NEWS RELEASE
For Immediate Release
Contact: Steve Halvonik 717 787-1381

Auditor General Jack Wagner Urges General Assembly To Make $4 Billion Procurement Process More Competitive

HARRISBURG, Pa., Dec. 1, 2009 – Auditor General Jack Wagner today urged the General Assembly to restore greater competition to the commonwealth’s $4-billion-a-year procurement process for goods and services.

“Competition is the American way,” Wagner told the Senate Communications and Technology Committee. “It spurs innovation. It creates jobs. And it saves money for taxpayers. There should be no place in state government for no-bid contracts.”

Wagner’s recent special performance audit of the state’s purchasing of information technology services uncovered weaknesses in the bidding process that Wagner said were systemic. Wagner’s auditors found that the state awarded $382 million worth of contracts to Deloitte Consulting that swelled to more than $592 million over a four-year period because of administration-approved change orders, emergency contracts and sole-source contracts. Wagner said these amendments to the original contracts would not have been necessary had the original contracts bid properly. He noted that 34 of the 59 initial contracts were awarded without competitive bidding.

“The lack of competition underscores weaknesses in the state’s bidding process,” Wagner said. “Either the initial specifications contained in requests for proposal are inaccurate, or the state is not sufficiently promoting RFPs to potential bidders.”

“In this difficult economic climate, state government must do everything it can to make every dollar count, including ensuring that the procurement process is transparent, competitive and as error free as possible,” Wagner said.

Wagner’s audit had 6 findings, and made 37 recommendations on how DGS can restore accountability, transparency and competition to the procurement process. He recommended that:

• DGS ensure that agencies develop procedures to document preparation and approval of Requests for Proposals and that agencies’ RFP evaluation committees follow procedures and document committee meetings.
  
• DGS and the Department of Community and Economic Development should coordinate to verify whether vendors seeking grants and tax credits already have state contracts.
  
• DGS should ensure that state agencies are enforcing the knowledge transfer provision of contracts to guarantee that state employees are being trained to operate all computer systems.
  
• DGS should develop and enforce ethical standards to prevent real or perceived conflicts of interest involving state employees approving procurement contracts.
  
• The procurement process should be centralized with all contracts coordinated through DGS.
  
• Legislation should be considered to tighten up and centralize the bidding process.

“It is imperative that our state government earn the taxpayers’ trust by being as transparent as possible. I hope the General Assembly exercises its constitutional authority and takes an active and vigorous role in overseeing the state’s procurement process…to make sure that tax dollars are being spent efficiently, effectively, and in the public’s interest,” Wagner said.

Auditor General Jack Wagner is responsible for ensuring that all state money is spent legally and properly. He is the Commonwealth’s elected independent fiscal watchdog, conducting financial audits, performance audits and special investigations. The Department of the Auditor General conducts more than 5,000 audits per year. To learn more about the Department of the Auditor General, taxpayers are encouraged to visit the department’s Web site at www.auditorgen.state.pa.us.

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