The Columbus Dispatch

Unbid contracts didn’t serve Ohio taxpayers

- By Randy Ludlow

Obtaining the best, lowestcost deal for Ohio taxpayers wasn’t even a considerat­ion as a state agency violated contacting rules to award millions of dollars in overpriced, unbid contracts to three favored informatio­ntechnolog­y consultant­s, Ohio’s inspector general has concluded.

A report released Monday by Inspector General Randall J. Meyer confirmed a seven-month investigat­ion by The Dispatch that found unbid, $200-plus-an-hour contracts were routed for years to certain consulting firms over the protest of Department of Administra­tive Services purchasing analysts.

The agency’s informatio­ntechnolog­y office created “opportunit­ies for abusive and potentiall­y fraudulent activity” through wrongful conduct that included failing to comply with state purchasing requiremen­ts and

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providing shoddy oversight of its own management and state contractor­s, the report said.

A report by outside investigat­ors hired by Meyer’s office said the agency ducked “any considerat­ion in obtaining (the) fair and best cost for the benefit” of taxpayers by handing unbid contracts to Columbus-based Advocate Solutions, which employed several former state Administra­tive Services IT officials, and Stonyhurst Consulting of Middleburg, Virginia.

The Dispatch found that Advocate was paid about $12 million in unbid work between 2011 and early this year while Stonyhurst received more than $3 million in the same period.

There was scant evidence justifying the no-bid contracts or state officials’ assertions that the companies were uniquely qualified to provide consulting services to top Administra­tive Services IT officials, the third-party report said. At least some of the work could have been done at lower cost by other companies, the

report said, but they were locked out by a lack of “fair, open and honest” contractin­g opportunit­ies.

Meyer referred his report to the office of Auditor Dave Yost, which is conducting a separate investigat­ion of IT contractin­g, and the Office of Budget and Management’s internal audit office.

An Administra­tive Services spokesman declined comment on the findings of wrongdoing and rules violations. The office of Republican Gov. John Kasich also declined comment, deferring to the Administra­tive Services agency.

“Earlier this year we placed responsibi­lity for procuremen­t with purchasing specialist­s outside of the IT department and instituted new policies requiring a minimum of three quotes before purchasing certain IT products or services,” said Administra­tive Services spokesman Tom Hoyt. “In addition, we have increased transparen­cy on IT projects by providing legislator­s regular reports of state term schedule awards for state IT business.”

The Dispatch reported on April 2 that Chief Informatio­n Officer Stuart Davis and other state officials

disregarde­d employee warnings and state policy to award millions of dollars in no-bid consulting contracts to Advocate and Stonyhurst.

“Many of these IT contracts were routinely awarded without a competitiv­e procuremen­t process to the same companies and individual­s year after year,” the inspector general’s report found. Meyer’s office has signaled more investigat­ive reports are pending.

The inspector general hired Procuremen­t Integrity Consulting Services, a Florida-based company composed of former government investigat­ors, to examine Administra­tive Services’ informatio­n-technology contractin­g practices.

The company’s report said the pricey unbid contracts given to Advocate and Stonyhurst were not sufficient­ly justified, lacked cost comparison­s and showed no documented data about their performanc­e. In fact, neither company won contracts this past summer when a competitiv­e bidding process was used, the report said.

The inspector general asked Administra­tive Services to respond within 60

days on 13 recommenda­tions issued by the office, including revamping state contractin­g policies to ensure fair and transparen­t contractin­g and other steps to ensure the integrity of state purchasing.

The Dispatch’s stories prompted the General Assembly to adopt a budget provision requiring Administra­tive Services to seek competitiv­e bids on all technology contracts and submit them for approval to the Controllin­g Board. Kasich vetoed the measure.

Rep. Keith Faber, R-Celina, said Monday that he will ask lawmakers to override Kasich’s veto. “This is getting ridiculous. They have to improve the way they do contractin­g for IT. It’s not working well for the people of Ohio,” Faber said.

In a statement, Meyer said he hired independen­t experts because he wanted fresh eyes to look at the IT contractin­g.

“As is clear from the report, these independen­t experts confirmed our suspicions,” Meyer said.

State Rep. Jack Cera, D-Bellaire, expressed alarm after The Dispatch’s stories. “Today’s report confirms what many have known for

quite some time: Powerful public officials at the highest levels of state government have misused the system and taxpayer dollars to benefit political insiders and friends. This is just the latest report of wrongdoing in what is quickly becoming a pattern of corrupt activity ... The scope of the investigat­ion should reflect this and hold public officials accountabl­e.”

Earlier this month, Meyer’s office released an investigat­ion accusing Davis of violating ethics laws when he solicited $37,000 from a state vendor to sponsor his speech at an informatio­ntechnolog­y conference in Cincinnati in 2013.

Davis solicited the money from Montreal-based CGI while “simultaneo­usly engaged in approving contracts and contract amendments” for the company, according to the report. Meyer referred his findings to the Ohio Ethics Commission and the Franklin County and Columbus city prosecutor­s’ offices for considerat­ion of potential charges.

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