House may stop no-bid IT deals
ONGOING COVERAGE /
A new budget provision would require state officials to seek competitive bids on information-technology contracts, after Dispatch stories detailed the awarding of millions of dollars worth of no-bid contracts to consultants.
The language aimed at the Department of Administrative Services surfaced as majority Republicans in the Ohio House of Representatives unveiled their rewrite of the two-year state budget proposal submitted by Gov. John Kasich.
In addition to mandating a “competitive selection process” in awarding contracts, the measure also would require Controlling Board approval of IT contracts, including for consultants.
The budget change was the work of state Rep. Keith Faber, R-Celina, a finance committee member and the former Ohio Senate president. He has expressed concerns about The Dispatch’s findings and the cost of a new online state licensing system.
“Your story was very helpful to me,” Faber said Wednesday. “It was indicative of a bigger problem.” Faber is concerned the state is not always “effective and efficient” in rolling out new computing systems.
A pair of finance committee members, Rep. Mike Duffey, R-Worthington, and Rep. Jack Cera, D-Bellaire, also think no-bid contracts require more oversight. Duffey believes Administrative Services officials have “abused” their authority to award no-bid contracts. “The way I read it in The Dispatch, it seemed shady, to be quite frank, and the amount of the awards seemed pretty large.”
Cera said, “The concern is you (Administrative Services) keep going with the same companies without having transparency and going against their own policy.”
A Dispatch investigation published April 2 found that Administrative Services officials overrode the concerns of agency purchasing analysts to award millions of dollars in no-bid contracts, frequently paying more than $200 an hour when analysts said cheaper options were available. The supervisors disregarded the agency’s own purchasing policy and sidestepped approval of the Controlling Board.
A spokesman for the agency said that its award of no-bid contracts is proper under a waiver of competitive selection granted by the Controlling Board. But, the agency failed to follow its own policy requiring that at least three price quotes be obtained from competing suppliers. The bipartisan Controlling Board consists of lawmakers from both chambers and an appointee of Kasich.
The Dispatch found that Advocate, a Columbus family of companies, has received in excess of $14 million in unbid state contracts since mid-2011. Advocate employs several former Department of Administrative Services IT executives who worked with the agency’s top-ranking IT officials. Stonyhurst Consulting, of Middleburg, Virginia, received more than $3 million in unbid contracts that included pay rates of up to $250 an hour.
The budget provision would require competitively bid contracts for “automatic data processing, computer services, electronic publishing services or electronic information services” in excess of $50,000 over five years. The contracts also would require Controlling Board approval and a comparison of what similar systems have cost in other states.
Faber had expressed concerns in committee hearings over the cost of the state’s still-unfolding eLicense computer system for licensing doctors, nurses, dentists and other occupations. The system handles about 1 million individual licensees and businesses.
The system has cost $25 million to date, with another $14 million in spending forecast to replace a system dating to 2004. Administrative Services officials say it will cost $4.2 million a year to operate and want lawmakers to approve the collection of a $3.50 fee from each person licensed to help fund the system. “You have a system that is dramatically more expensive than similar systems in other states. It seems to be prohibitively expensive going forward,” Faber said.
In a statement, Administrative Services spokesman Tom Hoyt said the agency long has received flexibility in awarding contracts for specialized services to “save millions of dollars and solve problems quickly. There are, of course, always ways to improve, and we look forward to exploring new ideas that preserve the best characteristics of this system — value and quick results for taxpayers — while doing even more to maximize transparency and accountability.”