Since 9-11, states have been flooded with federal cash to help boost security and emergency response systems.

Kansas has been no exception.

To manage the funds – more than $80 million in Homeland Security and defense grants since 1999 – Kansas chose a sole vendor to provide equipment to local emergency management agencies.

The problem, critics say and documents support, is the middleman fees that the vendor, Fisher Scientific Inc. of Houston, is charging Kansas emergency management agencies.

A Journal-World review of state and county records shows that Fisher added middleman fees to already expensive equipment, in some instances charging as much as $20,000 in taxpayer money per purchase. The fees have angered local emergency officials and lawmakers.

“It’s these types of contracts that really gouge the taxpayer,” said state Sen. Chris Steineger, D-Kansas City. “This could go down as the golden fleece award in Kansas government.”

Brian Imel, foreground, welds on a framing piece at Brown Cargo Van Co. The Lawrence-based company has several Homeland Security contracts to produce different models and designs of trailers and vans.

The high fees are frustrating, local officials say, because they use funds that could otherwise be spent on potentially life-saving equipment.

Furthermore, records show the safety contract was never bid competitively – affecting business for several Kansas vendors.

“It is not a competitive contract by any means,” said Mike Weis, owner of Weis Fire and Safety, a Salina-based safety supply company. “To me, it’s an abuse of our tax dollars.”

High fees

Fisher collects a fee on all homeland security grant purchases, even for equipment from vendors other than Fisher. For off-contract items, the fee is 12 percent for purchases under $2,000 and 5 percent when agencies spend more.

The Kansas Highway Patrol administers the grant program, and State Division of Purchases Director Chris Howe said the KHP hadn’t yet told the division how much of the federal funds had gone toward Fisher’s fees.

“I don’t have that information,” Howe said. “We’ve asked for it, but have yet to receive anything.”

But local officials have complained Fisher charged fees regardless the amount of work it did.

For example, when Saline County Emergency Management looked for a hazardous materials van last year, officials accepted bids from six different companies. Hays Fire Equipment, a Kansas company, came in lowest at $280,644, records show.

Salina Fire Chief Darrell Eastin said the company eventually knocked a few thousand dollars more off the selling price.

But when they got the bill, the price tag had climbed to $295,414, records show – with Fisher collecting more than $15,000 even though the company didn’t build, house or take bids for the hazmat van.

Les Green, department head, foreground left, and welder Phil Wyrick, both with Brown Cargo Van Co., work on the completion of a medical response vehicle for a Kansas City hospital.

Osage County had a similar experience, records show. Fisher charged the county at least $7,212 in fees for several off-contract items.

Agencies around the state have complained to the Legislature, including first responders in Johnson County and the city of Wichita. Fisher charged both agencies thousands in fees, records show.

The complaints have been so loud, the Division of Legislative Post-Audit launched an investigation of the contract earlier this year. The investigation isn’t yet complete.

Krishna Narayan, vice-president of Fisher Safety, admitted the company charged fees for off-contract purchases, but said the majority of products Kansas agencies had needed were part of the company’s catalog and didn’t require the fee.

As for off-contract equipment, Narayan said the fee helped pay for services associated with the handling of a product.

“I think there’s validity in charging a fee for those transactions,” Narayan said.

Good and bad

For local agencies who purchase the majority of their emergency management products from the Fisher catalog, the contract has served them well, according to letters submitted to the Legislature.

A handful of regional emergency management directors told legislators that the system was efficient and saved time when ordering goods.

Douglas County Emergency Management Director Paula Phillips said the contract saved the county from the “nightmare” of bidding out every equipment purchase the county has made with Homeland Security money.

So why all the concern from lawmakers?

Capt. Mark Bruce from the Kansas Highway Patrol, which administers the Homeland Security Grant funds, said the concern was a response to political pressure from Kansas vendors unhappy with the contract.

“This is a well-oiled machine,” Bruce said of the Fisher system, which includes a Web site from which local agencies can order.

Bruce also pointed out the national recognition for the Kansas program, which limits what local agencies can spend money on.

But Phillips recognized why people are upset. The system isn’t perfect, she said – especially in the fees Fisher charges on transactions.

“Is it double dipping from taxpayer money? Well, yeah,” Phillips said. “The state should have thought about this up front, and now we’re paying for it.”

Records show several other emergency management agencies across Kansas have complained Fisher’s fees wasted taxpayer money that could be spent on more life-saving equipment.

“We feel this (the fees) is in excess due to the fact that we handle all the arrangements, and bids,” Osage County Emergency Management Director Sheila Dale wrote to the Legislature. “The processing fee would have purchased more needed equipment.”

Johnson County EMS division chief Brad Mason echoed Dale’s comments. He said every year, the county makes a list of emergency management equipment it needs.

Because of Fisher’s fees, the county couldn’t buy some items on its list.

“If we weren’t paying some of the higher fees,” Mason said, “we could have bought more equipment we needed.”

Bruce from the KHP and Fisher officials said a waiver process existed that allowed agencies to buy directly from vendors. But critics, including several emergency management agencies, call the process cumbersome, and Bruce said the waivers weren’t in the best interest of the KHP.

He said he didn’t want agencies using waivers for every product that taxpayers could “save 15 cents on.”

Vendors

For Kansas vendors, the process has turned up a variety of experiences.

Some vendors, such as Weis Fire and Safety of Salina, complained its business had suffered because it no longer could sell directly to users.

Lawrence-based Brown Cargo Van Co. has built several special operations vans using Homeland Security grant money. Fisher brokers all the transactions.

Brown Cargo manager Brad House has worked with Fisher to broker deals. He said the process wasn’t so difficult. Plus, he said, those are the rules the state put in place, so he has little choice.

But when House sold a specialized van to Capt. Joe Dessenberger and the Wichita Police Department last year, Fisher charged more than $20,000 in fees to broker the sale, according to Dessenberger’s testimony before the Legislature.

House said that was how the system works, and if lawmakers were upset, they should take action.

“If they’re the ones that want to change it, they should change it,” he said.

Bidding problems

The original contract called on Fisher to provide “laboratory supplies, equipment, chemical and diagnostics,” records show, with no mention of security. This contract was bid competitively, with Fisher Scientific edging out several other companies.

After 9-11, the state received millions in taxpayer money for emergency supplies – something Fisher Security, a branch of the company, could provide.

Then-Gov. Bill Graves appointed the Kansas Highway Patrol to administer the funds. KHP then chose Fisher to provide products under the original contract without new bidding for suppliers of security-related goods.

Gov. Kathleen Sebelius since re-appointed the KHP to administer the grant money in 2003.

Howe, from the Division of Purchases, said he held meetings with Fisher and KHP in 2003 to consider holding a new bidding.

That year, Howe and KHP Finance Officer Walter Darling sent a letter to Fisher, suggesting the security portion of the contract be rebid.

“We are under significant pressure to allow numerous other companies, particularly Kansas companies, into this process,” the letter stated.

KHP’s Bruce said he recalled several meetings to discuss rebidding of the contract, but did not remember specifics.

“I don’t recall as to why that wasn’t rebid at the time,” Bruce said.

Instead of rebidding, KHP and Fisher renegotiated the contract to include the safety supplies, allowing some discounts according to the amount of money spent, records show.

Narayan, the Fisher executive, said making the contract competitive was the state’s duty, not theirs, and including all Kansas vendors was nearly impossible.

“That may make sense for the state, but not for us,” he said.

The original contract expired in December 2005 and was automatically renewed, again without bidding, for this year. The contract can be renewed for another year in 2007.