Raleigh, N.C. — North Carolina is losing money by using sealed-bid auctions to dispose of surplus materials and should look into holding eBay-style auctions to create bidding wars to generate more revenue, according to a state audit released Wednesday.
The audit of the Department of Administration's financial operations also recommended tighter security for surplus property and auto parts for the state motor fleet and better monitoring of vehicle maintenance costs.
The Division of Surplus Property generated $12 million in the fiscal year ended in June through sales of goods no longer needed by state agencies. The division sells anything valued at more than $200 through sealed-bid auctions, while anything that costs less than $200 is sold through a state-owned retail store.
Auditors compared vehicles sold by the state with similar vehicles sold on eBay and found the online sales prices were an average 23 percent higher. The audit also noted that the Division of Surplus Property did a similar comparison in 2011 on a variety of goods sold and found profits were 10 to 50 percent higher on eBay.
Division officials told auditors that a consultant would need to be hired to help modernize the agency's bidding software or to hire an outside auction site but that the process could start early next year.
Auditors also said security should be upgraded at the surplus property warehouse – recommendations were provided privately and weren't outlined in the audit – and that people with access to the warehouse shouldn't have access to the database of property to prevent someone from covering up a theft. Division officials said they were working on both recommendations.
The Division of Motor Fleet Management also is trying to limit the number of people with access to its database of auto parts for state vehicles to deter thefts, according to the audit.
The division also agreed with auditors' recommendation to monitor repairs on state vehicles performed by private mechanics to ensure costs are reasonable. Staff accountants plan to pull 10 invoices a day at random to review whether necessary services are being done and whether costs are in line with state estimates.