District Dodges Spending Laws

"I am really shocked, very disappointed, that you have an administration that aligns itself with some of this nonsense," she said. "It certainly doesn't protect our resources."

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Spending without contracts or authority through direct vouchers is so ingrained across agencies that the city is customizing its new $80 million computerized financial management system to allow it as standard practice. For others who bought the same software, including several states, large banks and universities, the program is specifically designed -- similar to a safety on a gun -- to prevent unauthorized spending. The District paid to have that safety removed.

Larry Daniels, director of the District's accounting managers, said the city added the direct-spending shortcut "because the District does our business in our own way."

City agencies have used that method 58 times in the past five years to pay Professional Products Inc. of Gaithersburg, a company that consults regularly for the District. When the city's cable television office, which carries the mayor's and D.C. Council's activities, wanted to buy a satellite transmission truck, it did not seek competitive bids but instead turned to the Gaithersburg company. To justify the no-bid contract, city buyer Kevin A. Green said in a memo that his research proved that the company's proposed price of $900,000 was fair.

The bill came in at $991,910, and the agency paid it. Later, the company sent an additional invoice for $219,000.

In a 2002 memo, the cable office's Director of Operations Robin M. Yeldell said the agency would pay the bill with a direct voucher. And despite laws requiring D.C. Council approval for purchases of more than $1 million, city officials did not seek permission from the council when the truck's cost rose above that figure.

In the next year, the city gave two more equipment contracts -- again without competition -- to Professional Products, at a total cost of $2.8 million.

The cost of the truck went up when the company recommended additional equipment, said its president, Bruce Kaufman. He said his company's expertise and longstanding relationship with the city led to the no-bid contracts.

"D.C. has been a very good client," Kaufman said. "D.C. has been a very aggressive technology city."

In the past two years, the city has paid consulting firm Deloitte & Touche $9.4 million under a contract to track children under the watch of the Child and Family Services Agency. When the firm sent an additional $1.8 million in bills for costs that ran over the contract figure, the city paid through direct vouchers.

Deloras A. Shepherd, associate chief financial officer at the agency, said in an interview "it shouldn't be" paid with direct vouchers, but they are commonly used. She said Deloitte & Touche was paid entirely through the vouchers until a few years ago, when she insisted a contract be written.

A Deloitte spokesman said the company did not want to comment on the contract costs.