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State government

A new audit says some California agencies sidestepped competitive bidding rules on contracts

 (Sacramento Convention & Visitors)
(Sacramento Convention & Visitors)

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 (CDT) 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, High-Speed 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 “they rarely employed them, allowing agencies to continue inappropriately using noncompetitive requests,” the audit concluded.

State workers also allegedly wrote 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 Deptartment of Technology, agreed with the auditor’s recommendations, 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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