District of Columbia: Procurement System Needs Major Reform
Published: 2007-01-19T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: To improve acquisition outcomes, in 1997 the District established the Office of Contracting and Procurement under the direction of a newly created chief procurement officer (CPO). Since then, the District's inspector general and auditor have identified improper contracting practices. This report examines whether the District's procurement system is based on procurement law and management and oversight practices that incorporate generally accepted key principles to protect against fraud, waste, and abuse. GAO's work is based on a review of generally accepted key principles identified by federal, state, and local procurement laws, regulations, and guidance. GAO also reviewed District audit reports and discussed issues with current and former District officials as well as select state and local officials.
section_title: What GAO Found
paragraphs: The District's procurement law generally does not apply to all District entities nor does it provide authority to the CPO to effectively carry out and oversee the full scope of procurement responsibilities across all agencies. A lack of uniformity in its procurement law and the CPO's limited authority not only undermines transparency, accountability, and competition but also increases the risk of preferential treatment for certain vendors and ultimately drives up costs. The current law exempts certain entities and procurements from following the law's competition and other requirements, and according to current and former District procurement officials, there is a push to expand independent procurement authority--a move that would reverse action taken by the District a decade ago. Other provisions of current law further erode competition. Notably, the law provides broad authority for sole source contracting and establishes high-dollar thresholds for small purchases, which are generally not subject to full and open competition. Also, in implementing the law, sufficient management oversight is lacking to ensure employees do not make unauthorized commitments. The District has been challenged to effectively manage and oversee its procurement function, due in large part to the low-level position of the procurement office in the governmental structure, the rapid turnover of CPOs, and multiple players having authority to award contracts and affect contract decisions. At the same time, the District does not have the basic tools that contracting and agency staff and financial managers need to effectively manage and oversee procurements--including a procurement manual, a professional development program, and an integrated procurement data system. In summary, the District's procurement system does not incorporate a number of generally accepted key principles and practices for protecting taxpayer resources from fraud, waste, and abuse. Specifically, the District lacks a comprehensive procurement law that applies to all District entities over which the CPO has sole procurement authority and promotes competition; an organizational alignment that empowers its procurement leadership; an adequately trained acquisition and contracting workforce; and the technology and tools to help managers and staff make well-informed acquisition decisions. To better ensure every dollar of its more than $1.8 billion procurement investment is well spent, it is critical that the District have a procurement system grounded in a law that promotes transparency, accountability, and competition, and helps to ensure effective management and oversight and sustained leadership. High-level attention and commitment from multiple stakeholders--including Congress--are needed if the District's procurement law is to provide the right structure and authority and if procurement reforms are to succeed.

section_title: Letter
paragraphs: Information from the District of Columbia’s lead contracting office and  other sources indicate that in fiscal year 2005, more than $1.8 billion— almost 22 percent of the city’s $8.2 billion budget—was spent on  procurement. To maintain public trust and fulfill public policy objectives,  an effective procurement system should provide timely acquisition of the  right goods and services while efficiently addressing agency needs and  obtaining the best value for taxpayer dollars. The success of any public  procurement system is rooted in law and policies with appropriate internal  controls, which if adhered to through effective management and oversight,  promote transparency, accountability, competition, and ultimately protect  resources from fraud, waste, and abuse.
The District’s history of procurement problems—which include poor  planning, excessive use of sole source contracts, and unauthorized  personnel committing government resources—is well documented.  Contracts have suffered from poorly defined requirements, noncompliance  with procurement rules, and avoidance of competition. Almost 10 years  ago in an effort to improve its procurement outcomes and promote  oversight and accountability, the District amended its procurement law— the Procurement Practices Act of 1985. A key component of the  amendment was the establishment of the Office of Contracting and  Procurement to centralize the District’s acquisition function under the  direction of a newly created chief procurement officer (CPO). Since then,  the District’s inspector general’s and auditor’s offices as well as numerous  press reports continue to identify improper contracting practices across  various District entities.
Given these circumstances, you asked us to assess the District’s  procurement system. Specifically, we examined the extent to which the  District’s (1) procurement law incorporates generally accepted key  principles that promote transparency, accountability, and competition and  (2) procurement system reflects sound management and oversight  practices. Our assessment also addresses recent actions the District has  taken to address persistent procurement challenges.
To conduct our work, we reviewed the relevant District procurement laws  and regulations, and compared them with generally accepted key public  procurement principles and best practices from a variety of sources,  including the National Association of State Procurement Officials  (NASPO), the American Bar Association (ABA) model procurement code,  the Federal Acquisition Regulation (FAR) as well as our prior work on  effective procurement practices. To obtain perspectives from others on  the District’s past and current procurement management challenges, we  reviewed various studies with recommendations that led up to the 1997  reorganization to establish the Office of Contracting and Procurement  headed by a CPO as well as selected District inspector general and auditor  reports since 2004. We interviewed current and former procurement,  executive, financial management, and auditing officials in the District to  discuss organizational, management, and policy challenges; procurement  reform; and related issues. We also spoke with state government  procurement leaders of NASPO about sound public procurement  principles and practices regarding public procurement and their views on  issues we raised about the District’s system. In addition, we visited  Atlanta, Baltimore, and New York City to interview city procurement  officials about their views on issues we raised concerning the District’s  system and to learn about related challenges they have faced and their  responses to these challenges. Appendix I presents our scope and  methodology in more detail. We conducted our work between February  and October 2006 in accordance with generally accepted government  auditing standards.
subsections: section_title: Background
paragraphs: For fiscal year 2005, the District’s Office of Contracting and  Procurement—its lead contracting office—reported conducting over  20,000 transactions valued at $1.2 billion on behalf of 55 District entities,  five of which accounted for $596 million (see table 1 for the departments,  agencies, and other entities reporting procurements through this office).  Over two-thirds of the District’s procurement dollars managed through the  lead contracting office was spent on professional and public safety  services, human care, and road and highway construction. In addition,  some District entities, including the Board of Education for District of  Columbia Public Schools and the Department of Mental Health, procure  independently of the lead contracting office. According to information  available from District sources, these entities spent over $600 million in  fiscal year 2005.
The District also has special requirements related to being the seat of the  federal government. The fiscal relationship between the federal  government and the District as well as city governance have been  perennial questions for Congress, and the District’s local autonomy has  evolved significantly in the last 30 years. In 1973, Congress enacted the  District of Columbia Self-Government and Governmental Reorganization  Act or Home Rule Act, which established the structural framework of the  current District government. The Home Rule Act allowed for an elected  Mayor and a council with certain delegated legislative powers. However,  Congress explicitly reserved legislative authority over the District. The  Home Rule Act generally provides a framework and processes for  Congress to enact, amend, or repeal any act with respect to the District.   Congress used this authority in the 1990s to enact laws intended to restore  the city to financial solvency and improve its management in response to a  serious financial and management crisis. Since the 1870s, the federal  government has made financial contributions to the District’s operations.   In fiscal year 2006, federal government appropriations included $603  million in special federal payments to the District with $75 million for  elementary, secondary, and post-secondary education initiatives.
subsections: section_title: Amendment to the District’s Procurement Law Aimed at Addressing Reported Challenges
paragraphs: In 1997, the council, with the Mayor’s approval, amended the District’s  procurement law to centralize procurement under one contracting office,  which would be the exclusive contracting authority for all procurements  covered under the act. The amendment also authorized the Office of  Contracting and Procurement to be headed by a CPO who would be  appointed by the Mayor for a 5-year term, with the advice and consent of  the council, and could only be removed from office for cause. The CPO  was required to have no less than 7 years of procurement experience in  federal, state, or local procurement. The CPO, by delegation of the Mayor,  was given the exclusive contracting authority for all procurements  covered under the law.
The amendment was enacted around the same time that various  procurement studies were published, with one describing procurement in  the District as “in crisis”—as evidenced by over 600 contracts expiring in  90 days and a rushed response to ensure that vital services were not  interrupted. The studies reported that procurement processing was  inconsistent and responsibilities were widely distributed across the  District; training for procurement personnel was insufficient and few were  professionally certified; agencies maintained separate databases; and there  was no acquisition planning process to define needs. Centralization under  the CPO’s office was expected to improve the quality of the District’s  procurement operations by promoting accountability, decreasing  procurement costs, eliminating duplication of effort, and increasing  financial control and performance. In particular, it was reported that  centralization of the acquisition function could allow the District to spend  money more effectively by promoting more competition and through bulk  purchases of goods and services used by multiple agencies.
Despite the expected benefits, the District’s inspector general’s and  auditor’s offices continued to identify deficiencies across the District’s  procurement system that frequently produce negative impacts on the  integrity and operations of the District. Moreover, for the past 5 years, the  inspector general’s annual reports have cited procurement as a significant  area of concern due to lapses in contracting operations resulting in costly  inefficiencies, fraud, waste, and abuse. Some of the persistent problems  reported by District auditors and inspectors include the following—many  of which are similar to those that prompted the 1997 law:    Outdated procurement law and regulations that fail to effectively  address long-standing procurement deficiencies, policies, and  procedures for all aspects of the process specifically in the areas of  solicitation, awarding, and monitoring of contracts.
Lack of continuity in procurement law, policies, and procedures as  applied to some agencies.
Noncompliance with procurement law and regulations, and lax  accountability over individuals for not complying with the District’s  guidelines.
Ineffective competition and overuse and misuse of sole-source contract  awards.
Unauthorized commitments and purchases by District personnel from  vendors without valid written contracts.
Failure to conduct advanced planning for known projects and  procurement requirements that lead to costly sole-source acquisitions  often based on faulty justifications.
Insufficient independent oversight of agencies that expend significant  resources for information technology, construction, and  communication projects.
Managers not ensuring a sufficient number of experienced  procurement personnel, proper training, and certification of  procurement workforce.
section_title: Characteristics of an Effective Public Procurement System
paragraphs: The objective of a public procurement system is to deliver on a timely  basis the best value product or service to the customer, while maintaining  the public’s trust and fulfilling public policy goals. The federal government  achieves this through guiding principles established in the FAR.  NASPO  and the ABA model procurement code have also established key guiding  principles and practices that are generally accepted and should be  incorporated into an effective procurement system. In addition, our work  has identified best practices and other accepted elements that are  essential for an efficient and accountable acquisition function. Key  characteristics of a successful procurement system include:  Transparency—Comprehensive procurement law with clear and written  policies and procedures that are understood by all sources.
Accountability—Clear lines of procurement responsibility, authority, and  oversight. State and local governments recommend the CPO have full- time, sole, and direct responsibility for the procurement program.
Integrity—Public confidence earned by avoiding any conflict of interest,  maintaining impartiality, avoiding preferential treatment for any group or  individual, and dealing fairly and in good faith with all parties.
Competition—Specifications that do not favor a single source and  solicitations widely publicized to benefit from the efficiencies of the  commercial marketplace.
Organizational Alignment and Leadership—Appropriate placement of the  acquisition function in the organization to cut across traditional  organizational boundaries with stakeholders having clearly defined roles  and responsibilities. For state and local governments to operate  effectively, recommended practice is central leadership in the executive  branch.
Human capital management—Competent workforce responsive to mission  requirements, with continued review and training to improve individual  and system performance.
Knowledge and information management—Technologies and tools that  help managers and staff make well-informed acquisitions decisions.
section_title: The District’s Procurement Law Does Not Promote Transparency, Accountability, and Competition
paragraphs: The District lacks a uniform procurement law that applies to all District   entities and that provides the CPO with adequate authority and  responsibility for the entire acquisition function—an essential component  to promoting transparency, accountability, and competition. In addition,  the law has been amended to exempt certain District entities and  procurements from following the law’s competition and other  requirements. According to current and former District procurement  officials, District entities are seeking to expand independent procurement  authority—a move that would undermine attempts to establish a central  authority. Finally, the law limits competition by broadening the exceptions  under which sole-source contracts can be awarded; authorizing dollar  thresholds for small purchases that are higher than those provided for in  other city and federal government procurement regulations, including the  FAR; requiring the use of a local supply schedule with limited vendors for  a variety of goods and services; and encourages agencies under certain  circumstances to bypass contracting rules to directly pay vendors without  valid written contracts. In contrast, other cities’ procurement laws  emphasize the competitive process and having a strong centralized  authority for their CPOs in order to safeguard the integrity of their  procurement systems.
subsections: section_title: District Lacks a Procurement Law That Applies to All Entities and Provides Clear Authority to the CPO
paragraphs: Contrary to sound procurement principles and practices as identified by a  variety of sources, the District lacks a uniform procurement law that  uniformly applies to all District entities and provides clear authority to the  CPO. To promote transparency, accountability, and maintain integrity of  public procurement, NASPO and the ABA model procurement code for  state and local governments describe concepts for creating a uniform   procurement law that provides for central management of the entire  procurement system and broad discretion and authority to a CPO to  implement policies. Similarly, in the federal procurement system, the FAR  establishes uniform policies and procedures for acquisition by most  executive agencies under the President. Without such a foundation, the  District’s procurement system is vulnerable to poor acquisition outcomes  and less capable of maintaining public trust.
Twelve District entities, including the Water and Sewer Authority and  Housing Authority, are not under the authority of both the District’s  procurement law and Office of Contracting and Procurement, and are  allowed to follow their own procurement rules and regulations. In many  cases, the procurement law specifically exempts these entities from  following the law, which is contrary to the central statutory purpose of the  District’s procurement law to (1) eliminate overlapping or duplication of  procurement activities; (2) improve the understanding of procurement  laws and policies by organizations and individuals doing business with the  District government; and (3) promote the development of uniform  procurement procedures governmentwide. As a result, the District’s law  has created a procurement environment where some entities follow  different rules and practices, undermining the District’s ability to capture  an overall view of its procurements as well as placing an added burden on  vendors to understand how to do business with the District.
According to NASPO, it is essential to have one uniform law that applies to  all agencies and their procurements and exclude blanket exemptions for  any executive agency or department. If exclusions are necessary, the law  should define them narrowly by types of goods and services procured.  NASPO state procurement leaders we spoke with said that they would be  unable to effectively run their own procurement systems without one  governing law. Without it, vendors are discouraged from competing since  they do not know what rules apply, which increases the risk that taxpayers  pay more for goods and services. According to several former and current  CPOs in the District, not having a uniform procurement law that governs  all entities has been problematic in ensuring transparency, accountability,  and oversight. Officials from other cities we reviewed agreed that having a  common procurement framework is critical for ensuring transparency and  integrity in the procurement system. Atlanta, for example, has one  procurement law that governs all agencies, which allows agencies,  vendors, and contracting employees to have a clear and consistent view of  how procurements should take place.
The law also fails to provide a service agency that would be the exclusive  contracting agency for all District procurements under the Mayor’s  direction. NASPO calls for a centralized procurement official with the  authority and responsibility to, at a minimum, develop standardized policy  and procedure, delegate procurement authority to executive agencies,  provide expert assistance and guidance on procurement issues, and  oversee the acquisition process. While the statutory purpose of the 1996  amendment to the procurement law was to centralize procurement in the  Office of Contracting and Procurement headed by a CPO, the law does not  give the CPO sole authority over the full spectrum of procurement  activities in the District. For example, although the law allows the CPO to  delegate procurement authority to employees of District entities covered  under the law and to the CPO’s own staff in the Office of Contracting and  Procurement, the council, with the Mayor’s approval, has used its  authority to pass emergency laws exempting entities and procurement  actions from the CPO’s authority.
The council’s use of its emergency act authority has been problematic in  certain cases where it exempted District entities from conducting their  procurements through the CPO’s office. For example, in October 2006, the  council amended the procurement law to provide the District’s Board of  Library Trustees procurement authority independent of the Office of  Contracting and Procurement and the District’s procurement   law—contingent upon the board issuing its own procurement  regulations—except for provisions pertaining to contract protests,  appeals, and claims. A senior official in the Office of Contracting and  Procurement said that circumventing the CPO’s authority in this case was  not a solution largely because the library board trustees do not have the  contracting experience or staff to exercise the new authority. NASPO  recognizes that to ensure the appropriate level of transparency and  accountability and to preserve the integrity of the procurement system, it  is critical that the CPO have sole responsibility for delegating procurement  authority.
According to the District’s current and former CPOs, agencies and the  council are pushing to expand independent procurement authority  through exemptions. These efforts, if successful, could further undermine  efforts to establish a central authority—a key objective of the procurement  law amendment more than a decade ago. NASPO state procurement  leaders as well as current and former CPOs in the District told us that this  is a move in the wrong direction and that amendments to the procurement  law should only be made to introduce more effective procurement  methods or when current laws no longer make sense.
In addition to authorizing agencies to award their contracts independently  of the CPO, the council has eliminated the CPO’s sole authority to debar or  suspend contractors from future contracts for various reasons, such as  conviction of certain offenses. In 2003, the council eliminated this  authority after the then-CPO debarred one vendor who pleaded guilty in  federal court to conspiracy in giving cash bribes to District public works  officials in return for falsified orders for asphalt-delivery. Prior to this  time, the procurement law gave the CPO sole authority for suspensions  and debarments. According to both a former CPO and a current senior  procurement official who were involved in this case, the procurement law  was amended to establish an interagency suspension and debarment panel  that reconsidered the CPO’s decision in this case as well as made final  decisions in all future cases. After the panel’s reconsideration, the vendor  was allowed to resume doing business with the District. To ensure a  strong, central procurement system, NASPO recommends that CPOs have  sole authority to implement a range of remedies for poor vendor  performance, including suspension and debarment.
section_title: Other Exemptions in the Law Further Undermine Transparency and CPO Authority
paragraphs: The council, with approval from the Mayor, has further amended the law  to exempt temporarily or permanently certain agencies from following the  procurement law’s requirements for competition or conducting their  contracts through the CPO. For example, in June 2006, the council  exempted the Director of the Department of Health from following the  competition and other requirements of the procurement law and allowed  the Director to select and contract with a vendor for an air quality study of  the Lamond-Riggs park within 30 days. In another case, in June 2006, the  council, with the Mayor’s approval, exempted the Office of Contracting  and Procurement from following its procurement law for awarding a  construction contract on behalf of the Department of Youth Rehabilitation  Services for a youth center at Oak Hill. A senior District procurement  official told us that despite this exemption, the office intends to award  competitively.
According to senior procurement officials in the CPO’s office, entities seek  exemptions believing that working through the CPO or the competitive  process required by the law takes too much time. Current and former  District officials noted that in giving some entities their own temporary  procurement authority through exemptions in the law, the council and  Mayor have, in effect, created a culture of resistance to centralized  management and oversight of the acquisition function. One senior District  procurement official told us that such exemptions also create inequities  among agencies; explicitly discourage competition—contrary to the  statutory purpose of the law; and occasionally show preferences for  certain agencies and vendors. A former District executive and former CPO  told us that such exemptions have over time distorted the procurement  law and made it difficult for any vendor interested in doing business with  the District to understand how and to whom the procurement law applies.  Further, it is questionable why the council would use emergency act  authority to make noncompetitive awards given that the procurement law  and implementing regulation already establish procedures for these types  of procurements.
NASPO state procurement officials we spoke with voiced concerns over  exemptions that would give certain agencies the authority to operate  under their own rules or no rules at all and jeopardize the integrity of their  public procurement system. Moreover, they said that such exemptions  further undermine the CPO’s authority over the District’s procurement  system and ability to develop consistent procurement policy. Other cities  we reviewed have faced similar challenges with what they called “political  influence” in the procurement process. New York’s CPO told us the city  council plays no role in making procurement policy and under no  circumstances would the council be allowed to pass exemptions to the  city’s procurement law similar to those passed in the District.
section_title: Other Provisions in the District’s Procurement Law Create Barriers to Competition
paragraphs: Long-standing procurement principles, policies, and procedures  implemented in the FAR and recommended by NASPO and the ABA  model procurement code recognize that maximizing the use of  competition ensures governments receive the best value in terms of price  and quality. According to a procurement law expert who participated in a  GAO forum on federal acquisition challenges and opportunities,  contractor motivation to excel is greatest when private companies, driven  by a profit motive, compete head to head in seeking to obtain work.  Consistent with this fundamental principle, the District’s procurement law  mandates that full and open competition is the preferred acquisition  method. However, certain provisions in the District’s procurement law  have resulted in a public procurement system that emphasizes flexibility  and speed over competition. Specifically, the law (1) authorizes sole-  source contracting under broad provisions, (2) establishes higher dollar  thresholds for limited competition small purchases than are allowed in  other cities or the FAR, and (3) mandates the use of a local supply  schedule with a limited number of vendors—each of which permits use of  streamlined acquisition methods for high dollar procurements that result  in limited or no competition.
subsections: section_title: Broad Authority for Sole- Source Contracting
paragraphs: Both NASPO and the FAR recognize that circumstances sometimes make  it difficult or impossible to conduct formal competitive procurements and  that in such cases, the use of sole-source procurements is warranted.  However, NASPO and the FAR also recognize that such procurements  should only be permitted under narrowly defined conditions and should  always be properly justified. They state that to ensure transparency in  these types of procurements, the law should also require legal notice of  intent to initiate a sole-source procurement over a determined dollar  value. While recognizing there are situations in which competition must  and should be limited, NASPO states that artificially restricting  competition when competition is possible defeats a central tenet of public  procurement.
Rather than restrict the conditions under which sole-source procurements  can occur, the District’s procurement law has been amended—as recently  as 2002—to expand exceptions to full and open competition. Although  complete data District-wide on sole-source contracting are unavailable,  over 14 percent—or $173 million—of the fiscal year 2005 reported  procurement spending through the Office of Contracting and Procurement  was on a sole-source basis. Of the District’s various sole-source provisions,  three account for the majority of sole-source contracts and spending (see  table 2). Of the three provisions, one is similar to an equivalent provision  in the FAR, while the remaining two provisions have no equivalent.  Senior  procurement officials and former CPOs pointed out that these provisions  in the procurement law establish a wide range of circumstances to bypass  competition.
Over 40 percent of the District’s fiscal year 2005 sole-source contracts  were awarded under provision (a)(1), which similar to an equivalent FAR  provision, requires agencies to justify that there is only one available  source for a good or service. Of the 296 contract awards under this  provision, 45 percent were made by the Office of the Chief Technology  Officer (OCTO) for a variety of information technology and  telecommunication services. According to NASPO officials we spoke with,  typically more than one vendor in the commercial marketplace provides  these services and the services would normally be competed. In 2005, the  District’s inspector general reported on questionable single available  source justifications involving information technology services.  According to the inspector general, there were numerous competing firms  that could have satisfied the District’s needs for eight selected single  available sole-source contracts they reviewed. For three sole-source  contracts for general purpose commercial information technology  equipment, software, and service, the inspector general found that there  were 700 vendors eligible to compete through the District’s supplier  database and another 113 vendors located in the District eligible to  compete through the federal supply schedules. Overall, the inspector  general concluded that the District could have potentially saved at least  $589,000—over 24 percent—of the $2.5 million for the sole-source  contracts awarded.
More than half of the fiscal year 2005 sole-source contracts were awarded  through the (a) ( 3) and (a) (3A) provisions, which permit agencies to  award sole-source contracts to any vendor who agrees to charge  according to a schedule of prices for federal agencies. Unlike the District’s  single available source provision, these provisions have no equivalent in  the FAR or NASPO and ABA procurement guidance for state and local  governments. According to a senior District procurement official, these  two procurement law provisions were intended to save time in the  District’s procurement process by piggybacking off the prices previously  set as a result of the prior competition—primarily contracts awarded to  District and other vendors under the General Services Administration’s  (GSA) multiple award schedule (MAS) program. The use of sole-source  provisions as a time-saving measure appears to conflict with the District’s  own procurement regulations, which calls for contracting officers to avoid  sole-source procurements except where necessary.
GAO’s work has also found that while MAS has provided the federal  government with a more flexible way to buy commercial items and  services, contract negotiators do not always use the full range of tools to  ensure the government effectively negotiated prices. As a result, the  federal government has missed opportunities to save millions of dollars in  procuring goods and services. By eliminating competition altogether and  awarding sole-source contracts to vendors based on MAS pricing, the  District may be similarly missing significant cost-saving opportunities.  Moreover, the District may be at greater risk because its sole-source use of  the federal supply schedule is not subject to the FAR, and the District’s  implementing procurement regulation does not provide specific guidance  on the use of the (a)(3) and (a)(3A) provisions. A senior procurement  official we spoke with noted that the CPO’s office recently started  requiring District contract officers to additionally justify their use of these  methods after growing concerned about the large number of sole source  contracts being awarded.
To ensure they get the best value for the taxpayer dollar, other cities we  reviewed have taken steps to emphasize competition over sole source.  These officials recommended that a procurement law—similar to statutes  implemented in the FAR—narrowly define sole-source contracting and  require that such actions be properly justified and documented. For  example, in Atlanta, sole-source contracts may only be awarded when the  CPO determines after conducting a good-faith, due diligence review of  available sources that there is only one available source for the required  good or service. Even for emergencies, Atlanta’s procurement law requires  the CPO to use competition to the maximum extent practicable, and sole  source may only be considered in the case of a threat to public health,  welfare, or safety. According to Atlanta’s CPO, in fiscal year 2005, only five  sole-source contracts were awarded. Similarly, New York’s procurement  rules specify only one condition or circumstance in which sole-source  contracting is permitted for purchases above $5,000; there is only a single  available source and competition is not possible.
section_title: High Dollar Thresholds for Limited Competition Small Purchases
paragraphs: For purchases under a certain dollar threshold, the administrative costs to  formally compete may outweigh the benefits of competition. In such cases,  procurement systems may permit streamlined acquisition procedures with  limited competition for purchases not exceeding a specified dollar  threshold.  In the District, small purchase procedures streamline the  process by limiting competition to oral or written price quotes from only a  few vendors, or eliminating competition altogether (see table 3).
For the District, a series of legislative changes since 1985—when the small  dollar threshold for small purchases was $10,000—have increasingly  raised the threshold for some entities, expanding the opportunities to limit  competition.  Currently, the District’s small purchase threshold is $500,000  for OCTO and the Metropolitan Police Department and $100,000 for all  other entities. The District’s small purchase authority allows for  somewhat larger limited competitive purchases than that authorized in the  FAR. Under the FAR’s micro-purchase authority, competition is not  required for purchases up to $3,000 when the contacting officer  determines that the price is reasonable. For small purchases between  $3,001 and $100,000, the FAR’s simplified acquisition procedures require  that the contracting officer promote competition to the maximum extent  practicable. Generally, the contracting officer should consider obtaining at  least three price quotes or offers from sources within the local area and  evaluating those to determine the most advantageous to the government.  Under the District’s small purchase authority, competition is not required  for purchases up to $10,000 when the contracting officer determines that  the purchase is in the best interest of the District. Moreover, contracting  officers in the District are allowed to waive the competitive small  purchase procedures under broad circumstances—such as time  constraints and lack of available sources—when it is impractical to obtain  the required number of quotes.
In fiscal year 2005, over 75 percent of the District’s procurements through  the Office of Contracting Procurement were for small purchases totaling  $163 million. However, small purchase procurements could increase in the  future. According to one senior District procurement official, there is a  move to increase the small purchase threshold from $100,000 to $500,000  for all agencies—a limit five times as high as that prescribed in the FAR.  State and city procurement officials voiced concern that the District would  consider this change in an effort to expedite procurements by allowing  limited competition methods.  NASPO state procurement officials we  interviewed were surprised at how high the District’s small purchase  thresholds were set, and viewed this as one of the procurement law’s  major barriers to competition. Each of these officials said that they  consider such amounts to be large purchases, particularly at the $500,000  level. As one senior procurement official in the District put it, “just about  anything can be considered a small purchase in the District.”
Other cities we reviewed see the economic and quality benefits of  competition when larger procurements are involved, such as those the  District considers small purchases. In Atlanta, for example, the small  purchase threshold is $20,000 and New York, which spends over   $11 billion per year on procurement, only recently increased its small  purchase threshold to $100,000. According to the Atlanta CPO, raising  small purchase limits across the board ultimately compromises the  integrity of the procurement system by reducing transparency over  procurement decisions and source selection. One District official  remarked that, if these types of changes continue in their current  direction, the District will no longer have a recognizable procurement  system.
section_title: Reliance on Local Supply Schedule
paragraphs: The District of Columbia Supply Schedule (DCSS) program also limits  competition by restricting the pool of vendors for a variety of goods and  services to local companies; requiring entities to use the schedule as a first  source for all procurements $100,000 and below; and allowing limited  competition for purchases over $100,000—to a ceiling as high as  $10 million for certain services. At the same time, there is no mechanism  in place to ensure that the incumbent vendor does not receive all DCSS  contracts for a particular schedule. NASPO has recognized that balancing  the need to promote socioeconomic goals with the need to ensure  maximum competition is an ongoing challenge. However, NASPO  recommends caution in the use of supply schedule programs, such as the  DCSS, because while there is the presumption of best value, competition  among vendors is often limited with no incentive to offer best price.
The DCSS program was established in 2002 to help achieve the District’s  local and small and disadvantaged requirement established in its  procurement law and expand the District’s tax base. According to a former  District executive, the DCSS program was also intended to expedite  agencies’ small purchases of common and routine items for which  competition would not be practical, such as office and janitorial supplies.  The current program is the primary vehicle for supporting the District’s  small, local, and disadvantaged business enterprises (LSDBE) and requires  that District entities use DCSS small business entities to make purchases  of $100,000 and below. This mandatory use of the DCSS ultimately limits  the pool of vendors for a number of goods and services, which for some of  the schedules is fewer than three vendors. Though it may appear similar to  GSA’s MAS program of federal supply schedule contracts, the DCSS serves  a different purpose. Under the FAR, the purpose of the GSA supply  schedules program is to provide federal agencies with a simplified process  for obtaining commercial supplies and services at prices associated with  volume buying. The FAR provides extensive guidance on the use of the  schedules to achieve that purpose. In contrast, the DCSS is designed to  promote LSDBEs and lacks the type of comprehensive guidance provided  to the federal supply schedules by the FAR.
According to NASPO, unlimited use of supply schedules limits competition  and can increase costs because vendors have no incentive to meet the best  price of their competitors.  Further, open-ended contracts for the same  goods or services are awarded to many more vendors than needs appear  to demand, removing any consideration of need and price from the  purchasing decision. In fiscal year 2006, reported contract awards off of  the DCSS—which contains 19 categories of goods and services with nearly  200 local vendors—totaled almost $22 million (see table 4).
Some DCSS contracts are valued much higher than $100,000, including  some fiscal year 2006 awards to DCSS vendors valued at $1 million and  one award for $5 million. Moreover, in 2006, the CPO’s office raised the  contract ceilings for individual DCSS vendors on several of these  schedules including the information technology services schedule, which  is now set at $10 million. As a result, one DCSS information technology  vendor could in 1 year potentially receive a single limited competition  order worth up to $10 million. NASPO officials we spoke with voiced  concern about the ease with which the District makes what they would  consider large limited competition purchases off a supply schedule  originally intended to limit competition only for small purchases.
In addition, District procurement officials told us that the DCSS program  has limited guidance and no procedure in place to ensure that each vendor  is provided a fair opportunity to be considered for orders. Under DCSS  terms and conditions, contracting officers must follow small purchase  procedures as described in table 3 when buying a good or service off  DCSS. However, these officials said that it is up to the contracting officer  to arbitrarily select three vendors from each schedule to obtain price  quotes; according to District procurement officials, this typically includes  the incumbent. For the 14 schedules that have more than three vendors,  this discretion could prove unfair to certain vendors. The FAR, in contrast,  advises contracting officers to request quotations or offers from two  sources not included in the previous solicitation. According to District  procurement officials, there is currently no requirement to monitor the use  of the schedule to determine whether it is promoting small businesses  overall or if a pattern of sole-source contracts to the same businesses is  occurring. They told us this type of information would be beneficial to  evaluating the effectiveness of the program and that an overall assessment  of the current program may be needed to determine if it is meeting its  original intent.
section_title: The District’s Law Allows Payments for Unauthorized Commitments to Vendors
paragraphs: To safeguard the obligation of taxpayer dollars and protect the integrity of  a public procurement system, a government’s procurement law should  grant exclusive authority to contracting officers for establishing contracts  and restrict employees from making unauthorized commitments for goods  and services. It should also grant the CPO the authority to ratify contracts  and authorize payments for goods and services received without a valid  written contract if certain conditions are met. Until recently, the District’s  procurement law appeared to emphasize these standards. Under  September 1996 CFO guidance, direct voucher payments without having  been first obligated in the District’s financial management system could  only be made in 21 specific non-procurement related circumstances—all  of which were reasonable and included situations where the payees could  not be determined in advance, such as court ordered fines, workers’  compensation, jury duty fees, and medical payments for assault crime  victims. However, in 2006, the council, with the Mayor’s approval,  amended the procurement law that increased the circumstances under  which such payments may be made.
Changing the policy may have had the unintended consequence of  focusing agency personnel attention on the process of paying for  unauthorized commitments rather than focusing on how to get  management attention on preventing employees from entering into  authorized commitments.  According to financial management officials, in  2005, the District’s CFO office reviewed over 21,000 direct voucher  payments totaling $556 million made in fiscal year 2004. They stated that  the purpose of the review was in part to determine to what extent these  direct voucher payments resulted from unauthorized commitments by  District agencies for goods and services. The analysis confirmed that of  the vouchers reviewed, over 11,000 totaling $217 million were not in  compliance with 21 allowed uses under the 1996 CFO policy. Rather than  take steps to hold agencies accountable for these violations, the CFO’s  policy was changed without consulting the CPO’s office on the merits of  the change. CFO officials told us their office determined it was necessary  to accommodate agency circumstances for bypassing the procurement  process to more promptly obtain goods and services needed for critical  operations.
Under Financial Management and Control Order No. 05-002, issued July  22, 2005, and revised October 17, 2005, the CFO added 7 new  circumstances for direct voucher payments to the 21 already included in  the 1996 financial guidance. Five of the seven added circumstances were  for new non-procurement related transactions, such as temporary welfare  payments to families and certain lawsuit settlement payments. The  remaining two are for procurement-related transactions, however, and are  problematic.  The first circumstance—which allows direct voucher  payments for goods and services needed for an unanticipated and  nonrecurring extraordinary emergency—duplicates provisions in the  District’s procurement law that establish procedures for handling such  circumstances under emergency contracting procedures. A senior District  procurement official said that direct voucher payments should not be  made for emergency procurements. The second circumstance allows  agencies to make direct voucher payments for liabilities incurred through  unauthorized commitments to vendors for goods and services without  valid contracts after payment has been ratified—a practice that could  further encourage employees to bypass established contracting  procedures.
The District’s inspector general has voiced a similar concern with this  change and in December 2005 testimony called for a reexamination of the  CFO’s 2005 policy for allowing direct voucher payments for unauthorized  vendor commitments that bypass contracting rules. More recently, the  inspector general reported that in fiscal year 2005, District agencies greatly  increased payment ratification requests for unauthorized vendor  commitments and the procurement office ratified $34 million in  payments.
In the federal procurement system under FAR Part 1.6, the policy provides   procedures for ratification actions to approve unauthorized commitments,  but also states that these procedures may not be used in a manner that  encourages such commitments be made by government personnel.  Moreover, the FAR provides a ratification procedure that not only  discourages unauthorized commitments, but allows for their approval if  certain conditions are met. Specifically, under the FAR, the chief of a  contracting office may ratify an unauthorized commitment only when the  goods or services have been accepted; the ratifying official has the  authority; the contract would have been proper if done by approved  personnel; the price is reasonable; the contracting officer recommends  payment; the funds were and are available; and the ratification complies  with any additional agency regulations.  In addition, the FAR states that  cases of nonratifiable commitments may be subject to further referral and  resolution under government claim procedures.
Allowing government agency personnel to circumvent the normal  procurement process and enter into unauthorized commitments with  vendors to perform services or deliver goods eliminates the opportunity  for competition.  After reviewing a draft of this report, CFO officials  acknowledged the need to work with the Office of Contracting and  Procurement to strengthen the District’s ratification policy.  They  indicated that unauthorized commitments that cannot be ratified should  be referred for possible Anti-Deficiency Act violations. Accordingly, we  revised our recommendations to the mayor and the CFO concerning the  use of direct vouchers and the ratification process.
Other cities we reviewed have taken steps to curb the use of unauthorized  commitments. For example, New York’s CPO described the city’s stringent  controls and regular monitoring to detect and publicize agencies’  unauthorized commitments with vendors as well as its discipline of  employees for bypassing contracting rules—steps that have greatly  decreased the number of unauthorized commitments in that city’s  procurement system.
section_title: The District’s Procurement System Does Not Reflect Sound Management and Oversight Practices
paragraphs: In addition to generally lacking a uniform procurement law that applies to  all entities, promotes competition, and provides the CPO the authority to  ensure sound procurement outcomes, the District’s management and  oversight of its procurements have lacked the rigor needed to protect  against fraud, waste, and abuse. Specifically, the Office of Contracting and  Procurement is positioned too low within the District’s executive  governmental structure to enforce agency compliance with policies and  procedures, effectively coordinate procurement activities and acquisition  planning, and sustain leadership. At the same time, the District’s  contracting managers and staff, agency heads and program personnel, and  other key procurement stakeholders do not have the basic tools for  ensuring sound acquisition outcomes, including written guidance on the  District’s procurement policies and procedures, a professional  development program and certification requirements for contracting staff,  and an integrated procurement data system. Although the District and  Congress have taken actions to address management and oversight  challenges, many remain largely unaddressed.
subsections: section_title: Low-Level Position of the Office of Contracting and Procurement Undermines Management and Oversight
paragraphs: The low-level placement of the Office of Contracting and Procurement  undermines the office’s ability to effectively manage and oversee the  District’s procurements across dozens of agencies and departments.  NASPO and GAO have stated that the central procurement office’s  effectiveness is clearly linked to its location in the government structure  and that placing the office at a high level is critical to ensuring effective  direction, coordination, and control over a government’s procurement  spending. Procurement is viewed as a strategic, service function within the  executive branch with the central procurement authority being a key  policy and management resource for the chief executive. The low-level  placement of the District’s procurement office has led to high CPO  turnover and a lack of sustained leadership, significantly impeding  progress expected from the 1996 law.
Within the District’s government structure, the Office of Contracting and  Procurement is placed under the Deputy Mayor for Operations— essentially relegating procurement to an administrative and operations  support function—as further evidenced by its position in relation to those  agencies that procure through this office (see fig. 1).
According to former CPOs and current procurement officials, the low-level  position denies the CPO direct access to the city administrator, agency  heads, and deputy Mayors other than the Deputy Mayor of Operations. As  a result, this limits the CPO’s ability to affect budget, program, and  financial management decisions. A former District official told us that to  improve management and oversight of the procurement system, the CPO  needs to be at all executive meetings to raise procurement issues that cut  across agency lines. This official told us that it would be helpful to elevate  the CPO’s office to a high level similar to other centralized cross- government functions, such as the Office of the Chief Technology Officer,  which is responsible for all meeting all of the District’s information  technology needs.
The low-level position of the CPO’s office in the District’s governmental  structure has also undercut the CPO’s ability to influence day-to-day  procurements across the District. According to several senior District  procurement officials, agencies often bypass the procurement office and  do not consult the CPO’s designated contracting officer when initiating  procurements—a practice that has led to unfavorable acquisition  outcomes. For example, the District’s auditor reported in 2005 that the  offices of the Mayor and city administrator failed to involve the CPO’s  office and violated contracting rules by entering into unauthorized  commitments with a vendor for international trade mission services  without a valid written contract, making the commitment invalid.  Ultimately, the CPO’s office was left to ratify a transaction that did not  conform to the procurement law or regulations.
One impact of CPO’s low-level placement is manifested in the inability of  the CPO to ensure effective acquisition planning—a critical process for  anticipating future needs, devising contracting programs to meet these  needs, and arranging for the acquisition to promote competition and use of  necessary resources. CPOs from the other cities we reviewed consider  acquisition planning as critical to managing the procurement system and  maximizing competition, and have put in place mechanisms and tools to  regularly address planning. In Atlanta, for example, the CPO requires his  contracting staff to meet bi-weekly with agency officials to plan for  expiring contracts and new requirements. Agencies are also required to  submit a quarterly report to the CPO detailing their procurement needs. In  New York, agencies awarding contracts must submit a draft plan detailing  anticipated procurement actions. They are also required to hold public  hearings on their plan within 20 days of its issuance and provide notice of  the hearings 10 days in advance.
While the District has a process in place to facilitate acquisition planning  across agencies, the CPO lacks the ability to hold agencies accountable for  submitting accurate and timely plans. According to former CPOs and  current senior procurement officials, District entities in general do not  understand the importance of acquisition planning or involving the CPO’s  office in planning efforts. Consequently, agencies largely view the required  annual plans as a paper drill. In recent years, the CPO’s office has tried to  improve acquisition planning across the procurement system without  much success. For example, in 2000 the then-CPO implemented a new  acquisition planning tool that was aimed at guaranteeing short turnaround  for small and simple buys and sharing workload with partner agencies on  larger, more complex buys. Though this was the original intent, CPO  contracting officers we spoke with do not use the plans to schedule  procurement support activities for their agencies. Our analysis of selected  contracts conducted by the CPO’s office in 2005 for three agencies against  procurements listed in their 2005 acquisition plans found none of the  contracts were recorded in the planning tool. conduct advanced planning for known projects, services, and procurement requirements  ultimately manifests in costly internally generated emergency contracts and purchases.” A  senior District procurement official agreed and stated that the lack of  planning does not constitute an emergency, but all too often the lack of  planning occurs and forces emergency-type procurement actions.
Finally, sustaining procurement leadership has been difficult due to the  low-level position of the CPO’s office. Former CPOs agreed that in a  complex and large-scale procurement system such as the District’s, it is  essential to have sustained leadership and a CPO with executive-level  procurement experience and qualifications. However, over the past 10  years, the District has had five CPOs—three appointed for 5-year terms  and two interim—and none served more than 3 years. According to each of  the three CPOs appointed to 5-year terms, the inability to effectively  coordinate acquisition activities across all agencies and manage and  oversee the District’s procurement function undermined their efforts at  reform and ultimately discouraged them from completing their tenures.  The lack of sustained leadership is underscored by the 2-year vacancy in  the District’s CPO position since September 2004, at which time the  Deputy Mayor for Operations became the interim CPO. With no  procurement experience—contrary to the District’s law requiring at least   7 years of procurement experience—this official acknowledged that it has  been challenging to assume the extra responsibilities of the CPO position.
The cities we reviewed have recognized the importance of elevating the  central procurement office in the governmental structure as necessary for  sound procurement management and oversight. For example, in 2003,  Atlanta recognized that the centralized acquisition function headed by a  senior procurement director was buried in the structure and took steps to  elevate this office with a newly appointed CPO to report through its chief  operating officer to the Mayor. According to Atlanta’s CPO, the office now  has a seat at the table with the necessary authority to control and direct  procurement across all agencies, and to have the Mayor reinforce the  CPO’s role in managing the city’s council and agencies.
section_title: The District Lacks Other Tools for Effective Procurement Management and Oversight
paragraphs: The District lacks other basic tools to effectively manage and oversee its  procurement system. Specifically, the city lacks (1) a procurement manual  with clear standardized policies and procedures to guide procurement and  agency staff; (2) certification requirements for procurement staff and  training for agency staff so that both workforces have the necessary skills  and knowledge to fulfill their responsibilities; and (3) an integrated  procurement data system that can provide complete, accurate, and timely  information to inform acquisition decisions and management. Other cities  we reviewed recognize the benefit of having these tools as a way to  effectively manage and oversee their procurement systems.
subsections: section_title: The District Lacks a Procurement Manual to Guide Staff
paragraphs: Despite repeated recommendations since 1997 to develop a procurement  policy and procedures manual, the District has yet to do so. Procurement  is a complex process guided by numerous policies, documentation  requirements, and procedures. A comprehensive manual—one that lays  out in one place these policies and rules and standardized procedures and  practices—is critical to ensuring procurement and agency staff have a  clear and consistent understanding of contracting rules and processes. An  internal study by the CPO’s office in 2004 found that in the absence of such  guidance, there was a lack of consistency in how the District’s  procurement work is done. This inconsistency creates frustration within  and outside the government as well as an impression that the District’s  procurement actions are unfair.
Each of the other cities we reviewed have developed and implemented a  basic procurement manual for strengthening management, accountability,  and transparency in their procurement systems. In Atlanta, for example,  when the new CPO was appointed in 2003, he found a comprehensive  procurement manual was key and immediately took steps to update the  manual, which had not been done in 7 years.
section_title: The District Lacks Professional Certifications for Procurement Staff
paragraphs: According to former CPOs and current senior procurement officials, the  District has not committed to developing a professional acquisition  workforce For example, the CPO’s office has not fully developed  professional certification requirements. Although the CPO is not required  to develop such requirements, this would ensure staff have the  qualifications and skills to carry out the responsibilities commensurate  with their delegated contracting authorities. A former District executive  told us that the CPO’s office should deliver regular training to agency  managers and staff on procurement rules and procedures as well as  develop metrics to ensure that agency staff participate in the training and  obtain the necessary knowledge for fulfilling their responsibilities in the  procurement process.
One former CPO referred to his staff as an “accidental” procurement  workforce because some had previously been administrative staff and few  had any contracting background. In 2005, the CPO’s office conducted a  skills and training assessment and determined that the current  procurement and contracting staff required training on fundamental  processes, such as source selection, contract negotiation, and contract  administration.  The CPO’s fiscal year 2006 budget added $668,400  earmarked for procurement training, and the interim CPO developed a  program to train the District procurement staff on basic contracting  concepts. While the 2006 training program appears to have addressed  some of the immediate contracting skill gaps identified in the 2005  assessment, this one-time effort, in our view, does not address the CPO  office’s need for longer-term investments in training. Unlike in the federal  government, this program is not linked to a certification process or  continuing education necessary for maintaining individual employee’s  contracting authorities. In the absence of a comprehensive training and  certification program, the CPO delegates contracting authority to  procurement staff based on his perceptions of individual skill and  experience.
NASPO emphasizes the importance of professional development and not  only recommends that executive branch officials and the central  procurement office encourage professional competence by providing  funding for training, but endorse professional certification of staff. Several  public procurement organizations, including the National Institute for  Government Purchasing, have developed certification programs to ensure  procurement staff has attained a prescribed level of qualification.  Procurement officials in other cities we reviewed also view training and  certification of the procurement staff as critical to the success of their  procurement system. For example, New York’s CPO office established a  Procurement Training Institute in 2000 and requirements for staff training,  including certifications and continuing education minimums.
section_title: The District’s Integrated Procurement Data System Has Yet to Be Fully Implemented
paragraphs: The District also lacks an integrated procurement data system to centrally  manage and oversee agency and headquarters procurement activities,  despite the procurement law requiring such a system over 20 years ago  and investment in the Procurement Automated Support System (PASS),  which was intended to provide these capabilities. Although the CPO’s  office recognizes that capturing and reporting complete, accurate, and  timely procurement data would increase transparency and support  development of meaningful performance measures to promote  competition and discourage excessive use of sole-source contracts and  unauthorized vendor commitments without valid contracts, officials have  lacked the high-level support from District leaders and OCTO needed to  follow through on their plans for improvement.
To make strategic, mission-focused acquisition decisions, organizations  need knowledge and information management processes and systems that  produce credible, reliable, and timely data about the goods and services  acquired and the methods used to acquire them. Our prior work has shown  that leading companies use procurement and financial management  systems to gather and analyze data to identify opportunities to reduce  costs, improve service levels, measure compliance and performance, and  manage service providers.
After numerous discussions with procurement, financial management, and  auditing officials, we found there is no visibility over total procurement  actions and spending in the District. We found it difficult to get even the  data on such basics as the number and dollar value of hundreds of millions  of dollars in procurements for agencies not supported by the CPO’s office,  such as the public schools and the Department of Mental Health. Data for  the $1.2 billion in fiscal year 2005 procurement spending reported by the  District’s CPO office are captured by several standalone systems. As a  result, the CPO’s office cannot readily generate regular reports from these  systems to track information on what agencies are buying, how they are  buying, and from whom they are buying. When we initiated this review, we  requested procurement data on such basics as the number of sole-source  contracts awarded in a specified time frame, from the CPO’s office for  fiscal years 2005 and 2006. The information was provided to us piecemeal.  According to a District procurement official, to obtain this data, the CPO’s  office must ask its contracting officers and specialists to manually  compile, sometimes from memory, the information—a workaround that is  not only time-consuming but at significant risk of error. Because of this,  we were unable to obtain reliable fiscal year 2006 data on sole-source  awards.
In an effort to obtain complete, accurate, and timely procurement data and  to automate and streamline the procurement process, the District has  invested almost $13 million in PASS. Yet, almost 4 years since its inception  in 2003, the system is only partially in operation. According to District  procurement officials, PASS does not provide full information on  completed or ongoing procurements across all agencies, nor does it  provide CPO and District agency and financial managers reports and other  information they need to manage and oversee the procurement system. In  August 2006, the inspector general reported concerns over the delays in  fully implementing PASS, noting that a conflict between the CPO’s office  and OCTO has hindered the installation and full implementation of PASS.  According to senior procurement officials, the CPO’s office has not  consented to the extra $2 million that OCTO is requesting to fully  implement PASS because all upgrades and installation were included in  their purchase of PASS in 2003. The inspector general has recommended  the CPO’s office seek assistance from the Mayor’s office in expediting the  installation and implementation of PASS’s contracting and sourcing  modules.
CPOs in the other cities we reviewed told us that a procurement data  system is critical to managing and overseeing the procurement system, but  some are facing challenges similar to the District’s to develop an  integrated tool. New York’s CPO, for example, told us that the city clearly  recognizes the importance of an integrated procurement data system and  as a result, is engaged in a major undertaking to fully implement a data  system sometime in 2007. In the interim, she relies on information  contained in the city’s financial management system in compiling various  procurement performance indicators.
section_title: The District’s Recent Actions to Address Its Procurement Management and Oversight Challenges Have Had Little Effect
paragraphs: Since 2004, the District has taken several actions to improve the  management and oversight of its procurement system. These efforts  include an internal study for innovation and reform in the CPO’s office and  procurement system; changes in staff assignments and review processes in  the CPO’s office; and establishment of an expert task force to review CPO,  procurement workforce, and competition matters and submit  recommendations to the Mayor and council. However, information we  obtained from former CPOs and current senior procurement and other  officials involved with these efforts indicates that most recommended  actions remain under study or are partially implemented at best. Most of  these officials voiced skepticism or concern about the merits and benefits  of these efforts as well as the absence of high-level and sustained attention  from District leaders to address systemic problems that hamper  management and oversight of the procurement system and undermine  transparency, accountability, and competition.
Following the early resignation of the District’s last full-time CPO in  September 2004, the Mayor and city administrator directed the District’s  Center for Innovation and Reform to work with the interim CPO’s staff to  lead a 6-week internal initiative to create a credible, transparent  procurement process that incorporate best practices and innovation. This  internal group’s final report made several recommendations to the CPO’s  office aimed at streamlining the process, providing tools such as a  procurement manual, and leveraging technology. However, 2 years after  these recommendations were made, many remained open. Further, none  are aimed at the type of legal and organizational changes necessary for  effective reform.
More recently, the interim CPO took steps to provide better customer  support from the Office of Contracting and Procurement to the District’s  agencies and vendors. Specifically, the interim CPO announced in April  2006 the establishment of sole-source contract reviews and  implementation of a central tracking data system to ensure that contract  ceilings are not exceeded, and to capture vendor performance data for  consideration in future source selections affecting those vendors. The CPO  also announced a new staffing alignment to assign a lead contracting  officer for groups of agencies and several commodity buying groups for  certain services that are centrally managed, such as construction and  information technology equipment and services. According to senior  procurement officials and the interim CPO, they expect that assigning  contracting officers will improve communication and efficiency across the  District as agencies will have a single point of contact for managing and  troubleshooting contracting issues. While these are positive steps aimed at  improving internal procurement operations, they are not far reaching  enough to address the more fundamental problems impeding overall  effectiveness in the District’s procurement system.
The third effort to improve District procurement has been ongoing since  December 2005 when the Mayor and council passed legislation to establish  a task force of local experts in contracting and procurement. The task  force is comprised of 10 members appointed by the Mayor and council and  represents a range of professional, legal, and business expertise in District  and public procurement operations and policy. Since March 2006, the task  force has met to obtain testimony and review other information from  District procurement, financial management, auditors, and agency  officials. At the time of our review, the task force chairman expected to  report final recommendations to the Mayor and council before the end of  2006.
In addition to these actions the District has taken to address procurement  system challenges, in December 2005, the Mayor, interim CPO, and CFO  separately provided information to the Chairman of the House  Government Reform Committee, who requested the information in light of  press allegations about possible violations of the city’s procurement laws  and procedures, and unauthorized payments to vendors. The Chairman  noted that it was essential for the Committee to conduct an assessment of  the District’s procurement system and the possible shortcomings in the  laws, policies, enforcement and practices. In their separate responses, the  Mayor, interim CPO, and CFO provided copies of the law, policies, and  procedures in place in the District for procurement and contracting,  including sole source and small purchase actions, exemptions for various  agencies such as the public schools and Department of Mental Health,  approval of voucher payments to vendors, and procurement and  contracting oversight mechanisms through the District’s inspector general  and auditor’s offices. In addition, the interim CPO provided information on  recent actions taken by the Office of Contracting and Procurement to  improve customer service and streamline the procurement process.  However, information provided did not address the range of concerns and  shortfalls in the procurement law and management and oversight that we  subsequently identified during the course of our review.
NASPO state government and city procurement officials we spoke with  said they have confronted similar management and oversight challenges.  They recognized that overcoming these challenges and achieving  meaningful procurement reform can take several years and requires  sustained executive support from elected leaders and legislatures.
section_title: Conclusion
paragraphs: To better ensure every dollar of the District’s more than $1.8 billion  procurement investment is well spent, it is critical that the District have an  effective procurement system that follows generally accepted key  principles and is grounded in a law that promotes transparency,  accountability, and competition, and helps to ensure effective  management and oversight and sustained leadership. Currently, the  District’s procurement system is mired in a culture that thrives on  streamlined acquisition processes, broad authority for sole-source  contracts, and unauthorized payments to vendors that are eventually  papered over through ratifications. Given this culture, it is not surprising  that public confidence in the District’s ability to judiciously spend  taxpayer dollars is guarded at best. To effectively address the District’s  long-standing procurement deficiencies, it is clear that high-level attention  and commitment from multiple stakeholders—including Congress—are  needed. Until the law provides for the right structure and authority, the  District’s procurement reforms will likely continue to fail.
section_title: Recommendations for Executive Action
paragraphs: To address needed structural and fundamental revision in the District’s  procurement law and to strengthen management and oversight practices  as well as facilitate congressional oversight, we recommend that the  Mayor of the District of Columbia submit a comprehensive plan and time  frame to Congress detailing proposed changes in line with our  recommendations. This comprehensive plan, to be submitted to Congress,  should include the following recommendations for revising the  procurement law:    Apply, at a minimum, to all District entities funded through the  District’s appropriated budget and specify that if exclusions from its  authority are necessary, they be defined narrowly by types of goods  and services procured.
Provide the CPO sole authority and responsibility as head of the  District’s Office of Contracting and Procurement to manage and  oversee the entire acquisition function for all entities, and if exclusions  from the CPO’s authority are necessary, they be defined narrowly by  types of goods and services procured.
Consider reestablishing the CPO as the sole authority for suspension  and debarment decisions.
Eliminate sections 2-303.05(a)(3) and (a)(3A) of the District Official  Code that allow noncompetitive procurements with a vendor who (a)  maintains a price agreement or schedule with any federal agency; and  (b) agrees to adopt the same pricing schedule as that of another vendor  who maintains a price agreement or schedule with any federal agency.
Reconsider appropriateness of high dollar thresholds for small  purchases to maximize competition.
Revise the DCSS program to (a) cap purchase ceilings at an  appropriate threshold; (b) eliminate any schedule that contains fewer  than three vendors or combine it with another schedule; (c) establish  procedures to ensure all eligible vendors are provided an opportunity  to be considered for orders; and (d) require the CPO to monitor and  report on patterns of contracting with a limited number of the same  vendors.
Require that specific guidance on the use of the DCSS program be  incorporated into the District’s regulations.
Eliminate the procurement-related circumstance that allows direct  voucher payments for emergency procurements.
To further discourage the use of unauthorized commitments to vendors,  we recommend that the Mayor of the District of Columbia, in coordination  with the CFO and other stakeholders take the following actions:    Revise Directive 1800.04 to be consistent with FAR part 1.6 and clearly  state, consistent with the policy of FAR section 1.602-3(b), that these  ratification procedures are not to be used in a manner that encourage  unauthorized commitments by government personnel.
Refer unauthorized commitments that are not ratified for further  resolution under government claim procedures, to include in  appropriate cases, possible referrals for Anti-Deficiency Act violations.
Upon revision of the ratification directive, track and evaluate the use of  direct voucher payments and ratifications to improve management  attention and oversight of agencies’ unauthorized commitments with  vendors.
To strengthen management and oversight practices in the District’s  procurement system, we recommend that the Mayor take the following  actions:    Recruit and appoint a CPO with the requisite skills and procurement  experience as required in the law.
Elevate the CPO’s position and office so that it is either in line with  other critical cross-government functions, such as OCTO, or higher and  would allow participation in cross-cutting executive management,  budgeting, planning, and review processes.
Direct the CPO to develop a process and tools for frequent and regular  interactions with agency heads and program managers to support  acquisition planning.
Direct the CPO to develop a procurement manual concurrent with  revision in the procurement law.
Direct the CPO to establish a plan and schedule for professional  development and certification programs for contracting staff and to  track personnel trained.
Direct OCTO to work with the CPO to expeditiously complete  installation of an integrated procurement data system.
To help ensure the District makes adequate progress in revising its  procurement law and improving procurement management and oversight,  we recommend that the Mayor submit periodic reports to congressional  oversight and appropriations committees on such elements by agency as  (a) competitive actions by agency; (b) number, value, and type of sole  source procurements; (c) numbers of procurement personnel trained and  the type of training received; and other indicators as appropriate.
In addition, to further discourage the use of unauthorized commitments to  vendors, we recommend that the Chief Financial Officer (CFO) of the  District of Columbia take the following actions:    Revise Financial Management and Control Order No. 05-002 to  eliminate the use of direct vouchers payments for emergency  procurements.
Work with the CPO and other stakeholders to do the following:  (a) Revise Directive 1800.04 to be consistent with FAR part 1.6 and  clearly state, consistent with the policy of FAR section 1.602-3(b), that  these ratification procedures are not to be used in a manner that  encourage unauthorized commitments by government personnel.    (b) Refer unauthorized commitments that are not ratified for further  resolution under government claim procedures, to include in  appropriate cases, possible referrals for Anti-Deficiency Act violations. (c) Upon revision of the ratification directive, track and evaluate the  use of direct voucher payments and ratifications to improve  management attention and oversight of agencies’ unauthorized  commitments with vendors.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of our report to the former Mayor’s office and the  office of the CFO.  The primary focus of our report deals with  procurement reform needed in the District that falls under the  responsibility of the Mayor.  Therefore, most of our recommendations are  made to the Mayor’s office. Given that the comment period coincided with  the final month of the administration, the outgoing Mayor chose not to  comment. However, the new administration contacted our office and  indicated concurrence with most of the findings and recommendations  and, as the principal office responsible for ensuring action is taken, plans  to provide formal comments and an action plan within 60 days of the  report’s public release.
Though most of our recommendations are made to the Mayor’s office,  there is a role for the CFO to play in helping curb unauthorized  commitments.  Therefore, we also made recommendations to the CFO.  In  that context, the CFO provided written comments, which were limited to  our discussion on the use of direct vouchers. Our response focuses only  on those comments.
In general, the CFO questions our understanding of the direct voucher  process and the CFO’s authority. We recognize the limitations in the CFO’s  authority for holding personnel accountable for unauthorized  commitments and the CFO’s obligation to pay for accepted goods and  services.  However, focusing on limited authority and payment obligation  does not address the larger issue.  Specifically, our report raises a concern  about the effect of the lack of management attention on prohibiting  unauthorized commitments that may be ratified and ultimately paid  through direct vouchers—a process CFO staff acknowledge is broken and  in need of more stringent controls.  Accordingly, we revised our  recommendations to the Mayor and the CFO concerning the use of direct  vouchers and the ratification process.  Strengthening this process is a  small part of a larger procurement reform effort that must be headed by  the Mayor and implemented by the CPO, CFO, and other stakeholders in  the District. The CFO’s comments state that the office intends to review  and clarify Financial Management and Control Order No. 05-002.  We  encourage them to implement our recommendations as well as work with  the Mayor’s office and other stakeholders in coordinating procurement  reform actions as applicable.
The CFO’s comments are included in appendix III along with our  comments on specific points he raised.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution of it until 30 days from  the date of this report. We will then send copies to other interested  congressional committees and the Mayor and Chief Financial Officer of  the District of Columbia. We will make copies available at no charge on  GAO’s Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-4841 or calvaresibarra@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on the  last page of this report.  See appendix IV for a list of key contributors to  this report.
section_title: Appendix I: Scope and Methodology
paragraphs: We conducted our work at the District of Columbia’s Office of Contracting  and Procurement, Office of the CFO, Office of the Inspector General,  Auditor’s Office, and Center for Innovation and Reform. We did not  conduct detailed audit work at the various agencies that procure  independently of the Office of Contracting and Procurement since this is  the central office that was established under 1996 reform legislation and it  procures for 61 District organizations—a majority in the District. We also  visited representatives of the National Association of State Procurement  Officials (NASPO) in Springfield, Illinois, and city procurement officials in  Atlanta, Baltimore, and New York. In selecting cities to visit, we  considered those that have faced similar challenges to the District as well  as took various approaches to structuring their public procurement  systems and implementing reform. We did not assess the effectiveness of  their approaches or reform efforts and our report is not intended to  suggest that we evaluated or endorse any particular approach from these  cities, but only to draw comparisons to the District where applicable.
In developing our criteria for generally accepted key principles for an  effective public procurement system, we relied on a variety of sources.  NASPO is a nationally recognized non-profit association comprised of  directors of central purchasing offices in each of the 50 states and other  member jurisdictions. NASPO has published a series of volumes related to  state and local government purchasing with the most recent edition  describing principles and suggested practices. We also spoke with state  procurement officials representing NASPO to obtain their perspectives on  our analysis as well as their own states’ guiding principles and practices  for an effective public procurement system. In addition to NASPO, the  American Bar Association’s (ABA) model procurement code for state and  local governments outlines principles for public procurement and provides  a variety of options and strategies applicable to all public bodies. The  Federal Acquisition Regulation (FAR) also describes guiding principles of  public procurement and though these are aimed at the federal government,  many are not unique to the federal acquisition system and are equally  applicable to state and local governments. Finally, we leveraged our own  work since 2001 on effective procurement and acquisition management  practices.
To assess whether the District’s primary procurement law reflects  fundamental principles that promote transparency, accountability,  integrity, and competition, we did a detailed legal review and analysis of  the Procurement Practices Act of 1985, as amended. We did not do a  similar review or analysis of laws, policies, or regulations governing the  various independent agencies or procurement authorities. In comparing  the District’s primary procurement law to generally accepted key  principles and assessing the impact of any shortfalls, we focused on  several key elements that are recognized by a variety of sources for  promoting transparency, accountability, integrity, and competition:          (1) uniform application of the law across all District organizations;           (2) adequacy of authority granted to the CPO for the full spectrum of  acquisition functions; (3) exemptions in the law through various  temporary, emergency, or permanent legislative amendments; and            (4) provisions in the law that limit or restrict competition, such as  authority for sole-source contracting, simplified acquisition procedures,  and use of supply schedule. Our review also examined recent legislation  that was passed in response to various procurement challenges that had  been identified to include changes in law and policy resulting from the  CFO’s review of direct voucher payments for unauthorized commitments  with vendors for goods and services without valid contracts.
To further understand the rationale and impact of these various provisions  and related procurement issues, we interviewed current and former  procurement, executive, financial management, and auditing officials in  the District. We also spoke to a D.C. Council committee representative  regarding legislative actions to address reported procurement problems  and related issues. In addition, we interviewed state government  procurement leaders of NASPO about sound principles and practices  regarding public procurement statutory coverage and their views on issues  we raised about the District’s procurement law. We also interviewed city  procurement officials in Atlanta, Baltimore, and New York to obtain their  views on issues we raised concerning the District’s procurement law and  to learn about related challenges they have faced and their responses to  these challenges.
To assess the extent to which the District’s management and oversight of  the procurement process reflect generally accepted practices, we  examined several key elements. First, we examined the organizational  alignment and leadership for managing the acquisition function across all  District organizations. Second, we assessed management’s commitment to  competence including elements required for a professional procurement  workforce. Third, we reviewed the District’s development of procurement  management and oversight tools, including a procurement manual and  automated data systems for recording procurement information. To gain  insights on the challenges of procurement management and oversight in  the District, we interviewed current and former city procurement and  District executive officials to obtain their perspectives. To obtain an  historical perspective on the management and oversight challenges in the  District that drove legislation reform in 1996, we reviewed various studies  done at that time and their recommendations. To understand how the  District has addressed those challenges, we reviewed selected District  inspector general and auditor reports since 2004, and the resulting  recommendations as well as those from the internal study of the Center  for Innovation and Reform. We interviewed responsible city procurement  officials on the status of addressing those recommendations. We also  interviewed the chairman of the Contracting and Procurement Reform  Task Force, which was established in 2006 to review the District’s  procurement system and attended several public meetings to observe their  discussions.
In the course of our review, we relied on various management and other  procurement data reports provided by the Office of Contracting and  Procurement. Specifically, information on procurement spending in  dollars and contracting and competition methods was generated from  various procurement data systems or compiled from manual inputs.  Though we did not conduct detailed tests of procurement transactions,  data reliability was suspect for these various reports based on very limited  testing and independent auditors have also raised questions about the  data. To fully test data reliability for all the various reports we received  would have required resources outside the scope of this review. Moreover,  an independent public accounting firm audits the District’s financial  statements annually and reports on internal control and compliance over  financial reporting. Compliance with procurement regulations was part of  the fiscal year 2005 audit in which the District received an unqualified,  clean opinion. Despite the limitations, we found the data to be reasonable  and sufficiently reliable for our purposes. Further, we have attributed,  where applicable and appropriate, this information to the Office of  Contracting and Procurement and responsible officials.
This work was done between February 2006 and October 2006 in  accordance with generally accepted government auditing standards.
section_title: Appendix II: District Governance and Related Procurement Authorities
subsections: section_title: Home Rule Act
paragraphs: In 1973, Congress enacted the District of Columbia Self-Government and  Governmental Reorganization Act or Home Rule Act, which set forth the  structural framework of the current District government in the District  Charter. The District Charter established the Office of the Mayor and  vested the Mayor with the executive power. It also established the D.C.  Council and delegated certain legislative powers to it. Despite the powers  delegated to the Council, Congress retained the ultimate legislative  authority over the District under the Constitution. Generally, the  Constitution authorizes Congress to enact legislation on any topic for the  District and to amend or repeal any District act.
With regard to the powers delegated to the Council, the Home Rule Act  authorized it to pass permanent and emergency acts.  A permanent act  starts as a bill, which usually gets introduced by a Council member and  then gets assigned to and considered by the proper committee.  The  committee then reports the bill to the Committee of the Whole (the entire  Council), which reviews it before it is put on agenda for regular session.  Hearings are required for permanent legislation before it is adopted. The  Council votes on a bill two times, during first and second readings.  However, 15 days before the Council adopts a bill, it must be published in  the D.C. Register. The Mayor then can either (1) sign the bill or take no  action and it becomes an act or (2) veto the bill and Council can override  the veto by two-thirds majority.  The act must then be published in the  D.C. Register.  The Council chair transmits the act to both houses of  Congress, which have 30 calendar days (or 60 calendar days for criminal  acts) to review the act and if they take no action, the act becomes law.
Congress may disapprove the act by adopting a joint resolution of  disapproval, which must be signed by the President.  Unless the President  vetoes the act, it becomes law within 30 days.
Emergency acts are quicker to pass than permanent acts, since they are  not required to go through (1) committee, (2) a second reading, (3) a  public hearing, (3) congressional approval, and (4) publication in the D.C.  Register before becoming effective, but must be published after that.  For  an emergency act, the Council must decide by two-thirds of the members  that emergency circumstances make it necessary that an act be passed.   Emergency acts are effective for 90 days.
With regard to the executive power, the Home Rule Act vested in the  Mayor, who is the chief executive officer of the District government, the  power to properly execute all laws relating to the District.  The Mayor may  delegate any function to (1) any officer, employee, or agency of the  executive office of the Mayor or (2) any director of an executive  department who may, with the Mayor’s approval, further delegate all or  part of the functions to subordinates under the Mayor’s jurisdiction.
In addition to establishing these branches of government in the District,  the Home Rule Act also established five independent agencies existing  outside the control of the executive or legislative branches of the District  government. The independent agencies were the (1) Board of Education;  (2) Armory Board; (3) Public Service Commission; (4) Zoning  Commission; and (5) Board of Elections.
section_title: Procurement Practices Act of 1985
paragraphs: In 1986, the Council enacted the D.C. Procurement Practices Act of 1985,  pursuant to the Council’s authority to pass acts under the Home Rule Act.  One of the primary underlying statutory policies of the act was to provide  for a uniform procurement law and procedures for the District of  Columbia government.  To achieve this policy, the Procurement Practices  Act applied to all agencies and employees of District government which  were subordinate to the Mayor. The Procurement Practices Act excluded  from its application a separate branch of government or an independent  agency (as defined in D.C. Administrative Procedures Act) that had  authority to enter into contracts or to issue rules and regulations for  awarding contracts pursuant to existing law. The Procurement Practices  Act applied to every contract, interagency agreement, or  intergovernmental agreement for procurement or disposal of goods and  services by covered agencies and employees.
The Procurement Practices Act also created in the executive branch of the  District government the Contract Appeals Board.  The appeals board was  the exclusive hearing tribunal for and had jurisdiction to review and  determine de novo throughout the District government the following:      (1) protests of a solicitation or contract award and (2) appeals from a final  decision of the Director of Administrative Services.  It allowed  disappointed contractors to appeal board decisions to the D.C. Court of  Appeals.  It also established bid protest procedures for protests of the  solicitation or award of a contract.
section_title: Procurement Reform Amendment Act of 1996
paragraphs: The Procurement Practices Act was amended by the Procurement Reform  Amendment Act of 1996 (reform act) with the primary statutory purpose  to centralize procurement in the Office of Contracting and Procurement.   The law required this office to be headed by a Chief Procurement Officer  (CPO).  By delegation of the Mayor, the CPO has the exclusive contracting  authority for all procurements covered by the Procurement Practices Act.  The reform act further centralized procurement in the CPO by requiring  the CPO rather than the Mayor to delegate contracting authority to  employees of District entities subject to the act and to employees of Office  of Contracting and Procurement who are contracting officers and  specialists in procurement.  All delegations must be subject to limitations  specified in writing.
The reform act also changed some of the requirements for sole-source  emergency procurements, which the Procurement Practices Act  authorized the executive branch to use.  Specifically, the reform act  allowed contracting officers to make and justify sole source emergency  procurements when there was an imminent threat to the public health,  welfare, property, or safety under emergency conditions. The  requirement is implemented in the District’s regulations, which defines an  “emergency condition” as a situation, such as a flood, epidemic, riot, or  equipment failure that created the imminent threat.
The reform act expanded the Procurement Practices Act’s application to  include independent agencies, which were previously excluded from its  application.  Specifically, the act applied to all departments, agencies,  instrumentalities, and employees of the District government, including  agencies which are subordinates to the Mayor, independent agencies,  boards, and commissions.  It applies to any contract for the procurement  of goods and services, including construction and legal services.
Despite the reform act’s primary statutory purpose of centralizing the  District’s procurement authority in the Office of Contracting and  Procurement, it excluded many entities from the authority of both the  Office of Contracting and Procurement and the Procurement Practices  Act.  Specifically, it excluded:  the D.C. Council;  the D.C. courts;  the D.C. Financial Responsibility and Management Assistance  Authority (Control Board), as Congress previously statutorily excluded  the Procurement Practices Act’s application to the Control Board and  vested the Board’s contracting authority in its Executive Director;   the Office of the Chief Financial Officer (CFO), and required the Chief  Financial Office, during a control year, to adopt the Control Board’s  procurement rules and regulations, except that during years other than  control years, Office of the CFO must be bound by provisions in this  act.
Further, the reform act added a new section in the Procurement Practices  Act, exempting the following entities from the authority of the  Procurement Practices Act and Office of Contracting and Procurement:    Redevelopment Land Agency with regard to real property or interests    Administrator of Homestead Program Administration under Homestead  Housing Preservation Act of 1986 with regard to disposal or transfer of  real property;    Mayor to sell real property in D.C. for nonpayment of taxes or  assessments of any kind;    Mayor and D.C. Council pursuant to D.C. Public Space Rental Act;    Convention Center Board of Directors pursuant to the Washington  Convention Center Management Act of 1979;    Sports Commission pursuant to the Omnibus Sports Consolidation Act    D.C. Housing Finance Agency;    D.C. Retirement Board pursuant to the D.C. Retirement Reform Act;    Metropolitan Police Department’s authority to make procurements of  $500,000 or less, as provided in the D.C. Appropriations Act, approved  April 6, 1996. (Pub. L. No. 104-134).
Since enactment of the 1996 reform act, the Council has amended the  Procurement Practices Act many times to exempt additional entities from  falling under the authority of the Office of Contracting and Procurement or  Procurement Practices Act or both, despite the Procurement Practices  Act’s statutory purposes of creating uniform procurement laws in the  District and centralizing the District’s procurement authority in the Office  of Contracting and Procurement. To date, in addition to those entities  mentioned above, the council excluded the following entities from the  authority of both Office of Contracting and Procurement and Procurement  Practices Act:    D.C. Water and Sewer Authority;    D.C. Public Service Commission;    D.C. Housing Authority, except for the provisions regarding contract  protests, appeals, and claims arising from procurements of the Housing  Authority; and    D.C. Advisory Neighborhood Commissions.
Further, the Council amended to Procurement Practices Act to exclude  the following entities from the authority of Office of Contracting and  Procurement, but they are subject to the Procurement Practices Act:    Director of the Child and Family Services Agency;    Criminal Justice Coordinating Council;    Director of the Department of Mental Health; and    Board of Education to solicit, award, and execute contracts, except for  security for the District’s public schools for security contracts to begin  on or after June 30, 2005.
Also, the Council exempted delivery of electrical power and ancillary  services for the District from certain requirements of the Procurement  Practices Act, subject to Council approval.
In addition to these exemptions, the Council continues to use its  emergency act authority under the Home Rule Act to exempt the  application of all or certain provisions of the Procurement Practices Act or  the authority of the Office of Contracting and Procurement for certain  District entities or projects.  These exemptions can last no more than 90  days or can become permanent if the emergency bill is accompanied by a  temporary bill bridging the gap between expiration of the 90-day  emergency bill and congressionally-approved permanent legislation on the  same matter.
section_title: Appendix III: Comments from the Chief Financial Officer for the District of Columbia
paragraphs: The following are GAO’s comments on the CFO’s letter dated January 5,  2007.
subsections: section_title: GAO Comments
paragraphs: 1.  As we state in the report, the CFO’s analysis of fiscal year 2004 direct  voucher payments showed that $217 million fell outside a 1996  financial management and control order. It was only after the CFO, in  2005, added 7 more acceptable uses of direct vouchers to the original  order, that these payments were found to be acceptable. The $4 million  in payments referred to in the CFO’s comments are those that fell  outside this updated policy.      2.  We recognize that the CPO’s office is not directly responsible for  developing financial management policies. However, we believe that in  order to effect meaningful procurement reform, the CPO should be  consulted on any policy changes that affect procurement—particularly  as such changes have been amended into the procurement law.  Elevating the CPO within the District government, as we recommend,  would facilitate needed coordination.  3.  Because the District’s procurement law already establishes emergency  contracting procedures, we stand by our finding and recommendation  that including emergency procurements as an acceptable use of direct  vouchers duplicates the provision in the law and allows agencies to  bypass established contracting procedures.  4.  As we state in the agency comments section, we recognize the  obligation to pay for accepted goods and services, but we are  concerned that the current policy, now codified in the law, is a  symptom of the lack of necessary management focus to minimize the   number of unauthorized commitments that may be ratified and  ultimately paid through direct vouchers. In meetings with CFO staff,  they acknowledged that the ratification process needs strengthening to  include, in appropriate cases, possible referrals for Anti-Deficiency Act  violations.          5.  The scope of our review was on the District’s procurement system as a  whole, not on the direct voucher process. As part of this review, we  examined and discussed with chief procurement officers reform  efforts in other cities. Through these discussions, we learned that  other cities have consistently taken steps to curb the use of direct  vouchers where at all possible and to ensure strict controls are in  place to hold employees accountable when their actions result in an  unauthorized commitment to vendors.
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Carolyn Kirby, Assistant  Director; Barry DeWeese; Cynthia Auburn; Rachel Girschick; Kevin Heinz;  Bill Petrick; Sylvia Schatz; and Karen Sloan made key contributions to this  report.