No-Bid Contracts Banned by Davis

Moving to address a controversy that is dogging his administration, Gov. Gray Davis issued an emergency order Monday banning all no-bid contracts and promised to sign legislation imposing conflict-of-interest rules for computer contracts.

As hearings into his administration’s handling of a no-bid contract for Oracle software continued a few doors away, the governor announced that he was also appointing a committee to write tough new regulations that would prevent a repeat of the Oracle debacle.

“I am determined to ensure that taxpayers get their money’s worth and that all state contracts withstand scrutiny,” Davis said in a prepared statement.

He said his executive order would stop the state from entering into any contracts over $100,000 that were not competitively bid and would remain in effect until new regulations that would discourage sole-source agreements are established.

Davis also said that when it reaches his desk, he will sign a conflict-of-interest bill (SB 1467) by Sen. Debra Bowen (D-Marina del Rey) that would prevent consultants hired to advise the state on technology contracts from bidding on those same contracts.

The decision was a reversal from a position Davis took three years ago when he vetoed a similar bill by Bowen, saying it would “restrict

Davis’ latest actions came as the Oracle controversy continued to plague his administration and his reelection efforts, even as he attempted to turn the political debate to other issues, including the latest Enron disclosures.

The contract became a liability for Davis in April, when the state auditor released a highly critical review that found taxpayers may have been saddled with as much as $41million in Oracle software that wasn’t needed.

The audit found the administration had signed a $95-million deal to buy Oracle software that was brokered by Logicon, a company that had been hired a year earlier to advise the Department of Information Technology on the state’s software licensing options.

Shortly after the agreement was signed, an Oracle lobbyist handed a $25,000 contribution to Davis’ director of e-government, Arun Baheti, for the governor’s reelection campaign. Davis has since returned the $25,000 donation, suspended the head of the Department of Information Technology, and forced the resignations of Baheti and the director of the Department of General Services, which approved the contracts.

His latest effort to defuse the controversy met with mixed reactions along partisan lines.

“Two cliches come to mind: ‘closing the barn door after the horse is out’ and ‘better late than never,’” said Sen. Tom McClintock (R-Thousand Oaks). “The state has tough regulations that promote competitive bidding. The governor just chose to ignore them.”

Assemblyman Bill Leonard (R-San Bernardino), a member of the committee investigating the deal, said the ban on no-bid contracts also came late. He said that a year ago Davis vetoed a bill by Sen. Steve Peace (D-El Cajon) that would have prohibited sole-source contracting.

Democrats were less critical. Bowen said the appointment of a special committee to examine contracting would enable the state to address an array of problems associated with the way it does business.

Assemblyman Dean Flores (D-Shafter), chairman of the Joint Legislative Auditing Committee, which is examining the Oracle contract, called Davis’ executive order “a stopgap” that “plugs a hole in a sinking ship.”

Shortly after Davis issued his order, the committee approved two separate audits aimed at broadening the Legislature’s investigation into state procurement practices. One seeks to assess how California should purchase computers and computer services. The other looks at the state’s list of prequalified contractors who are eligible for certain state contracts.

The committee, which continues its investigation today, agreed to give the governor’s office until Friday to comply with its request for documents. The administration had requested the delay.