Blank Check: Spending Violations

District Dodges Spending Laws

By Dan Keating and David S. Fallis
Washington Post Staff Writers
Sunday, November 27, 2005

District officials routinely violate city spending laws, avoiding competitive bidding, masking purchases under unrelated contracts and paying vendors without contracts or legal authority, according to D.C. records.

Out of $2.5 billion in purchases last year, the city spent roughly $425 million in unauthorized payments and no-bid contracts, according to a Washington Post review of thousands of documents, including the database that lists every dollar spent by the city over the past five years. Studies of no-competition contracts elsewhere indicate that the city is overpaying by $50 million a year.

In one case, the city has given a start-up computer consulting company 146 no-bid contracts worth a total of $13 million since 2003. The company has grown to 54 employees and has new offices in Northwest Washington.

The examination found problems that go far beyond sloppy paperwork as employees skirt the laws designed to prevent waste and fraud. In making purchases from riot gear to consulting services, for example, employees repeatedly send lucrative contracts to favored companies and pay huge cost overruns without getting permission for the spending.

"We screwed up," said Anthony F. Pompa, head of accounting for Chief Financial Officer Natwar M. Gandhi, when he was shown hundreds of millions of dollars in unauthorized checks. "We shouldn't do those things. We're going to clean it up."

The violations enrich well-connected companies at the expense of fair and open competition. Officials at a health agency used a technology contract as an open account to hire favored consultants and cover more than $1 million in unrelated expenses. Lottery agency officials paid an extra $900,000 so they could hire a telecommunications company they wanted without any bidding. The cable television agency paid more than $200,000 in cost overruns for a new truck without any spending authority.

To get around the rules, officials exploit loopholes not used in other cities.

The District spent about $225 million last year, for example, through a back door that allows payments without any authorization, violating policies that require approval from procurement and other officials. Under city policy, such "direct voucher" payments should be only for court-ordered judgments, monthly utility bills and other payments that cannot be negotiated. But they are used for computers, consultants, capital projects, special education services and furniture, among other things. The improper use of the practice is growing and approaching 10 percent of city spending, records show.

Deputy Mayor Herbert R. Tillery, who took over the contracting department last fall, insisted in an interview that it is impossible to spend money without a contract.

"That can't happen," he said. "If you can identify who . . . we'll know who to put in jail."

When shown records of more than $400 million that had been spent recently without authorization, Tillery turned to his staff and asked for an explanation.

Gandhi said that the city's purchasing system has "profound" problems, leaving him no choice but to pay bills for which there are no contracts.

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