The unsigned contract: $1.94 million paid on a contract that was never signed

2010 — the same audit's second money finding

The finding: The same School City audit examined the district's guaranteed energy savings contract. The board approved the provider Emcor on 27 April 2010; the corporation then paid Shambaugh & Sons $821,000 on 1 August 2010 and $1,116,969 on 17 September 2010 — $1,937,969 in all — with no signed contract in existence. What the auditors were shown was an unsigned, incomplete draft that named Shambaugh as provider and showed no relationship to Emcor at all. The audit quotes the statute the arrangement was measured against, Indiana Code 36-1-12.5-3, which requires a performance bond from the "qualified provider" on such a contract; no bond stood in the record either.

The answer given: The district's Business Manager explained to the auditors that Shambaugh is an Emcor subsidiary, that the work was nearly complete, and that a performance bond was anticipated. That explanation is printed here at its strength: it answers who did the work, and it does not answer the finding — the payments ran ahead of the paper, and the paper, on the audit's record, had not caught up by the report date of 4 November 2010. Two lesser items from the same audit travel with it at their size: $80,936 (2008-09) and $96,464 (2009-10) paid to one individual for construction consulting, and $17,553 and $18,321 to another for contract labor, neither supported by a written contract.

The three tests, printed working: (1) Documented — yes, an official audit finding with amounts and dates. (2) Genuinely contested — at half strength: an explanation was offered and recorded, but no defense of the practice itself stands in the record; nobody argued the payments were proper, only that the work was real. (3) City-significant — at district size, and larger money than the lobbying fight by two orders of magnitude. It prints as a found audit case, one step below a fight: the state's finding stands unanswered on the point that mattered, and no disposition — a signed contract produced, a bond filed, a sanction — stands in the record reached. The settler is the same as the lobbying item's: the district's subsequent audit cycle and board minutes.

Sources:

1. Indiana State Board of Accounts, Audit Report of the School City of Mishawaka, 2008–2010 (report B38176) — "Guaranteed Energy Savings Contract" and "Contracts," Audit Results and Comments.