Government of the District of Columbia
Office of Contracting and Procurement
Testimony of
David P. Gragan
Chief Procurement Officer
Public Oversight Hearing On The Comprehensive Annual Financial Report (CAFR) Findings for the Department of Employment Services, the Office of Risk Management, the Office of Contracting and Procurement and Department of Human Resources
Councilmember Carol Schwartz, Chair
Committee on Workforce Development and Government Operations
May 28, 2008
1:00 PM
John A. Wilson Building
Room 500
1350 Pennsylvania Avenue, NW
Washington, DC 20001
OPENING STATEMENT OF DAVID P. GRAGAN ON THE COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR) FINDINGS FOR THE OFFICE OF CONTRACTING AND PROCUREMENT
INTRODUCTION
Chairperson Schwartz, Members of the Committee on Workforce Development and Government Operations and colleagues. I am David P. Gragan, Chief Procurement Officer (CPO) for the District of Columbia. Today, I am here to discuss the Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on the Audit of Financial Statements Performed in Accordance with Government Auditing Standards for fiscal year 2007, specifically issues as they pertain to contracting and procurement functions in the District of Columbia. A copy of my testimony will also be posted on OCP’s website.
From December through March of this year, CAFR auditors requested approximately 100 contracts and over 800 purchase orders from OCP for review. Broken down into eight (8) substantive areas, the audit highlighted issues central to the process of responsible and transparent contracting and procurement in the District.
The audit has exposed areas in need of improvement - not only within OCP, but within the overall District procurement process. This audit reinforced the need for improvements already initiated by OCP, that will effectively overhaul and upgrade contracting in the District.
Database Review
Currently, OCP employs several databases that work independent of the Procurement Automated Support System (PASS), which is our procurement system of record. In conjunction with the Office of the Chief Technology Officer, OCP will enhance the functionality of PASS during fiscal year 2009 by implementing the Contract Compliance and Sourcing modules. These new modules will not only render those independent applications obsolete by performing their functions, but they will also increase the accuracy of information and create a centralized tracking system. OCP will work with agencies that have independent contracting authority to ensure that we share the same systems when tracking procurement activities.
Approval Process
With regards to the approval process, OCP is very aware of the need to improve management controls, but it is important to clarify that this audit concern is primarily one of file management and not whether the agency received the required approvals. The documents identified as missing in this section of the report were part of the contract file package when it was sent to Council for approval. Unfortunately, in the past there was no system put in place to ensure that OCP also maintained a complete contract package, with all associated approvals and documentation. It was this oversight that contributed to the lack of documentation evidence findings reported by the auditor. In January, OCP launched a new system of quality assurance. Two members of my staff, who are responsible for reviewing the contract package prior to its transmittal to the Mayor, will now also be responsible for ensuring that OCP maintains a complete set of documentation in our files. This change is part of a bigger process to ensure that all our files are complete, accurate and in compliance with the contract file preparation guidelines.
Additionally, OCP will create a contracting and procurement certification program to ensure a uniform process of contract formation and approval in the District, the details of which I will discuss later.
Ratification Process
As of March 29, 2008 OCP is no longer routinely approving ratifications. We have and continue to educate agencies about avoiding ratifications and implementing tools like term contracts to obviate the need for ratifications. It is my hope and expectation that this issue will no longer be a problem in the future. I recognize that there are and will be circumstances where ratifications are necessary; however, I expect these to be very few.
Purchase Order Splitting and Competitive Small Purchases
The issuance of multiple purchase orders to the same vendor is not necessarily indicative of purchase-order splitting. However, part of the value of a central procurement organization, such as OCP, is its ability to recognize the need for established term contracts. The result: purchases are then made under an existing contract reflecting economies of scale in pricing. A need for stand-alone purchase orders to the same vendor no longer exists. Ultimately, the appearance of purchase-order splitting is significantly reduced.
Limited Competition Small Purchases
In the third quarter of fiscal year 2007, I issued a directive mandating that contracting officers obtain three quotes when conducting small purchases. Contracting personnel are now posting requests for quotes on the OCP website in a vendor portal. The request is posted for a minimum of three (3) days for procurements of $50,000 or more. Vendors will be able to view all requests and respond directly to the contracting officers. The quotes will be placed in the contract file. If the contracting officers cannot obtain three quotes, they are required to justify, in writing, their efforts to comply with the directive.
The contracting officers will work with their staff to ensure that the proper documentation is included in all contract files. This change allows for transparency and integrity in the contracting process as well as expands opportunities for competition. The Vendor Management unit in OCP will work with the local business community to increase outreach to foster greater competition by increasing vendor participation in contracting opportunities. Additionally, I have tailored support programs that benefit the Department of Mental Health and the Child and Family Services Agency in addressing this issue.
Maintenance of Files
OCP is aware of the issues that have plagued our contract filing and maintenance system for some time. We are completely overhauling our contract file maintenance system, and are taking the following actions:
- Updating our Contract File Preparation Guidelines - which provide the necessary guidance to contracting personnel for file management;
- Inventorying every file currently in the file room and verifying that it is complete;
- Consolidating all files in a single location;
- Enhancing the contract file location, identification, and organization process, for easy accessibility; and
- Advertising and elevating the position of File Clerk to File Control Officer.
I will have this new filing system in place by early fiscal year 2009. Once OCP improves its contract filing and maintenance system, I will share this technology and train other District agency procurement employees on the enhancement.
Other District of Columbia Municipal Regulations (DCMR) Issues
As CPO, it is my responsibility to ensure a transparent procurement process and appropriate management controls at all District agencies conducting contracting activities. In an effort to address cross-cutting procurement issues, I will conduct quarterly meetings and roundtable discussions among the contracting officers of District agencies subject to the Procurement Practices Act. I have already instituted a year-long series of mandatory training seminars for all contracting personnel, regardless of agency, to promote standardization and compliance with applicable statutory and regulatory requirements. Additionally I have instituted an annual Contracting Officer Technical Representative Refresher, which is mandatory for all agency COTRs.
One of my goals as the CPO of the District of Columbia is to create a certification program for all contracting specialists and employees to ensure compliance with procedures, rules, regulations and directives for performing contracting functions in the District. This program will set expectations and eliminate inconsistencies in contracting and procurement. We are currently assessing our training curriculum and researching accreditation as an option. There are other jurisdictions in the country that have similar programs (Texas and Georgia) and we have contacted these jurisdictions to absorb their expertise on the subject. I expect to have this program operational in fiscal year 2009.
Conclusion
As you know I believe external and objective reviews including audits and inspections are invaluable in improving the procurement process. I am invigorated by this challenge, and I look forward to working with you and the Council and with District agencies as we strive to make permanent and sensible reforms to our procurement process. I am happy to address your questions.