23 October 2009 | Jake Kanter
The US state of Pennsylvania has been urged to overhaul its "shoddy" procurement processes, following an investigation by the Department of the Auditor General (DAG).
The DAG conducted a special performance audit and subsequently produced its Procurement of Deloitte contracts report. This found $382 million (£232 million) of IT services deals initially awarded to business advisory firm Deloitte in January 2004 increased by 55 per cent to $592 million (£360 million) by December 2007, as a result of changed orders, "emergency contracts" and lack of competitive tendering.
Over almost four years, the state also gave Deloitte $2.25 million (£1.4 million) in economic development grants and tax credits to create and retain jobs, in addition to helping it perform the IT deals.
"The $2.25 million awarded to Deloitte seems to indicate that state government violated the spirit as well as the letter of the law in awarding public tax dollars to a company receiving more than a half-billion dollars in state contracts," auditor general, Jack Wagner said.
He also uncovered "shoddy monitoring and record-keeping" and claimed the Department of General Services (DGS), which oversees the state's purchasing, blocked him from viewing public documents.
He said the problems indicated "potential flaws" in Pennsylvania's contracting processes.
"This is a textbook case of what happens when accountability, competition and transparency are not present in the daily operation of state government."
The report called on the DGS to centralise procurement and consider introducing legislation to tighten up bidding procedures. It said state agencies should document preparation and approval of requests for proposals, and stop buyers participating in deals in which they have a conflict of interest.
A Deloitte spokesman said it had competed for and serviced state contracts according to rules and procedures and has helped save the US government "hundreds of millions of dollars".
The DGS did not respond to SM's request for comment.