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entitled 'District of Columbia: Procurement System Needs Major Reform' 
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Report to the Ranking Minority Member, Committee on Oversight and 
Government Reform, House of Representatives: 

United States Government Accountability Office: 

GAO: 

January 2007: 

District Of Columbia: 

Procurement System Needs Major Reform: 

GAO-07-159: 

GAO Highlights: 

Highlights of GAO-07-159, a report to the Ranking Minority Member, 
Committee on Oversight and Government Reform, House of Representatives 

Why GAO Did This Study: 

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. 

What GAO Found: 

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. 

What GAO Recommends: 

GAO recommends that the District’s Mayor submit a procurement reform 
plan to Congress. The former Mayor chose not to comment, but the new 
administration indicated concurrence with most of GAO’s recommendations 
and intends to provide a plan within 60 days of the public release of 
this report. Comments from the Chief Financial Officer were limited to 
the section on direct vouchers. They indicated current review of their 
policy and GAO encourages implementation of this report’s 
recommendations. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-159]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Ann Calvaresi-Barr, (202) 
512-4841 or calvaresibarra@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

The District's Procurement Law Does Not Promote Transparency, 
Accountability, and Competition: 

The District's Procurement System Does Not Reflect Sound Management and 
Oversight Practices: 

Conclusion: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: District Governance and Related Procurement Authorities: 

Appendix III: Comments from the Chief Financial Officer for the 
District of Columbia: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: District Entities Procuring through the Office of Contracting 
and Procurement as of October 2006: 

Table 2: District Procurement Law Provisions Permitting Sole-Source 
Contracting and Awards in Fiscal Year 2005 under These Provisions: 

Table 3: Limited Competition Procedures for Small Purchases in the 
District of Columbia: 

Table 4: DCSS Program Schedule Categories and Number of LSDBE Vendors 
(as of October 27, 2006): 

Figure: 

Figure 1: The Office of Contracting and Procurement Placement in the 
District of Columbia's Government Structure: 

Abbreviations: 

ABA: American Bar Association: 

CFO: Chief Financial Officer: 

CPO: Chief Procurement Officer: 

DCSS: District of Columbia Supply Schedule: 

FAR: Federal Acquisition Regulation: 

GSA: General Services Administration: 

LSDBE: Local, Small, and/or Disadvantaged Business Enterprise: 

MAS: multiple award schedule: 

NASPO: National Association of State Procurement Officials: 

OCTO: Office of the Chief Technology Officer: 

PASS: Procurement Automated Support System: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

January 19, 2007: 

The Honorable Tom Davis: 
Ranking Minority Member: 
Committee on Oversight and Government Reform: 
House of Representatives: 

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.[Footnote 1] 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.[Footnote 2] 

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. 

Results in Brief: 

The District's procurement law as currently in effect generally does 
not incorporate accepted key principles of sound procurement as 
established by NASPO, the ABA model procurement code, and the FAR. As a 
result, the law fails to adequately promote transparency, 
accountability, and competition to reduce the risk of fraud, waste, and 
abuse. Although it recognizes the role of a CPO--a key component of a 
comprehensive procurement law--the law falls short in a number of other 
key areas. First, despite calling for uniform procurement procedures 
District governmentwide, the law does not apply to several District 
entities, including some that spend tens of millions of dollars a year 
to contract for goods and services. According to many officials we 
spoke with, this lack of uniformity severely hampers transparency and 
accountability and increases the risk of preferential treatment of 
vendors, discourages competition, and ultimately drives up costs. 
Second, the law fails to provide authority to the CPO to effectively 
carry out and oversee the full scope of procurement responsibilities 
across all entities. Third, the law has frequently been amended to 
grant exemptions to its provisions and the CPO's authority for certain 
entities and special procurements. Current and former CPOs, as well as 
NASPO and other city procurement officials, noted that these exemptions 
distort the District's law, undermine efforts to establish a central 
authority, and circumvent the competitive process. Finally, the law 
allows the use of noncompetitive contracting methods, such as sole- 
source contracting, under broad exceptions. It further allows higher 
dollar thresholds for small purchases than are allowed in other city 
and federal regulations, including the FAR; mandates the use of a 
District supply schedule with a limited list of local vendors for 
purchases of a specified threshold; and allows agencies under certain 
circumstances to bypass the District's contracting rules to directly 
pay vendors without valid contracts--payments that accounted for as 
much as $217 million in fiscal year 2004. Ultimately, these provisions 
in the law create barriers to competition--the basic tenet of an 
effective public procurement system. 

In addition to generally lacking a law that reflects accepted key 
principles of sound procurement, the District has been challenged to 
effectively manage and oversee its procurement system. The low-level 
position of the procurement office within the District's governmental 
structure, combined with rapid turnover of five CPOs in the past 10 
years, has resulted in fragmented and inconsistent procurement 
management and oversight with multiple players having authority to 
award contracts and affect procurement decisions. According to former 
District CPOs, the low organizational placement weakened their ability 
to direct, coordinate, and oversee procurement activities across the 
District's entities. Each of the appointed CPOs cited their lack of 
influence and control over the acquisition function as a major reason 
for resigning their position before the end of their tenure. At the 
same time, contracting and agency staff and financial managers do not 
have the basic tools needed for effective procurement management and 
oversight. Specifically, the District lacks a procurement manual, a 
professional development program for contracting staff, and an 
integrated procurement data system--key tools for guiding District 
procurements and helping contracting and agency staff carry out their 
responsibilities. Officials from the other cities we reviewed have 
overcome similar challenges by reorganizing and elevating the 
acquisition function within their city's governmental structure and 
implementing a variety of tools to strengthen the procurement system's 
management and oversight. 

We are making a comprehensive set of recommendations to the Mayor of 
the District of Columbia to seek reform of the District's procurement 
law and system in order to help promote transparency, accountability, 
competition, and minimize fraud, waste, and abuse. Our recommendations 
focus on establishing a procurement system that incorporates key 
procurement principles and practices identified by NASPO, the ABA model 
procurement code, and the FAR. To help ensure the District takes action 
and sustains improvements to its procurement system and to facilitate 
congressional oversight, we are also recommending that the Mayor 
develop and submit to Congress a comprehensive plan and schedule for 
carrying out major procurement system reform in line with our 
recommendations. 

After reviewing a draft of this report, the office of the outgoing 
Mayor declined to comment.[Footnote 3] However, in oral comments, the 
new administration indicated concurrence with most of our findings and 
recommendations and intends to provide an action plan within 60 days of 
the public release of this report. Although most of our recommendations 
are directed to the Mayor's office, we also made recommendations to the 
Chief Financial Officer (CFO). In written comments, the CFO disagreed 
with our findings related to the use of direct vouchers for procurement-
related transactions. They are reviewing their policy on direct 
vouchers and we encourage them to implement our recommendations as well 
as work with the Mayor's office to coordinate procurement reform 
actions as applicable. The CFO's comments are included in appendix III 
along with our comments. 

Background: 

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.[Footnote 4] According to information available from 
District sources, these entities spent over $600 million in fiscal year 
2005. 

Table 1: District Entities Procuring through the Office of Contracting 
and Procurement as of October 2006: 

Office of Administrative Hearings; 
Office on Aging; 
Alcoholic Beverage Regulation Administration; 
Commission on Arts and Humanities; 
Office of the Attorney General; 
Office of Boards and Commissions; 
Office of Cable TV and Telecommunications; 
Office of Campaign Finance; 
Office of Chief Medical Examiner; 
Office of the Chief Technology Officer[A]; 
Office of the City Administrator; 
Department of the Consumer and Regulatory Affairs; 
Office of Contracting and Procurement; 
Department of Corrections; 
Contract Appeals Board; 
Office of the Deputy Mayor for Children, Youth, Families and Elders; 
Office of the Deputy Mayor for Operations; 
Office of the Deputy Mayor for Planning & Economic Development; 
Office of the Deputy Mayor for Public Safety and Justice; 
Board of Elections & Ethics; 
Emergency Management Agency; 
Office of Employee Appeals; 
Department of Employee Services; 
Energy Office; 
Fire and Emergency Medical Services; 
Department of Health[A]; 
Department of Human Services[A]; 
Department of Housing and Community Development; 
Office of Human Rights; 
Department of Insurance, Securities, and Banking; 
Commission on Judicial Disabilities and Tenure; 
Justice Grants Administration; 
Office of Labor Relations and Collective Bargaining; 
Office of Latino Affairs; 
Metropolitan Police Department[A]; 
Office of Motion Pictures and Television Development; 
Department of Motor Vehicles; 
Executive Office of the Mayor; 
Office of the Neighborhood Action; 
Department of Parks and Recreation; 
Office of Partnerships and Grants Development; 
Office of Planning; 
Office of Police Complaints; 
Office of Property Management; 
Public Employee Relations Board; 
Public Library; 
Department of Public Works; 
Board of Real Property Assessments and Appeals; 
Office of Risk Management; 
Serve DC; 
Department of Small and Local Business Development; 
Office of State Education; 
Taxicab Commission; 
Department of Transportation[A]; 
Office of Tuition Assistance Grant Program; 
University of the District of Columbia; 
Department of Youth Rehabilitation Services; 
Office on Zoning; 
Office of Personnel; 
Personal Property Division. 

Source: Office of Contracting and Procurement. 

Note: GAO did not independently verify all the entities. We relied on 
information provided by the Office of Contracting and Procurement and 
did some limited reliability assessment through the course of our work 
and found the information to be sufficiently reliable for our purposes. 
Of the entities served by the Office of Contracting and Procurement, 55 
provided fiscal year 2005 procurement data. 

[A] One of the top five spending agencies in fiscal year 2005 in terms 
of millions of dollars spent on procurement. Specific reported amounts 
in procurement spending were $180 million (Department of 
Transportation); $123 million (Office of the Chief Technology Officer); 
$123 million (Department of Health); $110 million (Department of Human 
Services); and $59 million (Metropolitan Police Department). 

[End of table] 

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.[Footnote 5] In 1973, 
Congress enacted the District of Columbia Self-Government and 
Governmental Reorganization Act or Home Rule Act,[Footnote 6] 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.[Footnote 
7] 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.[Footnote 8] 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.[Footnote 9] 

Amendment to the District's Procurement Law Aimed at Addressing 
Reported Challenges: 

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.[Footnote 10] 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.[Footnote 
11] 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. 

Characteristics of an Effective Public Procurement System: 

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. 

The District's Procurement Law Does Not Promote Transparency, 
Accountability, and Competition: 

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. 

District Lacks a Procurement Law That Applies to All Entities and 
Provides Clear Authority to the CPO: 

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.[Footnote 
12] 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.[Footnote 13] 

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.[Footnote 14] 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.[Footnote 15] 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.[Footnote 16] 
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.[Footnote 17] 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.[Footnote 18] 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. 

Other Exemptions in the Law Further Undermine Transparency and CPO 
Authority: 

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.[Footnote 19] 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.[Footnote 20] 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.[Footnote 
21] 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;[Footnote 22] 
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.[Footnote 23] 

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. 

Other Provisions in the District's Procurement Law Create Barriers to 
Competition: 

Long-standing procurement principles, policies, and procedures 
implemented in the FAR[Footnote 24] 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,[Footnote 25] contractor motivation to excel is greatest 
when private companies, driven by a profit motive, compete head to head 
in seeking to obtain work.[Footnote 26] 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. 

Broad Authority for Sole-Source Contracting: 

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[Footnote 27] and 
should always be properly justified.[Footnote 28] 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.[Footnote 29] 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. 

Table 2: District Procurement Law Provisions Permitting Sole-Source 
Contracting and Awards in Fiscal Year 2005 under These Provisions: 

Dollars in millions. 

Procurement law provision: § 2-303.05 (a) (1); 
Criteria or circumstance justifying sole-source contracting: Only one 
supplier (single available source) can provide the good or service 
requested; 
Number of sole-source contracts awarded: 296; 
Dollar value of sole-source contracts awarded: $79.4. 

Procurement law provision: § 2-303.05 (a) (3); 
Criteria or circumstance justifying sole-source contracting: The 
contract is with a vendor who maintains a price agreement or schedule 
with any federal agency; 
Number of sole-source contracts awarded: 283; 
Dollar value of sole-source contracts awarded: 88.9. 

Procurement law provision: § 2-303.05 (a) (3A); Criteria or 
circumstance justifying sole-source contracting: The contract is with a 
vendor who agrees to adopt the pricing of a vendor who maintains a 
price agreement or schedule with any federal agency; 
Number of sole-source contracts awarded: 119; 
Dollar value of sole- source contracts awarded: 3.6. 

Procurement law provision: § 2-303.05 (a) (4); Criteria or circumstance 
justifying sole-source contracting: Procurements that would ordinarily 
be purchased on a competitive basis, but an emergency has been 
declared; 
Number of sole-source contracts awarded: 2; 
Dollar value of sole-source contracts awarded: 1.3. 

Total; 
Criteria or circumstance justifying sole-source contracting: [Empty]; 
Number of sole-source contracts awarded: 700; 
Dollar value of sole-source contracts awarded: $173.2. 

Source: GAO analysis of information from the Office of Contracting and 
Procurement on sole-source contract awards. 

Note: Complete data are not available on sole-source contract awards in 
2005 for all of the District's organizations, such as the public 
schools or Department of Mental Health. 

[End of table] 

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.[Footnote 30] 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.[Footnote 31] 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.[Footnote 
32] 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,[Footnote 33] and the District's implementing 
procurement regulation does not provide specific guidance on the use of 
the (a)(3) and (a)(3A) provisions.[Footnote 34] 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. 

High Dollar Thresholds for Limited Competition Small Purchases: 

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. [Footnote 35] 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). 

Table 3: Limited Competition Procedures for Small Purchases in the 
District of Columbia: 

Small purchase threshold: Less than or equal to $10,000; 
Small purchase procurement procedure: Contracting officer may make non-
competitive procurement. 

Small purchase threshold: Above $10,000 and less than or equal to 
$25,000; 
Small purchase procurement procedure: Contracting officer must obtain 
three oral price quotes. 

Small purchase threshold: Above $25,000 and less than or equal to 
$100,000; 
Small purchase procurement procedure: Contracting officers must obtain 
three written quotes. 

Source: Office of Contracting and Procurement. 

Note: For OCTO and the Metropolitan Police Department purchases, the 
small purchase threshold for no-bid procurement is less than or equal 
to $25,000. For purchases over $25,000, the contracting officer must 
get three written quotes. 

[End of table] 

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.[Footnote 36] 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. 
[Footnote 37] 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. 

Reliance on Local Supply Schedule: 

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.[Footnote 38] 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). 

Table 4: DCSS Program Schedule Categories and Number of LSDBE Vendors 
(as of October 27, 2006): 

Dollars in thousands. 

Schedule category: Information Technology Services; 
Number of LSDBE vendors: 40; 
Contract ceilings: $10,000; 
Total fiscal year 2006 purchase: $5,332. 

Schedule category: Mission Oriented Business Integrated Services; 
Number of LSDBE vendors: 40; 
Contract ceilings: 10,000; 
Total fiscal year 2006 purchase: 1,502. 

Schedule category: Temporary Support Services; 
Number of LSDBE vendors: 22; 
Contract ceilings: 5,000; 
Total fiscal year 2006 purchase: 5,696. 

Schedule category: Information Technology Products; 
Number of LSDBE vendors: 2; 
Contract ceilings: 5,000; 
Total fiscal year 2006 purchase: 52. 

Schedule category: Furniture and Furniture Management Services; 
Number of LSDBE vendors: 7; 
Contract ceilings: 2,000; 
Total fiscal year 2006 purchase: 1,563. 

Schedule category: Office Supplies, General; 
Number of LSDBE vendors: 10; 
Contract ceilings: 2,000; 
Total fiscal year 2006 purchase: 3,078. 

Schedule category: Industrial Services; 
Number of LSDBE vendors: 6; 
Contract ceilings: 900; 
Total fiscal year 2006 purchase: 1,575. 

Schedule category: Industrial Supplies and Apparel; 
Number of LSDBE vendors: 7; 
Contract ceilings: 900; 
Total fiscal year 2006 purchase: 489. 

Schedule category: Security Equipment and Services; 
Number of LSDBE vendors: 9; 
Contract ceilings: 850; 
Total fiscal year 2006 purchase: 513. 

Schedule category: Audit and Financial Management Services; 
Number of LSDBE vendors: 7; 
Contract ceilings: 500; 
Total fiscal year 2006 purchase: 171. 

Schedule category: Marketing and Media Services; 
Number of LSDBE vendors: 14; 
Contract ceilings: 500; 
Total fiscal year 2006 purchase: 506. 

Schedule category: Medical Equipment and Supplies; 
Number of LSDBE vendors: 5; 
Contract ceilings: 500; 
Total fiscal year 2006 purchase: 568. 

Schedule category: Moving and Logistics Services; 
Number of LSDBE vendors: 5; 
Contract ceilings: 500; 
Total fiscal year 2006 purchase: 356. 

Schedule category: Training Services; 
Number of LSDBE vendors: 8; 
Contract ceilings: 500; 
Total fiscal year 2006 purchase: 50. 

Schedule category: Advertising Services and Novelty Supplies; 
Number of LSDBE vendors: 3; 
Contract ceilings: 400; 
Total fiscal year 2006 purchase: 203. 

Schedule category: Engineering and Logistics Services; 
Number of LSDBE vendors: 6; 
Contract ceilings: 250; 
Total fiscal year 2006 purchase: 6. 

Schedule category: Food Services and Equipment; 
Number of LSDBE vendors: 1; 
Contract ceilings: 250; 
Total fiscal year 2006 purchase: 39. 

Schedule category: Printing and Document Management Services; 
Number of LSDBE vendors: 2; 
Contract ceilings: 250; 
Total fiscal year 2006 purchase: 53. 

Schedule category: Laboratory and Analysis Services; 
Number of LSDBE vendors: 0; 
Contract ceilings: 250; 
Total fiscal year 2006 purchase: 0. 

Schedule category: Total; 
Number of LSDBE vendors: 194; 
Contract ceilings: [Empty]; 
Total fiscal year 2006 purchase: $21,752[A]. 

Source: Office of Contracting and Procurement. 

[A] According to senior procurement officials, the discrepancy between 
the almost $21.8 million in reported purchases (i.e., expenditures) 
with DCSS vendors and the almost $30.9 million in orders awarded to 
DCSS vendors in fiscal year 2006 is due to separate contracting and 
procurement data systems being used to track these different types of 
transactions. 

[End of table] 

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. 

The District's Law Allows Payments for Unauthorized Commitments to 
Vendors: 

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.[Footnote 39] 

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.[Footnote 40] 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.[Footnote 41] 

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.[Footnote 42] 

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.[Footnote 43] 
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.[Footnote 44] 

The District's Procurement System Does Not Reflect Sound Management and 
Oversight Practices: 

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. 

Low-Level Position of the Office of Contracting and Procurement 
Undermines Management and Oversight: 

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). 

Figure 1: The Office of Contracting and Procurement Placement in the 
District of Columbia's Government Structure: 

[See PDF for image] 

Source: District of Columbia fiscal year 2006 budget (data); GAO 
(analysis and presentation). 

[A] Entities that procure their goods and services independently of the 
Office of Contracting and Procurement. 

[End of figure] 

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.[Footnote 45] 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.[Footnote 46] 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. 

The District's inspector general and auditor offices have repeatedly 
found that the District's lack of effective acquisition plans results 
in excessive use of sole-source contracts and missed opportunities for 
competition, thereby contributing to unnecessary spending from higher 
cost procurements. In December 2005 testimony before the Council, the 
District's auditor stated that as "a government striving for self- 
government, [the District] desperately needs to improve accountability 
and ethics in the way the procurement and contracting process is 
carried out and to restore the faith of residents that tax dollars are 
being spent judiciously, economically, and competitively. The failure 
to 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. 

The District Lacks Other Tools for Effective Procurement Management and 
Oversight: 

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. 

The District Lacks a Procurement Manual to Guide Staff: 

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. 

The District Lacks Professional Certifications for Procurement Staff: 

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.[Footnote 47] 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. 

The District's Integrated Procurement Data System Has Yet to Be Fully 
Implemented: 

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[Footnote 48] 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.[Footnote 49] 

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.[Footnote 
50] 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.[Footnote 51] 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. 

The District's Recent Actions to Address Its Procurement Management and 
Oversight Challenges Have Had Little Effect: 

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.[Footnote 52] 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.[Footnote 53] 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. 

Conclusion: 

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. 

Recommendations for Executive Action: 

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. 

Agency Comments and Our Evaluation: 

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 [Hyperlink, 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. 

Sincerely yours, 

Signed by: 

Ann Calvaresi Barr: 
Director, Acquisition and Sourcing Management: 

[End of section] 

Appendix I: Scope and Methodology: 

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.[Footnote 54] 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.[Footnote 55] 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.[Footnote 56] 

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. 

[End of section] 

Appendix II: District Governance and Related Procurement Authorities: 

Home Rule Act: 

In 1973, Congress enacted the District of Columbia Self-Government and 
Governmental Reorganization Act or Home Rule Act,[Footnote 57] 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.[Footnote 58] Despite the powers delegated to the Council, 
Congress retained the ultimate legislative authority over the District 
under the Constitution.[Footnote 59] 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.[Footnote 60] 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.[Footnote 61] 
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. [Footnote 62] 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. [Footnote 63] 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. [Footnote 64] 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. [Footnote 65] 

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. 

Procurement Practices Act of 1985: 

In 1986, the Council enacted the D.C. Procurement Practices Act of 
1985,[Footnote 66] pursuant to the Council's authority to pass acts 
under the Home Rule Act.[Footnote 67] 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.[Footnote 68] 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.[Footnote 69] 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. 

Procurement Reform Amendment Act of 1996: 

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. 
[Footnote 70] 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.[Footnote 71] 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.[Footnote 72] 
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.[Footnote 73] 

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. [Footnote 74] 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; [Footnote 
75] 

* the Office of the Chief Financial Officer (CFO), and required the 
Chief Financial Office, during a control year,[Footnote 76] 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. [Footnote 77] 

Further, the reform act added a new section in the Procurement 
Practices Act,[Footnote 78] 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 
therein; 

* 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 of 
1994; 

* D.C. Housing Finance Agency; 

* D.C. Retirement Board pursuant to the D.C. Retirement Reform Act; 
and: 

* 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. 

[End of section] 

Appendix III: Comments from the Chief Financial Officer for the 
District of Columbia: 

Note: GAO comments supplementing those in the report text appear at the 
end of this appendix. 

GOVERNMENT OF THE DISTRICT OF COLUMBIA: 
OFFICE OF THE CHIEF FINANCIAL OFFICER: 

Natwar M. Gandhi: 
Chief Financial Officer: 

January 5, 2007: 

Ms. Ann Calvaresi Barr: 
Director, Acquisition and Sourcing Management: 
Governmental Accountability Office: 
441 G Street, N.W. 
Washington, D.C. 20548: 

Dear Ms. Calvaresi Barr: 

In your draft report on District of Columbia Procurement System Needs 
Major Reform (GAO-07-159), the Governmental Accountability Office 
(GAO), in particular the section, "The District's Law Allows Payments 
for Unauthorized Commitments to Vendors," the District's Office of the 
Chief Financial Officer takes very strong exception to the tone, 
language and details of that section, and believes that the GAO does 
not understand the OCFO's position. 

The District is required by Generally Accepted Accounting Principles 
(GAAP) to book a liability whenever the District has "received" and 
"accepted" goods and/or services from a vendor, regardless of whether 
that vendor had a valid contract or purchase order. The improper 
receipt and acceptance of goods and/or services is a procurement 
responsibility which will have to be resolved by procurement officials, 
and not by the OCFO. 

The OCFO has no authority over the actions of procurement staff, nor 
does the OCFO have authority to discipline procurement staff for 
entering into improper procurements. But, once such improperly procured 
good and/or services have been actually received and accepted, the 
District has a responsibility under GAAP to record the liability; the 
legal responsibility to make payment is determined separately through 
the ratification process. The original policy, Resource Management 
Guidance No. 96-02, was promulgated not for procurement purposes but 
for budget control purposes, to direct financial staff to record all 
obligations. Financial Management and Control Order No. 05-002, issued 
July 22, 2005, and revised October 17, 2005, neither encourages, 
authorizes, nor condones improper procurements; it merely sets up the 
mechanism for the legally required payment to be made. 

The remainder of this response will discuss certain findings, or 
statements, made by the GAO in the draft report, concerning OCFO, and 
the OCFO's response to each of those statements. 

GAO Statement: "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." (Page 26): 

The CFO Response: Only $4 million in payments for 461 transactions 
actually fell outside of the Financial Management and Control Order No. 
05-002 - Revised October 17, 2005, not $217 million, pursuant to the 
analysis that the OCFO conducted in late-2005 on the District's use of 
direct vouchers. These improper transactions averaged less than $9,000 
each, and while troublesome, are not evidence of any material breaches 
of internal control, or damage to the District's financial stability. 

The CFO Order provides requirements for the authorization of 
miscellaneous vouchers, which state that: "The Deputy CFO for the 
Office of Financial Operations and Systems (OFOS) may authorize the use 
of miscellaneous vouchers for other purposes upon making a 
determination that: 

1. The transaction is not subject to the District's procurement rules 
and regulations, and that; 

2. an alternative means of processing the transaction is not available 
and that; 

3. such voucher processing is not in violation of applicable law. 

The OCFO believes that the District's use of its policy on direct 
vouchers is used appropriately in over 99% of the transactions in which 
it is being used, and also for over 99% of the dollars that are being 
spent through the use of direct vouchers. 

GAO Statement: "Rather than take steps to hold agencies accountable for 
these violations, the CFO's policy was changed without consulting the 
CFO'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." (Page 26): 

The CFO Response: This statement is inaccurate and reflects a 
misunderstanding of the respective CFO and CPO roles. The CPO has no 
role in financial management policies including the liquidation of 
liabilities. The policy was not changed to accommodate agency 
circumstances or bypass the procurement process to more promptly obtain 
goods and services. As stated earlier, the District is required by 
Generally Accepted Accounting Principles (GAAP) to book a liability 
whenever the District has "received" and "accepted" goods and/or 
services from a vendor, regardless of whether that vendor had a valid 
contract or purchase order. The improper receipt and acceptance of 
goods and/or services is a procurement responsibility, which will have 
to be resolved by procurement officials, and not by the OCFO. 

GAO Statement: "Under Financial Management and Control Order No. 05- 
002, issued July 22, 2005, and revised October 17, 2005, the CFO added 
seven 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 transaction, 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." (Page 26): 

The CFO Response: 

We disagree that this is a needless duplication. Rather, it reasonably 
parallels other non-financial policy. We agree that the Office of 
Contracting and Procurement should be the determining agency as to what 
constitutes an "unanticipated and nonrecurring extraordinary 
emergency." The OCFO is currently reviewing Financial Management and 
Control Order No. 05-002 - Revised October 17, 2005, and, if necessary, 
we will clarify this item; OCFO personnel should not be perceived as 
being responsible for making procurement related determinations. Our 
revision, if any, will be completed within the next three months, and 
we will include comments from District agency CFOs, the Office of 
Contracting and Procurement (OCP), in addition to the District's Office 
of the Attorney General and the CFO's General Counsel: 

GAO Statement: "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." 
(Pages 26-27): 

The CFO Response: We strongly disagree that this item encourages agency 
personnel to bypass established contracting procedures. As stated 
earlier, the District is required by Generally Accepted Accounting 
Principles (GAAP) to book a liability whenever the District has 
"received" and "accepted" goods and/or services from a vendor, 
regardless of whether that vendor had a valid contractor purchase 
order. The improper receipt and acceptance of goods and/or services is 
a procurement responsibility which will have to be resolved by 
procurement officials, and not by the OCFO. In fact, the OCFO has not 
used this exception to approve payment for unauthorized contracts. 

For example, the D.C. Public Schools did make such a request, in fiscal 
2005, of the Deputy Chief Financial Officer, Office of Financial 
Operations and Systems, for the payment of Vendor Settlement Agreements 
and also for Accrued Liabilities. After thorough review, the Deputy CFO 
rejected the DCPS request, and directed them to initiate a proper 
ratification determination that followed D.C. law, OCP regulations, 
DCPS Office of Contracts and Acquisition (OCA) and OCFO requirements, 
before payment of such a request would be approved. The following 
language was used to deny the DCPS request: 

"A DCPS OCA official will have to certify that the goods and/or 
services in question were "actually" received, not "probably" received, 
and to ratify each procurement. DCPS OCA officials will also have to 
follow both DCPS and District procurement authorization policies and 
procedures in order to make sure that each requested vendor payment is 
valid. Because of the large dollar amounts of some of these claims, the 
approval of the DCPS Superintendent or School Board may also be 
required. At that point, and only then, will OFOS reconsider your 
request for the authorization of direct vouchers to make these 
payments." 

This is the sort of payment request that should only be approved after 
the OCP, following District law and its procedures on contract 
ratification, determines that ratification of the unauthorized 
procurement is appropriate. Once proper ratification has taken place, 
the OCFO must have a mechanism for making the actual payment, and the 
use of a direct voucher is the only appropriate mechanism to do so. We 
must retain this item in the CFO Order to create the obligation in the 
financial management system to make the payment. 

GAO Statement: "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." 
(Page 28): 

The CFO Response: 

We would agree that the CPO's stringent controls, regular monitoring, 
and discipline for infractions of the procurement process would greatly 
reduce unauthorized commitments. The OCFO does not have any control 
over the activities of OCP employees, or for the unauthorized 
commitments with vendors made at the agency level. Where such 
unauthorized commitments have been made and the goods or services have 
been delivered, the OCFO's position, as stated earlier, is that a real 
"liability' has been created and must be recorded; actual payment 
should await the completion of the ratification process. However, as 
indicated previously, payments were made on 461 unauthorized 
commitments totaling $4 million, and the average payment amount was 
less than $9,000.00. These minor infractions in no way harmed the 
District's financial stability. 

This is not to dismiss the seriousness of the issue. The OCFO has 
implemented better internal controls at the agency level to make sure 
that all responsible employees --OCP, agency procurement, and OCFO 
employees --are made aware of the prohibitions against making 
unauthorized vendor commitments, and that their performance plans and 
evaluations will begin to reflect such errors in applying District 
procurement regulations. 

OCFO General Comments: The use of direct voucher payments is not an 
unusual occurrence, either for governments or businesses, although 
there are different terms that are used for the process, such as: 
direct payment, direct payment orders, direct voucher, voucher payment, 
special payment, special expenditure, direct purchase order, etc. The 
District's financial operations are audited every year for the 
preparation of the District's Comprehensive Annual Financial Report 
(CAFR), and the District was not cited for a Yellow Book violation of a 
Material Weakness, Reportable Condition, or instance of Material 
Noncompliance, in regards to its use of direct vouchers during the 
entire period that direct vouchers have been in use by the District, 
from fiscal year 1996 through fiscal year 2005. 

The use of direct vouchers is an accepted procedure that private 
businesses and governments use to make payments to other governments, 
business, or individuals, for items that are non-procurable. The 
contracting and procurement process anticipates procurements, or 
purchases, that can be issued as a result of competitive bidding, and 
in those cases where the good or service and its quantity is known in 
advance, then that is the practice that should be used. 

Realistically though, there are many specific situations where the item 
is not a procurable item, such as the requirement to make a court 
ordered payment, payment (or transfers) between agencies or 
governments, utility payments, employee related benefits, worker's 
compensation and unemployment benefits payments, jury duty, court 
witness fees, stipends, debt service, payroll withholding, revenue 
refunds, etc. 

These are not procurable because they are required payments by law, 
they are payments made directly to individuals, or they are refunds of 
payments made to the District, either in error or an excess amount, 
etc. Other governmental jurisdictions and private corporations have 
similar needs and in those situations they can, and do, make similar 
payments, although they may call them something else. 

The two changes cited under Financial Management and Control Order No. 
05-002, issued July 22, 2005, and revised October 17, 2005, in regards 
to emergency procurements and contract ratifications were undertaken, 
not to thwart OCP's ability to perform their responsibilities, but to 
document those instances where necessary goods or services were 
actually received, or unauthorized contracts where the goods or 
services were actually received, and to specify the conditions that 
must be met for the payment to be made. 

The OCFO believes that GAO has failed to research the methods and 
procedures that other jurisdictions use to make payments in situations 
similar to what the District has been cited as having done improperly. 
We believe that if GAO had done such a study, then it would have been 
exceedingly clear that jurisdictions all face similar situations, and 
must use responses very similar to what the District use, even though 
they may call the process something other than "direct vouchers." 

The OCFO is in the process of updating its Financial Management and 
Control Order No. 05-002, issued July 22, 2005, and revised October 17, 
2005 to make necessary clarifications in response to the concerns of 
both the U.S. Government Accountability Office and the D.C. Office of 
Contracting and Procurement. We also plan to work with OCP to develop 
better communication and integration between OCP and OCFO computer 
systems and procedures. 

We look forward to working with officials in the Administration and the 
Congress to find solutions to the District's procurement system issues. 

Sincerely, 

Signed by: 

Natwar M. Gandhi: 
Chief Financial Officer: 

The following are GAO's comments on the CFO's letter dated January 5, 
2007. 

GAO Comments: 

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. 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Ann Calvaresi Barr (202) 512-4841 or calvaresibarr@gao.gov: 

Staff Acknowledgments: 

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. 

FOOTNOTES 

[1] The Procurement Practices Act of 1985, codified as amended in D.C. 
Official Code § 2-301.01 et seq., is the District's primary procurement 
law and is implemented through Title 27 of the District of Columbia 
Municipal Regulation. 

[2] For purposes of this report, the term "entities" refers to the 
various District departments, agencies, boards, and commissions. 

[3] On January 2, 2007, Anthony Williams ended his term and Adrian 
Fenty began his term as Mayor of the District of Columbia. 

[4] According to the Office of Contracting and Procurement, the 
following District entities procure independently of this office: Board 
of Education (for the public schools); Office of the Chief Financial 
Officer; Child and Family Services Agency; Washington Convention 
Center; District of Columbia (D.C.) Council; D.C. Court System; D.C. 
Housing Authority; D.C. Housing Finance Agency; D.C. Public Service 
Commission; D.C. Retirement Board; Department of Mental Health; 
Pretrial Services Agency; Public Defender Service; Sports Commission; 
and the Water and Sewer Authority. The Board of Education is exempted 
from the Office of Contracting and Procurement in soliciting, awarding, 
and executing contracts for the public schools, except for security 
contracts that began on or after June 30, 2005 (D.C. Official Code § 2- 
301.04(d)). 

[5] Appendix II provides more details on District governance and 
related procurement laws. 

[6] Pub. L. No. 93-198, (1973). 

[7] U.S. Constitution, Art. I, Section 8, Clause 17 provides authority 
for Congress with respect to governance of the District. 

[8] For example, the District of Columbia Financial Responsibility and 
Management Assistance Act of 1995 created a temporary federal control 
board, which supplanted most of the elected Mayor's powers and 
established the authority to review and approve all legislation passed 
by the Council; it also created a Chief Financial Officer (CFO) and 
added powers to the District's inspector general. In September 2001, 
the control board suspended its authority. In 2006, the 2005 District 
of Columbia Omnibus Authorization Act includes provisions to 
permanently establish the CFO office and require the CFO to prepare 
annual budget submissions. Pub. L. No. 109-356, § 201, amending § 424 
of the Home Rule Act. 

[9] Transportation, Treasury, and Housing and Urban Development, the 
Judiciary, the District of Columbia, and Independent Agencies 
Appropriations Act, 2006, Pub. L. No. 109-115 (2005). For more 
information on the District's fiscal relationship with the federal 
government, see GAO, District of Columbia: Structural Imbalance and 
Management Issues, GAO-03-666 (Washington, D.C.: May 22, 2003). 

[10] D.C. Law 11-259, effective April 15, 1997. The law expanded the 
procurement law's application to include independent agencies--which 
were previously excluded--and applied it to all departments, agencies, 
instrumentalities, and employees of the District government. 

[11] These studies also found that the District's contracts suffered 
from insufficient funding; deficient specifications; vague and 
conflicting delivery requirements; inadequate proposal evaluations and 
cost analysis; long processing times after bid opening; lack of 
documentation supporting technical scores; and no justification for 
sole-source contract awards and technical evaluation plans. 

[12] The D.C. Housing Authority is exempt from the authority of the 
Office of Contracting and Procurement and the District's procurement 
law, except for the provisions regarding the jurisdiction of the 
Contract Appeals Board for contract protests, appeals, and claims 
arising from procurements of the Housing Authority. D.C. Official Code 
§ 2-303.20 (m). 

[13] A permanent act requires approval of both houses of Congress while 
an emergency act, which is only effective for 90 days or less, does 
not. Appendix II provides more information on the District's laws and 
procedures. 

[14] Other amendments to the law between 2000 and 2005 exempted the 
District of Columbia Public Schools, Department of Mental Health, and 
Child and Family Services Agency from the CPO's office in order to give 
them independent procurement authority. D.C. Official Code § 2-301.04, 
D.C. Official Code § 2-303.20. 

[15] According to a District official involved, the board asked the 
Mayor for independent procurement authority because, in its view, the 
CPO's office could not support the libraries' contracting needs. 
However, this advocate also acknowledged that the board lacked the 
expertise needed and indicated that the board intends to outsource the 
entire procurement function. 

[16] A suspension is a temporary exclusion of a contractor from 
consideration for award of contracts or subcontracts based on certain 
convictions, judicial determinations of certain contract violations, or 
charges of certain offenses. D.C. Official Code § 2-308.04. A debarment 
may be a 3-year exclusion from consideration based on these 
circumstances. Under the FAR, agency heads or designees (debarring or 
suspending officials) rather than contracting officers make debarment 
and suspension decisions. FAR9.403. The FAR provides discretion to 
officials in developing a suspension and debarment decisions. FAR 9.406-
1(a). 

[17] The Debarment Procedures Emergency Amendment Act of 2004, D.C. Law 
15-327 (codified at D.C. Official Code § 2-308.04). 

[18] The interagency suspension and debarment panel was established in 
2003 and includes the CPO as well as representatives from the offices 
of the CFO and labor relations and collective bargaining; deputy Mayors 
for planning and economic development and operations; and agencies 
deemed affected by the proposed action against a vendor. 

[19] Lamond-Riggs Air Quality Study Temporary Act of 2006. D.C. Law 16- 
113. 

[20] The Oak Hill Construction Streamlining Temporary Amendment Act of 
2006. D.C. Law 16-136. 

[21] In addition, District procurement officials told us of the 
inability of these agencies to effectively carry out their temporary 
delegations of procurement authority as demonstrated by the agency 
heads seeking informal assistance from the CPO's office. These 
officials told us that the CPO's office helps the agencies prepare the 
contracts for award, but does not sign the awards because they would 
not be authorized to do so. 

[22] D.C. Official Code § 2-301.01(a)(2). 

[23] The D.C. Council can introduce emergency legislation when there is 
a situation that adversely affects the health, safety, welfare, or 
economic well-being of a person for which legislative relief is deemed 
appropriate and necessary by the council, and for which adherence to 
the ordinary legislative process would result in delay that would 
adversely affect the person whom the legislation is intended to 
protect. Similarly, the procurement law and implementing regulations 
allow the contracting officer to make an emergency procurement when 
there is an imminent threat to the public health, welfare, property, or 
safety under emergency conditions. D.C. Official Code § § 2- 
303.12(a)(1) and 2-303.05(a)(4) and as implemented by 27 DC ADC 1710- 
10.2. 

[24] The Competition in Contracting Act of 1984, Pub. L. No. 98-369 
requires all acquisitions, with some exceptions, to be made using full 
and open competition. FAR part 6 provides seven exceptions to full and 
open competition. 

[25] GAO, Highlights of a GAO Forum: Federal Acquisition Challenges and 
Opportunities in the 21st Century, GAO-07-45SP (Washington, D.C.: Oct 
6, 2006). 

[26] Professor Steven L. Schooner, Desiderata: Objectives for a System 
of Government Contract Law, Public Law and Legal Theory Working Paper 
No. 37, George Washington University Law School (Washington, D.C.: 
2002). 

[27] Such conditions include when there is only one vendor of a 
necessary good or service or during a declared emergency. 

[28] To prevent the misuse of sole source provisions, the FAR and 
District procurement regulations describe explicit limitations on each 
exception. For example, both procurement regulations state that sole- 
source contracts shall demonstrate the authority under which they are 
awarded and shall not be awarded on the basis of a lack of advance 
planning or the pending expiration of program funds. The District's 
regulation also requires that contracting officers avoid using sole- 
source procurement except when it is both necessary and in the best 
interests of the District. 

[29] The Procurement Practices Negotiated Pricing Amendment Act of 
2001, effective March 19, 2002, amended section 2-305.05 (a) of the 
procurement law to establish the (3A) provision. (D.C. Law 14-083; D.C. 
Official Code § 2-305.05 (a)(3A) et seq.) 

[30] FAR 6.302-1 states that an executive agency need not provide for 
full and open competition when the supplies or services required are 
available from only one responsible source and no other type of 
supplies or services will meet the agency requirement. The FAR 
provision defines a very limited number of circumstances under which a 
supply or service may be considered to be available from only one 
responsible source and provides detailed written justification and 
certification requirements. As implemented in the District's 
procurement regulations, the law's single available source provision 
states that a contracting officer may award a contract by using 
noncompetitive negotiation upon making a determination and findings 
that there is only one available source for a supply, service, or 
construction and that the District's minimum needs can only be met by 
this source. 

[31] Office of the Inspector General, Government of the District of 
Columbia, Audit of Contracting Actions for the District's 
Administrative Services Modernization Program, OIG No. 04-1-12MA 
(Washington, D.C.: May 3, 2005). 

[32] GAO, Contract Management: Opportunities to Improve Pricing of GSA 
Multiple Award Schedules Contracts, GAO-05-229 (Washington, D.C.: Feb. 
11, 2005) and Contract Management: Opportunities Continue for GSA to 
Improve Pricing of Multiple Award Schedules Contracts, GAO-05-911T 
(Washington, D.C. July 26, 2005). 

[33] FAR 8.4 sets forth substantial procedures for federal agencies' 
use of the multiple award schedules contracts to procure goods and 
services. For instance, in procurements exceeding the micro-purchase 
threshold--$3,000 with certain exceptions--the FAR requires ordering 
activities to place orders with the schedule contractor that represents 
the best value; requires ordering activities to seek price reductions; 
and sets forth minimum documentation requirements. In procurements for 
services that require a statement of work, the FAR requires the 
ordering activity to create a request for quotation; provide it to 
schedule contractors; and evaluate each response received before making 
the order. 

[34] Though the District's procurement regulation does not provide 
specific guidance for the use of the (a)(3) and (a)(3A) provisions, it 
does require a general determination and findings to justify use of 
sole-source authorities. 

[35] Section 13.003 of the FAR provides guidance on federal small 
purchase thresholds. 

[36] The Procurement Practices Act of 1985 established the small 
purchase threshold at $10,000 for all District agencies. In 2002, the 
District amended the procurement law to include a small purchase 
threshold of $500,000 for the Metropolitan Police Department and OCTO 
and $100,000 for all other departments, agencies, and 
instrumentalities. D.C. Official Code § 2-303.21. 

[37] According to NASPO, the dollar thresholds for triggering the 
formal competition process for non-small purchases have increased over 
the years; yet, most states require some competitive quotations for 
small dollar procurements. NASPO's small purchasing procedures call for 
soliciting a minimum of three oral or written quotations to afford the 
best practice and to ensure price comparisons. 

[38] To be eligible for the DCSS program, a vendor must first be 
certified as a LSDBE by the Department of Small and Local Business 
Development. To be eligible for an award on the DCSS, a contractor must 
adopt a federal contract schedule for services or products consistent 
with the scope of the DCSS application. This can be the vendor's own 
GSA MAS contract or another vendor's federal MAS contract. As discussed 
earlier, our previous work found that GSA does not always effectively 
negotiate MAS contract pricing and the federal government is missing 
opportunities to save millions of procurement dollars. By linking DCSS 
contract pricing to MAS pricing, the District may be similarly missing 
significant cost-saving opportunities. 

[39] The Procurement Practices Timely Competition Assurance and Direct 
Voucher Prohibition Amendment Act of 2006. D.C. Law 16-122. 

[40] CFO staff told us the internal review was in response to a 
Washington Post report alleging that District agencies made $446 
million in direct voucher payments in 2004 to vendors for such 
unacceptable uses as computers and furniture. 

[41] Under District law, in order to pay vendors that have provided 
goods or services without a valid contract, agency directors must seek 
approval for unauthorized commitments by submitting a payment 
ratification request to the Office of Contracting and Procurement. In 
August 2006, this office established written procedures under Directive 
1800.04 for the ratification of unauthorized commitments. 

[42] Office of the Inspector General, Government of the District of 
Columbia, Office of Contracting and Procurement Part One: Report of 
Inspection, OIG No. 06-0017-PO (Washington, D.C.: Aug. 23, 2006). Of 
this amount, $33 million was to ratify payments for OCTO's unauthorized 
vendor commitments. Further, the inspector general stated that District 
employees are not consistently held accountable for unauthorized 
commitments. In another report, a senior official at the Department of 
Health, who did not have contracting authority, bypassed the normal 
procurement process by preparing and signing a letter authorizing a 
vendor to provide transportation services to medical appointments for 
Medicaid recipients. The contractor billed the department $936,000 for 
these services and, after ratification was complete, received a direct 
voucher payment. (Office of the Inspector General, Government of the 
District of Columbia, Audit of Contractual Arrangement for Non- 
Emergency Transportation of Medicaid Recipients, OIG No. 05-2- 
18HC(a)(Washington, D.C.: May 5, 2006). 

[43] Under the Anti-Deficiency Act, District government officers as 
well as federal officials are prohibited from making obligations or 
expenditures in excess of amounts available in an appropriation or fund 
unless they are otherwise authorized to do so by law. 

[44] In Atlanta, direct vouchers or "confirmation purchase orders" are 
only used when there is a dire need such as a threat to safety, 
welfare, or the financial security of the city and the procurement 
process would not apply. According to the CPO, they are reviewed very 
closely and often not approved. Similarly, the Baltimore CPO said that 
city has taken steps to curb the use of these type payments for goods 
and services valued at over $1,000. 

[45] District of Columbia Auditor, Letter Report: Sole Source 
Agreements Issued by the Executive Office of the Mayor and Office of 
the City Administrator Failed to Comply with Procurement Law and 
Regulations (Washington, D.C.: June 3, 2005). 

[46] Requirements for federal acquisition planning are addressed in 
detail in the FAR. For example, in justifying contracting without 
providing for full and open competition in the federal procurement 
system, FAR Part 6.301 policy states that "a lack of advance planning 
by the requiring activity" shall not be used. Similarly, in order to 
promote competition, FAR policy requires acquisition planning for all 
acquisitions and the efforts of all responsible personnel for the 
purpose of ensuring that the government meets its needs in the most 
effective, economical, and timely manner. NASPO's state and local 
government purchasing principles similarly emphasize acquisition 
planning and scheduling and discuss the role of the central procurement 
office--both in terms of broad, longer-term management and in terms of 
day-to-day decision making on the timing of procurements and methods of 
contracting at the operations level. 

[47] In October 2006, we were told that this interim CPO left his 
deputy Mayor position in the District government. This latest vacancy 
in the District's CPO position is now being filled on an acting basis 
by the commodity manager for human care supplies and services 
contracting. 

[48] The District's Procurement Practices Act, as enacted, in 1986 
required within 12 months of the effective date, the establishment of a 
comprehensive computer-based material management information system for 
collecting, organizing, disseminating, maintaining, and reporting 
procurement data that takes into account the needs of all branches of 
the District government. Further, the act required the system to permit 
measuring and assessing the impact of procurement activities on the 
economy of the District government and the extent to which LSDBEs were 
sharing in the District's contracts. Moreover, the act required the 
system to (1) serve for policy and management control purposes, such as 
forecasting material requirements and purchasing; (2) reflect the state 
of the art in information systems technology; and (3) have the ability 
to accommodate future technical enhancements. 

[49] GAO, Best Practices: Using Spend Analysis to Help Agencies Take a 
More Strategic Approach to Procurement, GAO-04-870 (Washington, D.C.: 
Sept. 16, 2004). 

[50] According to the CPO's office, PASS is a commercial procurement 
software application that includes different modules. PASS supports the 
District's on-line procurement process and is intended to help 
contracting personnel more efficiently purchase, report, and manage 
procurements. PASS is being incrementally deployed with the District 
having so far implemented two of the four modules, including (1) the 
automated, Web-based buying module and (2) the module that facilitates 
Web-based obligation and approval for vendor payments. 

[51] Office of the Inspector General, District of Columbia, Office of 
Contracting and Procurement Part One: Report of Inspection, OIG No. 06- 
0017-PO (Washington, D.C.: Aug. 23, 2006). 

[52] Center for Innovation and Reform, Executive Office of the Mayor, 
Contracting and Procurement Continuous Improvement Initiative: 
Recommendations for Reform (Washington, D.C.: Sept. 30, 2004). 

[53] Contracting and Procurement Reform Task Force Establishment 
Emergency Act of 2005 and the Contracting Reform Task Force 
Establishment Temporary Act of 2006. 

[54] NASPO, State & Local Government Purchasing: Principles & 
Practices, Fifth Edition (Lexington, Ky.: 2003). 

[55] ABA, Model Procurement Code for State and Local Governments, 
adopted in 1979 and updated in 2000. 

[56] GAO, District of Columbia: D.C. Public Schools Inappropriately 
Used Gas Utility Contract for Renovations, GAO-01-963 (Washington, 
D.C.: Sept. 28, 2001); Best Practices: Taking a Strategic Approach 
Could Improve DOD's Acquisition of Services, GAO-02-230 (Washington, 
D.C.: Jan. 18, 2002); Metropolitan Washington Airports Authority: 
Contracting Practices Do Not Always Comply with Airport Lease 
Requirements, GAO-02-36 (Washington, D.C.: Mar. 1, 2002); 
Transportation Security Administration: High-Level Attention Needed to 
Strengthen Acquisition Function, GAO-04-544 (Washington, D.C.: May 28, 
2004); Homeland Security: Successes and Challenges in DHS's Efforts to 
Create an Effective Acquisition Organization, GAO-05-179 (Washington, 
D.C.: Mar. 29, 2005); and United Nations: Procurement Internal Controls 
Are Weak, GAO-06-577 (Washington, D.C.: Apr. 25, 2006). 

[57] Pub. L. No. 93-198 (1973). The federal Act was supplemented by 
D.C. Council Rules, which provide rules of organization and procedure 
for the Council. It should be noted that a Council enactment is cited 
as an "act" but a congressional enactment is cited as an "Act." 

[58] The D.C. Council has 13 members who are elected for 4-year terms. 

[59] U.S. Const., art. I, § 8, cl. 17. 

[60] Council Rule, Art. IV, § 305. Hearings require public notice and 
may be given by publication in the D.C. Register, in newspapers, 
mailing notices to a mailing list maintained by the Secretary, and by 
other means. Council Rule, Article IV, § 425. 

[61] Council Rule, Art. IV, § 422. 

[62] The 30-day period excludes Saturdays, Sundays, and holidays, and 
any day on which either House of Congress is not in session. Thus, if 
one or both of the Houses are out of session, a day cannot be counted 
within that time. Home Rule Act, section 602 (c)(1). Also, Congress 
usually adjourns in October. As a result, any act passed by the Council 
after July usually will not become law until the following year. 

[63] The legislative history of the Home Rule Act does not provide 
insight about what Congress intended regarding the frequency or 
circumstances in which the Council should use the emergency act 
provision. If the Council finds the existence of an emergency and 
approves an emergency bill, the Council may, at the same legislative 
session, consider a temporary bill on first reading without committee 
referral; the temporary bill must be "substantially similar" to the 
emergency bill and may remain effective for not more than 225 days. 
Temporary legislation is passed with an emergency legislation to ensure 
that some legislation is in effect while permanent legislation is 
before Congress and to fill the gap between the expiration of an 
emergency act and the effective date of a permanent act. 

[64] Current Council rules clarify that an "emergency" means a 
situation that adversely affects the health, safety, welfare, or 
economic well-being of a person for which legislative relief is deemed 
appropriate and necessary by the Council, and for which adherence to 
the ordinary legislative process would result in delay that would 
adversely affect the person whom the legislation is intended to 
protect. It also clarifies that legislation must take effect, according 
to its terms, either immediately or at a specific time. Council Rule, 
Art. IV, § 412(b)(c). 

[65] The Mayor cannot, however, delegate the authority of approving or 
disapproving acts passed by the Council. Home Rule Act, § 422(6). 

[66] D.C. Law 6-85 (1986), codified at the D.C. Official Code, § 2-301 
et seq. 

[67] Home Rule Act, § 412(a). The Procurement Practices Act provided 
that nothing in the act or in its implementing regulations abrogates 
the powers and duties of the Mayor pursuant to the Home Rule Act or any 
other law not specifically repealed by the Procurement Practices Act. 
D.C. Law 6-85, § 201(b) (1). 

[68] Although the Procurement Practices Act did not define the term 
"subordinate agency," it defined the term "agency" as used in the act 
to exclude an independent agency from its application, so we know that 
a subordinate agency is not an independent agency. D.C. Law 6-85, § 
107(2). 

[69] The D.C. Administrative Procedures Act provides that "independent 
agency" means any agency of the government of the District with respect 
to which the Mayor and the Council that is not authorized by law, other 
than by this title, to establish administrative procedures, but does 
not include the courts of the District and the District of Columbia Tax 
Court. The District of Columbia Administrative Procedures Act of 1968, 
Pub. L. No. 90-614, § 102(5). The Act did not enumerate specific 
agencies that were independent. 

[70] D.C. Law 11-259 (1997). 

[71] Id. at § 105 (a) (b). 

[72] Id. at § 105 (p) (codified at D.C. Official Code § § 2-303.05(a) 
(4)and 2-303.12 (a)(1). 

[73] 27 DC ADC 1710.2. 

[74] D.C. Law 11-259, § 104 (a)(c) (codified at D.C. Official Code § 2- 
301.04). 

[75] Under the District of Columbia Financial Responsibility and 
Management Assistance Act (FRMAA) of 1995, Pub. L. No. 104-8 (1995), 
Congress established the Control Board upon finding that the District 
government was in a fiscal emergency, was plagued by pervasive 
mismanagement, and failed to deliver effective or efficient services to 
residents. FRMAA, at § 305(4). The Control Board was provided wide- 
ranging statutory powers to improve the District government's 
operations, including authority to award contracts and review and 
approve certain contracts. FRMAA, at §§ 102(c)(2), 103(g), and 203(b). 

[76] A control year, as defined in the FRMAA, means any fiscal year for 
which a financial plan and budget approved by the Control Board is in 
effect, and includes fiscal year 1996. FRMAA, § 305(4). The District 
government was under the Control Board's authority from April 1995 
until September 2001. 

[77] D.C. Law 11-259, § 104(c). Despite the provision that the Office 
of the CFO must be bound by provisions in the Procurement Practices Act 
during years other than control years, Congress has extended the 
authority provided to the CFO to exercise the procurement authority 
granted to it during a control year in several appropriations acts 
relating to the District. The most recent appropriation act relating to 
the District exempts the CFO's acquisitions from all provisions of the 
Procurement Practices Act. Transportation, Treasury, Housing and Urban 
Development, the Judiciary, the District of Columbia, and Independent 
Agencies Appropriations Act, 2006, Pub. L. No. 109-115, § 132 (2005). 

[78] D.C. Law 11-29, § 320 (codified at D.C. Official Code § 2-303.20). 

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