COLUMBUS (TDB) -- State contracts are already receiving heightened scrutiny under Democratic Gov. Ted Strickland's administration, especially those for major deals that do not go through standard competitive bidding or selection processes. Spending on set-aside programs for minorities and women also are being looked at closely. A memo issued earlier this month by Ohio Budget Director Pari Sabety told agency fiscal officers that the entire spending approval process is being tightened and more questions will be asked about who gets state business.
On Jan. 22, Sabety stopped $147 million in spending requests from reaching the Controlling Board. The state's top beancounter didn't throw a penalty flag to stop the action, but she did use the NFL replay words "further review" in her memo. Agencies wanted approval for $210 million, but Sabety allowed just $63 million.
But the real news is that there is a crackdown under way on "waivers of competitive selection" -- govspeak for contracts that are granted without bids or competition between vendors. She laid down the law in her memorandum.
"There will be increased scrutiny of waivers of competitive selection, Buy Ohio outreach, Minority Business Enterprises and Women Owned Minority Business Enterprises. Agencies can expected to be questioned if they routinely use [the] Controlling Board to disregard biennial budget limits or request increases in appropriation authority. Exceptional and unusual contract terms, such as up front lump sum payments for future services to be rendered, will also be reviewed with special attention," Sabety wrote.
In 2003, the Cleveland think-tank Policy Matters Ohio raised serious questions about the state's contracting policies in a report written by analyst Zach Schiller, who found that waivers of competitive selection were rampant. (Full Disclosure: Schiller was a Plain Dealer colleague, although he worked on the business desk and I was on the news side. Prior to that, when he was the Cleveland Bureau Chief for Business Week magazine, he hired me as a stringer to cover various matters in SW Ohio.).
Schiller's Policy Matters Ohio report said that sometimes there were good reasons to waive bidding because the contractor used may have gone through a bidding process with another contractor "or the product may only be available from one vendor." Still, he was critical:
"With dozens of contracts approved last year, however, it is unclear whether they were competitively bid or not. The result: Millions or dollars in state spending without proper accountability.,"
He noted that some approvals of competitive waivers "strain the imagination" -- including a $450,000 increase in a contract with a Washington, D.C. firm to write the details in how to cut the state Medicaid program. "The firm will be paid more than $300 an hour, more than double the usual state rate," the Policy Matters Ohio analyst reported, adding that it was ironic the fee was so high because the job was to help eliminate health insurance for 50,000 low-income Ohioans.
Sabety's action to ask questions and tighten the spending process is an overdue move. She said she wants to maximize the ''efficient use of state resources."
Her memo can be viewed by clicking here.
A capsule of the Policy Matters Ohio report is found in this Gongwer update from a few years back.