Agen­cies skirted bid­ding process, au­dit says

Los Angeles Times - - CITY & STATE - By Pa­trick McGreevy pa­trick.mcgreevy @la­times.com

SACRA­MENTO — Two Cal­i­for­nia agen­cies in charge of high-tech projects failed to pro­vide proper over­sight for bil­lions of dol­lars in con­tracts awarded with­out com­pet­i­tive bid­ding, ac­cord­ing to a state au­dit re­leased Tues­day.

State law re­quires the De­part­ment of Gen­eral Ser­vices and the Cal­i­for­nia De­part­ment of Tech­nol­ogy to use the com­pet­i­tive bid­ding process when­ever pos­si­ble “to en­sure fair com­pe­ti­tion and elim­i­nate fa­voritism, fraud, and cor­rup­tion,” State Au­di­tor Elaine Howle wrote in a let­ter to Gov. Jerry Brown.

The in­ves­ti­ga­tion ex­am­ined a sam­ple of those con­tracts and found nine non­com­pet­i­tive re­quests val­ued at al­most $1 bil­lion that “agen­cies likely could have avoided had they en­gaged in suf­fi­cient plan­ning,” Howle wrote.

The au­di­tors cited ap­proval of a re­quest by the Cal­i­for­nia High-Speed Rail Author­ity for a $3-mil­lion non­com­pet­i­tive con­tract amend­ment to pro­vide fi­nan­cial con­sult­ing ser­vices. The pro­posal was sub­mit­ted 17 days be­fore the ex­ist­ing con­tract was set to ex­pire.

“When jus­ti­fy­ing its non­com­pet­i­tive re­quest, High­Speed Rail stated that the fi­nan­cial con­sult­ing ser­vices were crit­i­cal to its mis­sion and that the ven­dor’s skills were ‘spe­cial­ized and not widely avail­able.’ How­ever, it did not pro­vide a valid rea­son why this ven­dor alone could meet the state’s needs, as fi­nan­cial con­sult­ing ser­vices are not unique,” the au­dit found.

In all, au­di­tors es­ti­mated that the state awarded at least $44 bil­lion in non­com­pet­i­tive con­tracts of more than $1 mil­lion each dur­ing the five fis­cal years end­ing June 30, 2016.

The two agen­cies have the power to en­force con­tract rules but “rarely em­ployed them, al­low­ing agen­cies to con­tinue in­ap­pro­pri­ately us­ing non­com­pet­i­tive re­quests,” the au­dit found.

State work­ers also are faulted for writ­ing re­ports in ways that mis­led about which projects were com­pet­i­tively bid. In one case, a $3-mil­lion con­tract was iden­ti­fied as com­pet­i­tively bid, to which an ad­di­tional $31 mil­lion in non­com­pet­i­tive con­tracts was added through nine amend­ments.

Amy Tong, di­rec­tor of the Cal­i­for­nia De­part­ment of Tech­nol­ogy, agreed with the au­di­tor, say­ing the agency “be­lieves that the rec­om­men­da­tions will strengthen CDT’s over­sight of in­for­ma­tion tech­nol­ogy and telecom­mu­ni­ca­tion pro­cure­ments, es­pe­cially those ac­quired through the non­com­pet­i­tive re­quest process.”

Daniel C. Kim, di­rec­tor of the De­part­ment of Gen­eral Ser­vices, also agreed to im­prove the process, writ­ing to au­di­tors that his agency “will take ap­pro­pri­ate ac­tion to ad­dress the is­sues pre­sented in the re­port.”

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