State Asks Narconon to Explain Overruns
The Okhahoman, Oklahoma
November 21, 1990
A substance abuse center will be required to explain why it spent $1.1 million more on start-up costs than it originally stated it would, a state official said Tuesday.
Because the overrun is more than $500,000, Narconon Chilocco New Life Center is subject to a public hearing on the portion of the project that exceeded the original dollar estimate, said Henry Hartsel, director of the certificate of need division in the Oklahoma State Department of Health.
Narconon officials on the original certificate of need issued in January 1989 projected a cost of $400,000 to renovate existing buildings at the old Chilocco Indian school north of Newkirk to get the facility acceptable for a substance abuse center, Hartsel said.
Gary Smith, president of Narconon Chilocco, said renovating existing buildings on the grounds, most of which were built in the 1930s, is expensive.
Also, more work was done than originally expected when additional donations for the proposed 75-bed facility were made, he said.
"We got a lot more support and back-up than we thought we would when we first applied for it," Smith said. "We just decided to step up the renovations."
So far, a student union, two dormitories and six houses for staff members who live on site have been renovated, he said.
Narconon Chilocco plans to file an application to explain the additional cost to state health officials, Smith said.
Cost overruns on projects occur routinely, health officials say.
Hartsel said a hearing will be held for Narconon officials to explain why the additional money was spent.
It will deal with that phase of the project only and will not cover arguments already covered in Narconon's original certificate of need application, he said.
Narconon officials applied for state 1 certification with the Department of Mental Health in August, but only after state health officials sought an injunction to close the facility because it had been accepting patients since February without state approval.
Earlier this month, Narconon filed a lawsuit in federal court claiming the state lacks jurisdiction because the center is on Indian land.
The State Mental Health Board has been delayed from acting on a negative recommendation from the mental health staff on its certification application after an Oklahoma County district judge ruled the report was biased against it.
Narconon Chilocco has been allowed to continue to operate while the State Mental Health Board tries to form a new evaluation team to look over the center's treatment plan and operating procedures.
In the meantime, Narconon won court approval to accept up to 35 patients during the delay.