New State Agency Violates Contracting Laws

An audit by the Washington State Auditor's Office found a number of violations of laws by the Puget Sound Partnership related to sole source contracts, convenience contracts, information technology purchases, and goods and services.

The Puget Sound Partnership is a new State of Washington agency created in 2007 to restore Puget Sound.  

Highlights of some of the findings in the 16 page audit report include the following:

• Sole Source:  Failure to advertise an intent to award a $33,300 sole source contract.  The state law threshold for such advertisement is $20,000.

• Payment of More Than Contract Amount:  Award of a $19,950 sole source contract to a law firm that was amended three times, increasing the total amount to $35,000.  The Puget Sound Partnership ended up paying $51,498, even though the contract was not amended to that amount.  The agency was also required to obtain approval from the State Attorney General's Office to use outside legal counsel, something that did not occur.

• Lack of Competition for Roster Work:  After advertising and awarding 35 convenience consultant contracts, the agency did not consistently seek competition from the firms on the roster before awarding actual work.  Work assigned was not equitably distributed to firms on the roster, nor did all firms on the roster have the chance to compete for specific work.

• No Competition on Purchases and Gifting of Public Funds:  The agency did not competitively procure various promotional items that were given to staff members, as well as elected and appointed officials.  Giving away such items violates state law on recognition awards.  They also spent almost $2,500 on catering for a private reception in violation of state law.

 Click here to read the complete report.

Payment Prohibited for Work Not Completed

Public agencies in the State of Washington are prohibited by the State Constitution from making payments to contractors, consultants, vendors, or any other party for work that has not actually been completed, or for goods and services not actually received.

The Washington State Constitution prohibits the lending of the public’s credit. Article VIII, Section 5 (Credit not to be loaned) states the following: “The credit of the state shall not, in any manner be given or loaned to, or in aid of, any individual, association, company or corporation.” Paying early for work not performed would clearly fall under this prohibition in the Constitution.

In addition, counties, cities, districts or other municipal corporations or political subdivisions are also governed by the provisions of RCW 42.24.080. This law requires that all claims for payment made to the public agency must be audited by the agency for appropriateness and the public agency must certify that:

“the materials have been furnished, the services rendered, the labor performed as described, or that any advance payment is due and payable pursuant to a contract or is available as an option for full or partial fulfillment of a contractual obligation, and that the claim is a just, due and unpaid obligation against the municipal corporation or political subdivision.”

Public agencies should ensure that staff who are charged with reviewing invoices for approval understand their obligations to not authorize payment if the obligations of the contractor, consultant, or vendor have not actually been met.

It is important to verify that obligations have been met before authorizing payment because it is the law, and also because it makes good business sense. Once you’ve paid a contractor, consultant, or vendor without them fulfilling their obligations, you loose your leverage to ensure that they comply with the terms of their contract with your public agency.