DENVER – Several city agencies have improved how they track, assess, and monitor noncompetitive contracts and their contract procurement processes. However, the Mayor’s Office has not completed work to require all necessary disclosures of conflicts of interest and political contributions in the contracting process, according to a follow-up report from Denver Auditor Timothy M. O’Brien, CPA.
“We need strong transparency and accountability in the contracting process to assure taxpayers we’re using their dollars appropriately,” Auditor O’Brien said. “I hope the Mayor’s Office will make it a priority to catch up with other city agencies when it comes to addressing these issues.”
Our 2019 audit of contract procurement processes found weaknesses in the city’s policies and procedures to avoid conflicts of interest, political favoritism, and inadequate documentation of how the city’s vendors are selected.
Since then, the Department of Transportation & Infrastructure and the Department of Public Health & Environment have each implemented or partially implemented all recommendations regarding monitoring and tracking justifications for certain contracting decisions for on-call contracts and noncompetitive contracts, protecting confidentiality, and analyzing contract data. The Department of Parks & Recreation implemented three recommendations but failed to implement one related to data analysis.
“Improved transparency for contracts worth millions of dollars is a win for the people of Denver,” Auditor O’Brien said. “These new steps will help shed light on when the city could do more to encourage competition for city contracts and support more local businesses.”
On the other hand, the Mayor’s Office has not implemented most of our recommendations to help avoid political favoritism or conflicts of interest.
On one hand, in 2020, the Mayor’s Office successfully updated Executive Order 8, which allows all city agencies to procure their own contracts for services. In the revised order, the Mayor’s Office added a requirement to have a selection panel for all formal bids. According to the order, all selection panel members must sign a conflict-of-interest disclosure form. The three departments addressed in the audit also each developed procedures for conflicts of interest.
“While this is a step in the right direction for transparency and accountability, the Mayor’s Office has still not required the same level of transparency for all bidders on contracts,” Auditor O’Brien said.
In fact, when the Mayor’s Office revised Executive Order 8, city leaders failed to include language requiring agencies to review political contribution disclosures during the evaluation process. Noncompetitive bidders are required to submit disclosures, but there is no evidence that agencies are actively evaluating those forms during the contracting process.
Further, our audit team recommended that the Mayor’s Office should sponsor a change to city ordinance to require political contribution disclosures for competitive contracts, which is already required for noncompetitive bids. Mayor’s Office staff told our team they had drafted a document to address disclosures for competitive bids that is still awaiting review, but they did not provide this draft document.
Our audit team also recommended that the Mayor’s Office should sponsor an ordinance change to require disclosures for expenditure contract amendments that add more than one year to the term of a contract but it has not done so.
Because these areas were not implemented, there are outstanding risks that continue to be more difficult for the city to detect and deter political influence in expenditure contract amendments, which lowers transparency and accountability.
Without ordinance changes and policies and procedures that protect the integrity of the bid process, transparency to the public can be diminished and agency staff may lack clear and consistent understanding of required regulations.
“Disclosures of conflicts of interest or political contributions should be a routine submission and the city should make sure these disclosures are considered in the contracting process,” Auditor O’Brien said. “These disclosures will carry little weight if the city isn’t evaluating them to ensure fairness and transparency in the entire bid process.”
The audit team did identify several areas of successful improvement regarding justifications for noncompetitive procurements and for contracts longer than three years.
The Department of Transportation & Infrastructure created policies and procedures for making selections when there is only one bid for a contract. This includes adding a requirement for documentation of the reasons that may have led to the single response, such as whether the bid was overly restrictive, and a determination of why only one bid was received. The department is also developing policies and procedures for making selections from all types of on-call pools.
Parks & Recreation and Public Health also created policies and procedures to address noncompetitive procurement, documentation of approvals and reference checks, solicitations yielding only one response, protests, and nonresponsive items.
The Auditor’s Office released two other follow-up reports this month: a follow-up on the 2019 “Preserving Affordable Housing for Denver Residents” report and a follow-up on the 2019 “Workday Post Implementation Assessment” report.