Should Elected Officials Make Consultant Selection Decisions?

Consultant and service contractor selection decisions are typically made by evaluation committees that review proposals or statements of qualifications submitted by firms.  Evaluation committees rate the submissions based on established evaluation criteria.

Question:  What role, if any, should elected officials play in making the final decision of what firm should be selected?

Louisiana's Unusual Practice:  In one of Louisiana's largest counties (called parishes), the selection decision is made by the elected members of the Jefferson Parish Council, who often overrule the evaluation and recommendation of the committee.  In fact, the Parish Council typically defers the decision "to the councilmember in whose district the contracted service will be performed," rather than making decisions based on established evaluation criteria. 

Politicized Process:  This process politicizes the consultant selection decision, raises a host of ethical concerns, and appears to result in a "pay to play" situation in which campaign contributors are awarded contracts.

Critical Report Published:  This controversial process has recently come under criticism.  In May 2012, a private, non-profit and independent research organization published a report evaluating the Parish's selection practices: "Private Services in the Public Interest: Reforming Jefferson Parish's Unusual Approach to Service Contracting."  In investigating Jefferson Parish's consultant selection practices, the Bureau of Governmental Research contacted me to provide input and comments on best practices.

Report Available Online:  The 14 page report by the Bureau of Governmental Research is available online by clicking here.

Executive Summary:  The following is the Executive Summary from the report that does a good job of highlighting the main issues addressed in the report (the headings below are mine to make it more readable):

Abnormal Process:  Jefferson Parish's contracting process for professional and other services stands far apart from norms and best practices.

Legislative Branch Power to Select:  To begin with, it places the power to select contractors with the Parish Council instead of the executive branch.  This approach is abnormal for a government with an elected executive.  It creates a misalignment between powers and responsibilities.  While the responsibility for delivering services and infrastructure rests with the executive branch, the power to select the contractors who carry out much of that work rests with the legislative branch.

Unfettered Council Discretion in Selections:  The misalignment of powers, while problematic, is not the most troubling aspect of the Parish's contracting process.  The most serious flaw is the Parish Council's nearly unfettered discretion in the selection of contractors.  The Parish Council is free to ignore the work and recommendations of the evaluation committees and make its own selections.

Selections Driven by Personal Political Relationships:  This degree of discretion would be troubling on its own, but the problem is grossly exacerbated by the practice of deferring to the councilmember in whose district the contracted service will be performed.  The result is an idiosyncratic process that some perceive to be driven more by personal political relationships than by what makes the most sense for taxpayers. 

Selection Should be Based on Evaluation Criteria:  There is no reason for giving any elected official - whether it be a council member or the chief executive - such expansive power over contractor selection.  Best practices indicate that governments should select the firm that performs best on an evaluation committee's scoring of relevant criteria.

Additional Information:   The following news articles describe the situation in more detail including the negative response to the report from the Jefferson Parish Council.

• Jefferson Parish's contracting desperately needs reform, watchdog says, by Richard Rainey, The Times-Picayune, May 10, 2012

• Curb pay to play in Jefferson Parish's contracting: An editorial, The Times-Picayune, May 14, 2012

Mike Purdy's Public Contracting Blog 

© 2012 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

Free Webinars on MRSC's Rosters for Construction and Consulting

Many public agencies solicit bids and proposals from contractors and consultants on rosters, rather than advertising each project separately.  When and whether to use rosters is generally a matter of either state or local laws.

MRSC Rosters:  The Municipal Research and Services Center (MRSC) announced that it will offer three free webinars describing how its small public works and consultant rosters operate.

When:  The webinars will be held from 10:00 a.m. to 11:00 a.m. on the following dates:

• October 4, 2011 (Tuesday)
• October 20, 2011 (Thursday)
• October 26, 2011 (Wednesday)

Information and Registration:  For more information and to register for attending one of the free webinars, visit MRSC's website.

Other Cooperative Rosters:  In the State of Washington, www.eCityGov.net also maintains a cooperative roster with participation by a variety of public agencies.  There are also some rosters that are cooperative efforts between a couple of public agencies located near one another.

Mike Purdy's Public Contracting Blog 

© 2011 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

4 Topics in 1 Bill

Senate Bill 5519 was recently introduced in the Washington State Legislature.  It's a curious bill that addresses multiple topics.

Contractor Reporting of Off-Site, Prefabricated Items:  One of the amendments proposed would make difficult-to-understand changes in the recently enacted reporting requirements of RCW 39.04.370 regarding the use of off-site, prefabricated, nonstandard, project specific items produced outside of the State of Washington for a public works project.

Shift from Labor and Industries to Awarding Agencies:  The following chart summarizes the key changes from the current requirements to the proposed requirements.  The general thrust of this section of the bill is to make awarding agencies and not the Department of Labor and Industries responsible for the reporting requirements.  

The information about the use of off-site, prefabricated, nonstandard, project specific items would be reported to awarding agencies (not L&I), awarding agencies would somehow be responsible for ensuring the Affidavit of Wages Paid form included a request for this information, and awarding agencies (not L&I) would be responsible for reporting the information to the Capital Projects Advisory Review Board (CPARB). 

Action	Current Requirement	Proposed Requirement
Contractors report information on use of prefabricated items	To L&I on the Affidavit of Wages Paid form	To the awarding agency
Include on the Affidavit of Wages Paid form requests for the required data	L&I responsible for taking this action	Awarding agency responsible for taking this action
Transmit information to CPARB	L&I	Awarding agency

It doesn't really make any sense for awarding agencies to pick up these duties when the reporting tool has already been established by the Department of Labor and Industries, and when the bill still requires the use of the Affidavit of Wages Paid.

Other features of SB 5519 include the following:

• State Agency Purchases from Correctional Industries:  For institutions of higher education, the bill would shift from the requirement to establish specific goals for using correctional industries to a requirement to "endeavor to purchase any goods or services produced in part or in whole from correctional industries when quality, service, and delivery will meet institutional needs and result in the best value for expenditure of state and institutional dollars." (RCW 28B.10.029)

• Relaxed Personal Service Contract Competition Threshold :  For state agencies subject to requirements for the use of personal service contracts, the bill would change the threshold for when evidence of competition is required from $5,000 to $20,000.  Under the current law (RCW 39.29), evidence of informal competition is required for personal service contracts of $5,000 to less than $20,000.

• Repeal of State Purchase Thresholds Inflationary Adjustment:  RCW 43.19.1906, which is applicable to state agencies, establishes certain dollar thresholds and provides that the Office of Financial Management should adjust those thresholds based on inflation.  SB 5519 would repeal the provision regarding OFM adjustment of the thresholds.

Mike Purdy's Public Contracting Blog 

© 2011 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

Seattle Schools Permit Performance of Work Prior to Contract Approval

The Washington State Auditor's Office recently issued an audit finding that the Seattle School District permitted work to be performed on a number of personal service contracts prior to execution of the contracts, in violation of the District's policies and procedures.  The audit also found instances where the District actually paid consultants for services prior to approval of the contracts.

Issue Unresolved Since Last Year:  According to the audit report, "this issue was brought to the District's attention in last year's audit.  It has not be resolved."

Response by School District:  This District concurred with the finding and "will continue to emphasize the importance of compliance with contracting requirements and will implement a specific set of consequences for non-compliance."

Audit Report:  To read the details of the audit report, click here, and go to page 22 of the report.

Lessons Learned:  Auditors will hold public agencies accountable not only for applicable laws and grant requirements, but for compliance with the agency's own policies and procedures.  It's a good idea to conduct a pre-audit on an annual basis of your agency's compliance with applicable laws, regulations, and policies.  Please contact me if you would like assistance in reviewing your agency's compliance with various contracting and procurement standards.

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.

Veteran-owned Business Legislation Marching Forward

A bill introduced in the Washington State Legislature has been approved by a vote of 48 to zero in the State Senate.  Engrossed Senate Bill (ESB 5041) would affect state agencies in the award of contracts to veteran-owned businesses.  

Under the legislation, "state agencies are encouraged to award three percent of all procurement contracts that are exempt from competitive bidding requirements under RCW 43.19.1906 (2)" to businesses to be certified by the Department of Veterans Affairs as being at least 51% owned and controlled by veterans or active or reserve members of the U.S. military.   

RCW 43.19.1906 (2) addresses competitive exemption requirements for the purchase of goods and supplies.  State agencies would also be required to perform outreach to veteran-owned businesses to increase contracting opportunities for them. 

The 3% goal would would also presumably apply to public works and personal service contracts, although from my reading the bill is not clearly drafted.  When including public works and personal service contracts, it refers back to the requirements of RCW 43.19.1906 (2) which appear to only apply to goods and supplies.

A hearing has been scheduled before the House Committee on State Government and Tribal Affairs for February 18, 2010 at 8:00 a.m.

Did DC Councilman Break Ethics Rules by Awarding a Contract to his Girlfriend?

The District of Columbia City Council has authorized an independent investigation into whether DC Councilman and former mayor Marion Barry violated ethics requirements by awarding a $15,000 personal services contract to his girlfriend, Donna Watts-Brighthaup. She was paid to develop "poverty reduction strategies."

Visit the Washington Post to read more about the investigation.

Regardless of whether Barry is found to have technically violated any ethics requirements, there is, at a minimum, an appearance of an ethical breach. When it comes to public officials awarding contracts, it is important that they avoid even the appearance of a conflict of interest. Nevertheless, it's surprising how many cases like this come up.

In Seattle, in 2008, Councilmember Richard McIver was slapped with an ethics fine for awarding a contract to a friend who also regularly made her Virgin Islands condo available for McIver's use. Click here to read my previous blog entry on this Seattle case.

To help educate public agencies about ethical issues in contracting, I've developed and taught a training session on "The Ethics of Public Contracting: Integrity, Transparency, and Appearances." Here are the ten key questions addressed in this interactive training class:

1. How should you make ethical decisions?
2. Why do we having public bidding?
3. What ethics laws and standards apply?
4. What's so important about appearances?
5. What are the 4 risks of ethical lapses?
6. What gifts can I accept?
7. What situations pose a conflict of interest?
8. What are the ethics of contract administration?
9. How do I manage the ethics of internal politics?
10. What trends in public contracting affect ethics?

Please contact me if you are interested in discussing this important training for your agency.

Small Business Preference Legislation

HB 1830 would establish definitions for three different types of small businesses and then permit public agencies using the Limited Public Works process (less than $35,000) under the Small Works Roster law (RCW 39.04.155) to "solicit and award small works roster contracts to small businesses, minibusinesses, and microbusinesses."

The legislation would amend what was passed in 2007 permitting agencies to solicit and award these contracts to "registered contractors with gross revenues under one million dollars annually as reported on their federal tax return."

In its place would be three new categories of businesses: small, mini, and micro that each have definitions under the bill. For each of the three types of businesses, they must be a "business entity, including a sole proprietorship, corporation, partnership, or other legal entity, that is owned and operated independent from all other businesses."

They differ based on the annual gross revenues permitted, all as reported on the federal tax return or Department of Revenue return of the business.

• A microbusiness would have gross revenue of less than $1 million annually.
• A minibusiness would have gross revenue of less than $3 million but more than $1 million annually.
• A small business would have gross revenue of less than $7 million annually.

The bill also would add these three business type definitions to RCW 39.29.006, the definitions section of the Personal Services Contracts section of the law that is applicable to state agencies. But there are no provisions in the bill for applying these definitions in the application of Personal Services Contracts.

For public agencies with bid limits of less than $35,000 (the amount for using the Limited Public Works process and therefore applying these proposed definitions), the bill may have limited value as most of the public work under $35,000 may be performed with in house forces or not through the Limited Public Works process.

Personal Services Contracting Manual for Ports Published

The Municipal Research and Services Center (MRSC) has published its Personal Services Contracting Manual for Ports.

In 2008, the Washington State Legislature adopted Chapter 53.19 RCW imposing personal service contracting requirements on all port districts. The legislation requires that ports entering into or amending personal service contracts after January 1, 2010 follow policies adopted by their commission, which must be based on the guidelines included in the Manual.

The Personal Services Contracting Manual for Ports is available by clicking on MRSC's website, or may be ordered as a hard copy from MRSC.

I was one of the editors of the Manual, reviewing and commenting on various drafts before it was finalized.