Audit: Nevada Division of Tourism chose contractors without required competitive process

CARSON CITY – An audit of the state Division of Tourism reviewed by state lawmakers on Monday found two cases where contractors were not selected through a formal competitive process as required by state law.

The review by the legislative auditor also found that the two contractors did not have formal state contracts.

Payments to the two contractors in fiscal years 2012 and 2013 totaled over $7 million.

Failure to have formal state contracts could leave the state exposed to unnecessary liability and costs, the audit said.

The Tourism Division, in its response, said it had a waiver granted in 2008 and other approvals to award the services without competitive bids.

But the audit found the agency did not follow the requirements of the waiver and other procedures.

One contractor, Creative Concepts, was selected in 2009 by the agency using its own request for proposals for television advertising. In 2012 and 2013, the contractor was paid more than $4.7 million for advertising, including over $708,000 in commissions.

The second contractor, Centro, was selected to purchase digital media, and received $2.3 million in 2013. Although the division indicated most of the money went to purchase advertising space, the contractor’s invoices did not include sufficient detail to determine if a commission was paid, the audit found.

Claudia Vecchio, director of the Department of Tourism and Cultural Affairs, said in her response to the audit that no commission was paid on the second contract.

Another finding in the audit determined that payments were made to contractors without adequate supporting documentation. For 21 of 57 payments tested, contractors’ invoices lacked the required information, the audit found. For fiscal years 2012 and 2013, payments to these 10 contractors totaled over $12.5 million.

In the Centro contract, the division did not have evidence from media providers that the digital advertisements were placed, or the costs charged by the publishers, the audit said.

“State policy and best practices require adequate supporting documentation to ensure contract payments are appropriate,” the audit said.

Vecchio, who took over as head of the state tourism agency in November 2011, said the Creative Concepts contract predated her tenure. But she told the members of the Legislative Commission’s Audit Subcommittee that she takes 100 percent responsibility for the findings and that changes have been made to ensure state laws and regulations are being followed in the award of contracts.

Neither firm is currently providing any services to the state, although Creative Concepts potentially could be awarded more work.

Changes have also been made to ensure documentation is adequate before payments are made, Vecchio said.

“Things are not perfect but we’re getting there,” she said.

Tourism’s primary mission is to promote the state to travelers. In fiscal year 2013 the agency spent $18.4 million, including $9.4 million on promotion and advertising. The agency gets its revenue from the hotel room tax.

Vecchio said the state’s spring/summer tourism campaign just kicked off Monday. The Las Vegas firm B&P Advertising was awarded the $4.1 million contract.

Contact Capital Bureau reporter Sean Whaley at swhaley@reviewjournal.com or 775-687-3900. Follow him on Twitter @seanw801.