Nevada's Highway Department Lost Track of $25 Million in Materials

The Nevada Department of Transportation (NDOT) runs 5,400 miles of highway, more than 1,000 bridges, and a fleet of over 2,000 pieces of heavy equipment and 700 vehicles on a $1.2 billion annual budget.▸ A performance audit by Nevada's Legislative Counsel Bureau⧉ -- the state's independent legislative auditor, reviewing NDOT's stockroom purchasing, equipment repair shops, material stockpiles, and executive vehicle use between January 2022 and June 2023 -- found nearly $25 million in discrepancies between what NDOT's own material-tracking system says it holds in road materials and what physical inventory counts actually showed for fiscal year 2023. That gap alone is worth almost double NDOT's entire $12.8 million Equipment budget line for the year.

NDOT has been burned by weak purchasing controls before: a stockroom employee ran more than $250,000 in fraudulent procurement-card purchases identified in October 2013, and a separate investigation in 2014 turned up at least $35,000 in tire theft, including one truck with fewer than 11,000 miles on it that was billed for 34 new tires.▸ Auditors didn't find fraud this time, but the controls meant to prevent a repeat still are not holding: of 150 purchase transactions tested, 57 (38%) lacked documentation of proper approval or separation of duties, and one employee admitted to routinely signing a co-worker's name as the purchase requestor to dodge that separation. Another disguised a purchase with a signature so far from real that auditors reproduced it in the report: 'Jonny Appleseed.'

Staff also split purchases to stay under NDOT's $5,000 per-transaction spending limit -- 77 instances of multiple same-vendor orders placed on a single day between January 2022 and February 2023, and in 8 of 20 (40%) instances auditors tested, the same items were bought from the same vendor the same day using separate invoices.▸ NDOT's own internal stockroom audits had already flagged much of this: of 10 internal findings on circumventing purchasing limits, incomplete documentation, and inappropriate approvals, 7 were unresolved repeats between 2022 and 2023.

Time NDOT's own mechanics log to actual repair work varies wildly by shop.▸ NDOT's standard is that 80% of a mechanic's hours should be billed directly to work orders; auditors found the worst-performing shop, South Las Vegas, logging just 27% -- an average of 2.2 hours in a nominal 7-hour day -- while only Carson City and Sparks (82% and 94%) actually met the standard. Four of nine equipment repair shops performed zero quality-assurance inspections in all of calendar year 2022, even though those inspections exist specifically to catch fraud and confirm parts were actually installed. The consequence shows up in NDOT's own fleet data: only 68% of units received on-time preventative maintenance in 2023, and district management didn't consistently fix what its own audits found -- senior leadership told auditors it used the audits 'for informational purposes' but did not directly address them with district management, letting some issues persist.

The audit's most pointed example of misused resources involves a 1987 NDOT pickup truck.▸ One equipment repair shop spent nearly $20,000 modifying it with window tinting, matte black wheels and low-profile tires, an engine power chip, and a lowering kit -- upgrades work-order notes describe as prep for 'a holiday party car show.' The supervisor who improperly ordered the modifications later bought the same truck for $8,200 when NDOT auctioned it off in April 2022; staff called the project a team-building exercise, but auditors called it wasteful spending. Separately, of three vehicles assigned to NDOT's Director's office, one was driven 2,700 miles between August and November 2023, with GPS data showing 83% of that mileage was personal use; auditors estimated the personal-use value at about $5,000 a year. NDOT hadn't filed the paperwork required to treat the vehicle's 2023 home storage as taxable compensation -- it completed that documentation only after auditors' inquiries prompted it -- and during the four months auditors tested, the employee never responded to an incident, the only legal justification under state law for keeping a state vehicle at home.