Audit Finds Questionable Activity at Springfield Hospital Center -- 33 Contracts Awarded to One Contractor without proper controls
Below is the Summary DLS included in the Audit, followed by the analysis. The summary is reprinted vertabim; I have made some stylistic modifications to the analysis for readibility. If you would like to see the actual Audit document, click here.
A Springfield Hospital Center (SHC) management employee controlled virtually all aspects of the procurement and related invoice approvals for maintenance contracts, resulting in questionable activity with one contractor with whom the employee appeared to have conducted personal business.
Specifically, there was a lack of separation of duties as this employee:
handled all aspects of the procurement process for maintenance contracts (including the solicitation of bids, evaluation of bids, and selection of the winning bidder),
monitored the work, and
approved the related invoices for payment.
During the period from July 2011 to January 2015, this employee awarded 33 contractstotaling approximately $439,300to this contractor and approved the related invoices for payment.
These contracts (for electrical, plumbing and construction services and supplies) represented more than one-third of the total dollar value of all maintenance contracts awarded during this same period.
Furthermore, each contract awarded was for an amount less than $25,000, which is the threshold over which approval is required by the Department of Health and Mental Hygiene’s (DHMH) Office of Procurement and Support Services (OPASS).
Our review of the 33 contracts disclosed numerous instances of SHC’s failure to comply with procurement regulations and other questionable activities that appeared to compromise the integrity and competitive nature of the procurement process.
Bid solicitations and the resulting contract awards for seven contracts totaling $149,600 (each valued at amounts greater than $15,000) were not publically advertised on eMaryland Marketplace, as required. State procurement regulations require that bid solicitations and resulting contract awards exceeding $15,000 be publically advertised on eMaryland Marketplace. Thirteen of the 33 contracts reviewed totaling $281,430 were valued at amounts greater than $15,000.
Our review of the bid information related to six contracts, totaling $92,800 for plumbing and construction services disclosed certain anomalies that raised questions about the validity of the bids and whether a competitive process was, in fact, used to select the winning bidder. We noted that three of the six contractors who purportedly submitted losing bids for these contracts were not in good standing with the State Department of Assessments and Taxation (SDAT) at the time some bids were submitted. In addition, three of the contractors (including two mentioned above) appeared to have connections to the winning contractor. For example, SDAT records indicated that the addresses for two of the contractors were in very close proximity to the address of the winning contractor or to the winning contractor’s relative. Furthermore, 9 of the 13 losing bids did not contain the bidder’s contact information (such as complete address or phone number) and the bid forms used by two of the contractors were similar in appearance. Finally, for one contract valued at $14,800, the bid price on the winning contractor’s bid was altered to decrease the amount by $1,200 after it was received by SHC—making it the lowest bid by a difference of $100.
Three procurements for electric distribution and emergency generator maintenance were artificially split and were awarded as six contracts, totaling approximately $72,500, in an apparent attempt to avoid either OPASS approval or eMaryland Marketplace bid solicitation requirements. Specifically, the first year and optional second year for the same service was split into two contracts instead of being combined into a single contract in accordance with State procurement regulations. For example, a two-year electrical distribution maintenance procurement for $36,660 was split into two annual contracts, each for $18,330.
Four procurements to obtain and deliver street light poles were questionable. Specifically, the related solicitations did not specify the number of street light poles needed. Rather, the solicitations were structured so that the bidder would specify how many street light poles could be supplied without exceeding a cost of $25,000, the dollar amount requiring OPASS approval. Four contracts totaling $96,100 were awarded during the period from September 2011 to October 2014 using this solicitation process and each contract resulted in fewer street light poles being provided than the original contract which was for 16 poles.
The management employee approved payments totaling $19,000 for electrical transformer repair work, but the related quote was only $12,500. SHC could not provide us with an explanation for the $6,500 difference.
The employee responsible for these questionable activities resigned in lieu of termination in June2015. We referred these matters to the Office of the Attorney General – Criminal Division.
According to State records, SHC paid the aforementioned contractor approximately $523,300 during the period from July 2011 to January 2015. This amount included payments related to these contracts totaling $434,750 and payments for additional maintenance related goods and services, in amounts less than $5,000, using the State’s corporate purchasing credit card totaling $88,550.
CORRUPTION and lack of oversight jeopardize $200,000 of taxpayer money
The Mass Transit Agency and Towson University had training programs that appear either hopelessly inept or downright corrupt. An employee, on his sole authority, gave a $200,000 contract to his wife’s business. Payment records, involving millions of dollars, over a 3 year time period were woefully inadequate It all came out in an audit. We suspect that such horrors exist elsewhere in state government as rumors of corruption in some departments and agencies have surfaced from time to time. Could it be that the state has far too much money to spend and so be so lax about waste?
The MarylandReporter.com, Wednesday, March 25, 2014, by Charlie Hayward
"The Prince George's County Public School System overpaid employees millions of dollars because of lax controls on payrolls and "sick-leave banks," according to one of many repeat findings by legislative auditors. The audit also found that hundreds of millions of dollars in equipment and expenses within the school system do not have proper oversight and safeguards."
Legislative Audit Finds numerous repeat problems at the Department of Human Resources
"In the last four years, the Department of Human Resources (DHR) overspent its budget by $27 million — and inadvertently masked its overruns with improper accounting adjustments, an audit of the department has revealed," by Charlie Hayward, Maryland Reporter, July 10, 2014.
DHR also failed:
Paid $13.7 million in legal bill without confirming that any work had been performed. (2012)
Failed to oversee $14 million in grants to charitable organizations.
Failed to perform site visits
Failed to obtain activity reports from the grantees in 113 out of 119 instances.
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