Thursday, July 30, 2015
Your taxpayer money at work—faulty DOH procurement runs up costs 611% on a contract
Only one bid was received, and the contract was renegotiated with the sole bidder from $76,400 to $340,000 (an increase of 345 percent). Over the next three years, the contract was amended three times, increasing the total award to $543,374 (611 percent above the original bid).—from Summary of DOH procurement audit report
by Larry Geller
With this article just out…
… the Department of Health’s container redemption program pops up today with the release of an audit showing DOH’s failure to follow the required procurement process. And just one DOH contract cost taxpayers big bucks.
The Legislative Auditor’s report released today was department-wide, but I focused on the section describing DOH’s handling of a contract intended to audit the redemption centers.
Spoiler: except for one, the other redemption centers didn’t even get audited.
This juicy snip is from the Summary of the Legislative Auditor’s report 15-09, Procurement Examination of the Department of Health: Lack of Procurement Controls Exposes Health Department to Waste and Abuse:
In October 2008, the department sought a contractor to audit six certified redemption centers in the Deposit Beverage Container (DBC) Program. The contract was solicited and awarded via a request for proposals (RFP), which is designed to solicit multiple bidders. However, only one bid was received, and the contract was renegotiated with the sole bidder from $76,400 to $340,000 (an increase of 345 percent). Over the next three years, the contract was amended three times, increasing the total award to $543,374 (611 percent above the original bid), extending the contract by one year, and reducing the number of redemption centers to be audited from six to two. The department eventually accepted the first redemption center audit report but rejected the contractor’s draft of the second. However, since the contract’s procurement was fundamentally and significantly flawed, we question the value of either audit effort.
One more snip, this time from the main body of the report, and you probably have as much as you care to read about this.
The department’s failure to ensure proper oversight of its procurements is embodied in the numerous irregularities that took place in procuring the redemption centers audit. We found that the department ignored SPO’s ruling and declined to resolicit the contract; the single bidder negotiated a contract more than triple its initial bid; and the department proceeded to execute a contract with a different legal entity than the firm it evaluated, selected, and awarded the contract to.