $33,000. He said the agency received a flat rate of $25 per ton, even though the company was at times obligated to pay $55 to $100 per ton of paper.
Foley said his office’s review stretched from May 2010 to November 2012, but the company has held state contracts for the last 10 years.
“We think this problem goes back a lot longer,” he said. “The dollar total involved could be much larger.”
Department of Administrative Services director Carlos Castillo said the audit letter was based on Foley’s interpretation of the contract, which his agency disputes. Castillo said the original wording in the written agreement was vague, and it has since been changed to make clear what the company has to pay.
“We believe the state was paid all the money owed,” Castillo said. “We disagree with his assertion that somehow, somebody was doing something wrong, and the state was short-changed. We do not believe that to be the case.”
Castillo said Shredding Solutions Inc. has been the lowest bidder on state contracts and has worked with the state for years. The company collects paper from government buildings in Lincoln, including the Capitol, and from state offices in Kearney, Norfolk and other cities.
A man who answered the phone at Shredding Solutions said the company will return any money the state asks it to repay. He declined to comment further and hung up.
The state has contracted with Shredding Solutions since June 2003, and the agreement has been renewed and extended multiple times. About 400 tons of discarded paper are collected, shredded and sold each year.
The agreement requires the company to pay the state for the value of the paper it shreds every month. Specifically, Shredding Solutions is required to pay a monthly fee based on the per-pound rate set for the Chicago market. Foley said the Chicago market rate for paper ranged from $55 to $100 per ton. The state received a flat rate of $25 during that period.
Foley said the department first received insufficient payments from the company, then “very late” insufficient payments, and then no payments whatsoever. He said the agency didn’t act until his office raised the issue.
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Online: www.auditors.nebraska.gov
