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Friday, February 5, 2010

Procurement controversies -- the District of Columbia

D.C. Mayor Fenty's associates bypassed rules in donating rescue vehicles
A friend and a staffer of Mayor Adrian M. Fenty's skirted procurement rules in arranging a deal that raised questions about how to properly dispose of city property.

"What makes the transaction so incredible is the fact that so much effort -- at the highest levels of District government -- was expended to facilitate a transfer of surplus property without even a hint of potential benefit for the District government," said a report by the Committee on Government Operations and the Environment. "Rather, the entire affair was merely the pet project -- even if well intentioned -- of a senior District official and a well-connected non-government individual."

No city laws were broken

In their reports on the firetruck controversy, the committees call for stricter policies on how government property can be donated or auctioned off, especially to a foreign government. The reports also say that the Fenty administration hastily arranged the transfer of the firetruck and ambulance to Sousa outside traditional procurement procedures.

according to the report, Skinner, Giles and Jannarone were working behind the scenes to make sure the transfer would be legal. In March 2009, the District government issued an emergency rule "to allow the Chief Procurement Officer to donate surplus supplies to Peaceoholics," according to the report.

D.C. Council questions parks projects it didn't approve
D.C. Mayor Adrian M. Fenty's administration has funneled at least $82 million to the D.C. Housing Authority to build a dozen parks, ballfields and recreation centers, a process that has circumvented D.C. Council oversight and awarded contracts to firms with ties to the mayor.

By law, the council must approve contracts that exceed $1 million. Last month, contracts for as much as $16 million went to various construction companies as part of the mayor's effort to improve the city's parks system.

Banneker Ventures, a firm owned by a Fenty fraternity brother, Omar Karim, is the construction manager on every project

Some talks with housing authority and parks officials this week led to the discovery of millions of dollars in projects that the council never approved. Thomas said it appears the money was taken from the Department of Parks and Recreation, given to the Office of the Deputy Mayor for Planning and Economic Development and then passed through the quasi-government agency that operates the city's public housing system.

Thomas said he wanted to know how Banneker received the 12 contracts last month. "There are some real concerns that one contractor could win competitive contracts 100 percent of the time," he said.

Dena Michaelson, a spokeswoman for the housing authority, said Thursday that she did not have information about the projects. She also said she did not know whether the contracts had been competitively bid.

But she said it is not unusual for city officials to route money through the housing authority for construction work. "They tap into us . . . to get the projects off the ground," Michaelson said. "We get projects going fast, and we keep costs low."

FURTHER READING: In 2007 the GAO issued a report regarding Washington D.C., which was headed "Procurement System Needs Major Reform". In its introductory comments and preliminary brief it said (excerpts):
The District’s procurement law generally does not apply to all District entities nor does it provide authority to the CPO to effectively carry out and oversee the full scope of procurement responsibilities across all agencies. A lack of uniformity in its procurement law and the CPO’s limited authority not only undermines transparency, accountability, and competition but also increases the risk of preferential treatment for certain vendors and ultimately drives up costs.

The District has been challenged to effectively manage and oversee its procurement function, due in large part to the low-level position of the procurement office in the governmental structure, the rapid turnover of CPOs, and multiple players having authority to award contracts and affect contract decisions. At the same time, the District does not have the basic tools that contracting and agency staff and financial managers need to effectively manage and oversee procurements—including a procurement manual, a professional development program, and an integrated procurement data system.

In summary, the District’s procurement system does not incorporate a number of generally accepted key principles and practices for protecting taxpayer resources from fraud, waste, and abuse. Specifically, the District lacks a comprehensive procurement law that applies to all District entities over which the CPO has sole procurement authority and promotes competition; an organizational alignment that empowers its procurement leadership; an adequately trained acquisition and contracting workforce; and the technology and tools to help managers and staff make well-informed acquisition decisions.

The District’s history of procurement problems—which include poor planning, excessive use of sole source contracts, and unauthorized personnel committing government resources—is well documented. Contracts have suffered from poorly defined requirements, noncompliance with procurement rules, and avoidance of competition. Almost 10 years ago in an effort to improve its procurement outcomes and promote oversight and accountability, the District amended its procurement law. Since then, the District’s inspector general’s and auditor’s offices as well as numerous press reports continue to identify improper contracting practices across various District entities.

the law has frequently been amended to grant exemptions to its provisions and the CPO’s authority for certain entities and special procurements. Current and former CPOs, as well as NASPO and other city procurement officials, noted that these exemptions distort the District’s law, undermine efforts to establish a central authority, and circumvent the competitive process.

In addition to generally lacking a law that reflects accepted key principles of sound procurement, the District has been challenged to effectively manage and oversee its procurement system. The low-level position of the procurement office within the District’s governmental structure, combined with rapid turnover of five CPOs in the past 10 years, has resulted in fragmented and inconsistent procurement management and oversight with multiple players having authority to award contracts and affect procurement decisions. At the same time, contracting and agency staff and financial managers do not have the basic tools needed for effective procurement management and oversight.

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