Report Faults City Controls On Contracting

The District lacks clear rules for the $1.8 billion it spends annually and violates the rules it does have on the books, according to a report released yesterday by the Government Accountability Office.

The report criticized the city's practice of spending without a contract, saying that officials spent $217 million in 2004 through this method, called "direct voucher," which circumvents rules by "bypassing the procurement process." The GAO, Congress's watchdog agency, said employees who evade purchasing laws should be held accountable if their actions were illegal.

Rep. Thomas M. Davis III (R-Va.) requested the GAO review in December 2005 in response to a series of stories in The Washington Post on problems in city spending practices, including $225 million paid annually without contracts and an additional $200 million spent through no-bid deals.

"This is a scathing report that should serve as a wake-up call," Davis said in a statement. "The report makes clear that D.C. procurement is fatally flawed, both in its structure and execution."

Mayor Adrian M. Fenty (D) said yesterday that he intends to hire a strong contracting director to fix the problem.

"Essentially, the government agrees with the report," he said. "Procurement is broken. . . . We need to stop the loopholes that people are going around in procurement."

The federal assessment was the fourth highly critical assessment of city spending practices released in the past few months, joining reports by a city emergency contracting task force, the District inspector general and the outside firm that performs the city's annual audit.

The GAO recommended closing a loophole approved in 2002 by the D.C. Council that greatly expanded use of no-bid contracts, allowing them anytime a company agrees to charge according to a published schedule of prices. The Post series reported that a start-up technology consulting firm had received 146 no-bid contracts worth $13 million from 2003 through 2005 under the loophole.

The report also urged the city to give its contract chief more authority. The agency counted five chiefs in 10 years, with none lasting more than three years. Not since September 2004 has the city had a chief procurement officer with the experience required by law. The GAO, echoing earlier studies, said that the quality of contracting has suffered without a chief.

That chief should oversee purchasing for all city agencies, the report said. Currently, the public schools, the Child and Family Services Agency and the chief financial officer have their own purchasing offices.

The report also said that D.C. contracting officers lack professional experience and training. It noted that the city does not have an integrated computer system for purchasing. The District has spent $80 million on a new financial-management computer system, but a dispute between the contracting office and technology office over who should pay an additional $2 million has stalled installation of the purchasing component.

The GAO report includes a six-page letter from D.C. Chief Financial Officer Natwar M. Gandhi, who said he "takes very strong exception to the tone, language and details" of the findings on direct payments. He said the practice is not uncommon in other cities.

Staff writer David Nakamura contributed to this report.