An out-of-state company with the Kansas contract for providing Homeland Security equipment collected close to $1 million in tax-funded middleman fees in 2005, according to a state audit.

The report released Wednesday prompted some lawmakers to call for refunds from the company.

“What galls me most is this fee,” said state Sen. Chris Steineger, D-Kansas City. “I would hope and encourage that the state asks for a refund of that money, or at least a large portion of it.”

The report from the Legislative Division of Post Audit called for state agencies responsible for overseeing the contract to renegotiate with Fisher Scientific Inc., of Houston, to lower fees attached to some purchases.

“We are prepared to do that,” Kansas Highway Patrol Supt. William Seck said at the hearing of the Post Audit committee.

The highway patrol controls a major portion of the federal Homeland Security Department grants to Kansas and negotiated the initial and subsequent agreements with Fisher. The audit also recommended the Department of Administration take part in the called-for negotiations.

The audit came as a result of complaints from emergency management agencies and vendors, telling legislators the fees fleeced taxpayers and increased costs for equipment such as protective gear and hazardous materials vans.

A Lawrence Journal-World investigative report published Feb. 26 about the contract described the high fees and other problems related to the contract. The audit conclusions echoed many of those findings.

For example, when emergency management agencies need equipment from vendors other than Fisher, the company brokers the deal for a fee: 12 percent for purchases less than $20,000, and 5 percent if local agencies spend more money.

In many cases, auditors said, the fees charged by Fisher surpassed any possible savings the company could have provided the state through its vaunted efficiencies as a sole contractor.

“The fee was more than the reduction in price,” said state Sen. Les Donovan, a Wichita Republican and chairman of the Post Audit Committee. “Such a deal.”

The audit also recommended the agencies consider putting the contract up for competitive bid when the current contract expires at year’s end.

The original contract called for Fisher to provide laboratory equipment and other science-related goods, and was competitively bid. But when Homeland Security funds began pouring into the state in 2002, the highway patrol selected Fisher to be sole vendor for safety equipment without allowing local companies to bid.

“This issue should be seriously considered,” the audit stated, though auditors conceded most counties now use other vendors for safety products, so it was difficult to tell if new bidding was really necessary.

Currently, the state uses a Fisher-owned, Internet-based software program to track all purchases using the federal grants – a chief reason why the highway patrol chose the company, according to auditors.

The audit recommended that if the state agencies can’t reach an agreement with Fisher to lower fees, the highway patrol should allow emergency management agencies to buy products without using Fisher as a middleman and create its own system to electronically track Homeland Security Grant purchases.