District of Columbia: Procurement System Needs Major Reform

GAO-07-159 Published: Jan 19, 2007. Publicly Released: Feb 15, 2007.

Highlights

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.

Recommendations

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Executive Office of the Mayor	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, the Mayor of the District of Columbia should 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 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.	Closed – Implemented In February 2008, the Mayor of the District of Columbia submitted a comprehensive plan with timeframes to the House and Senate oversight committees. Further, in February 2010, consistent with GAO's recommendation for executive action, the Mayor submitted to the D.C. Council comprehensive reform legislation, entitled the "Procurement Practices Reform Act of 2010." According to the Mayor's press release, the legislation would improve most of the District's existing laws covering procurement authority and consolidate the Chief Procurement Officer's (CPO) authority. According to the CPO's testimony before the D.C. Council, the legislation draws from model procurement practices in other... View More
Executive Office of the Mayor	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, the Mayor of the District of Columbia should 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 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.	Closed – Implemented In February 2008, the Mayor of the District of Columbia submitted a comprehensive plan with timeframes to the House and Senate oversight committees. Further, in February 2010, consistent with GAO's recommendation for executive action, the Mayor submitted to the D.C. Council comprehensive reform legislation, entitled the "Procurement Practices Reform Act of 2010." According to the Chief Procurement Officer's (CPO) testimony before the D.C. Council, the reform legislation draws from model procurement practices in other jurisdictions and would strengthen CPO authority by expanding the procurement code's applicability to district agencies. The legislation was passed and became effective on... View More
Executive Office of the Mayor	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, the Mayor of the District of Columbia should 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 consider reestablishing the CPO as the sole authority for suspension and debarment decisions.	Closed – Implemented In February 2008, the Mayor of the District of Columbia submitted a comprehensive plan and a timeframe to the House and Senate oversight committees, and in April 2009 provided GAO and those committees an update on the District's continuing efforts to address GAO's recommendations. As of April 2009, the mayor's update indicated that reestablishing the CPO as the sole authority for suspension and debarment decisions requires amending the District's procurement law. Toward that end, in January 2009, the Office of Contracting and Procurement submitted to the city council proposed legislation to amend the district procurement law by eliminating the Debarment and Suspension Panel and making... View More
Executive Office of the Mayor	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, the Mayor of the District of Columbia should 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 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.	Closed – Implemented In February 2008, the Mayor of the District of Columbia submitted a comprehensive plan with timeframes to the House and Senate oversight committees. Further, in February 2010, consistent with GAO's recommendation for executive action, the Mayor submitted to the D.C. Council comprehensive reform legislation, entitled the "Procurement Practices Reform Act of 2010." According to the Chief Procurement Officer's testimony before the D.C. Council, the reform legislation eliminates several provisions of existing law to improve competition. The legislation was passed and took effect in April 2011. Specifically, Section 404 (sole source procurements) of the law provides that a contract may only... View More
Executive Office of the Mayor	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, the Mayor of the District of Columbia should 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 reconsider appropriateness of high dollar thresholds for small purchases to maximize competition.	Closed – Implemented In February 2008, the Mayor of the District of Columbia submitted a comprehensive plan and a timeframe to the House and Senate oversight committees, and in April 2009 provided GAO and those committees an update on the District's continuing efforts to address GAO's recommendations. In response to this recommendation intended to reduce high dollar thresholds that limited competition for small purchases, several major actions were taken in 2009 which should promote more competition in the District's procurement system. First, in January 2009 the CPO's office submitted a legislative proposal to the city council. With the city council's enactment of the legislation in July 2009, this reform... View More
Executive Office of the Mayor	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, the Mayor of the District of Columbia should 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 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.	Closed – Implemented In February 2008, the Mayor of the District of Columbia submitted a comprehensive plan and a timeframe to the House and Senate oversight committees, and in April 2009 provided GAO and those committees an update on the District's continuing efforts to address GAO's recommendations. As of April 2009, the mayor's update demonstrates that several actions have been taken to revise the DCSS program that promote elimination of barriers to competition identified in our report and respond to each part of this recommendation. For example, the CPO has (a) reviewed current caps for certain DCSS schedules and has now put in place appropriate dollar thresholds for each DCSS solicitation. In response... View More
Executive Office of the Mayor	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, the Mayor of the District of Columbia should 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 require that specific guidance on the use of the DCSS program be incorporated into the District's regulations.	Closed – Implemented In February 2008, the Mayor of the District of Columbia submitted a comprehensive plan with timeframes to the House and Senate oversight committees. Futher, in February 2010, consistent with GAO's recommendation for executive action, the Mayor submitted to the D.C. Council comprehensive reform legislation, entitled the "Procurement Practices Reform Act of 2010." According to the Chief Procurement Officer's (CPO) testimony before the D.C. Council, the reform legislation includes provisions to improve the use of the D.C. Supply Schedule (DCSS) program. The law was passed and took effect in April 2011. Specifically, section 412 is a separate section that establishes the DCSS program. As a... View More
Executive Office of the Mayor	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, the Mayor of the District of Columbia should 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 eliminate the procurement-related circumstance that allows direct voucher payments for emergency procurements.	Closed – Implemented Between May and September 2007, the District's Chief Financial Officer (CFO) took action in reponse to this and a related recommendation directed to the CFO to develop and implement revised financial policy to eliminate emergency procurement-related circumstances that allow agencies to use direct voucher payments for unauthorized commitments. According to the CFO, to implement this revised policy, his office would further review and make conforming changes in all CFO fund obligation and payment processing policies and procedures; D.C.'s automated financial accounting records system; any D.C. laws and regulations; and notify all city employees, vendors, and others about the revised... policy. View More
Executive Office of the Mayor	To further discourage the use of unauthorized commitments to vendors, the Mayor of the District of Columbia, in coordination with the CFO and other stakeholders, should 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.	Closed – Implemented In February 2008, the Mayor of the District of Columbia submitted a comprehensive plan and a timeframe to the House and Senate oversight committees, and in April 2009 provided GAO and those committees an update on the District's continuing efforts to address GAO's recommendations. As of June 2009, the CPO's office has taken aggressive actions to complete implementation of this recommendation and significantly reduce the number of ratifications requested by agencies. First, as of March 2008, the CPO cut-off approvals for ratification requests from district agencies. Second, as part of a one-time alternative to ratification to address situations with agencies continuing to identify having... View More
Executive Office of the Mayor	To further discourage the use of unauthorized commitments to vendors, the Mayor of the District of Columbia, in coordination with the CFO and other stakeholders, should 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.	Closed – Implemented Since 2008, the CPO's office has taken aggressive actions to complete implementation of this recommendation aimed at actively reducing and ultimately eliminating the number of ratifications requested by agencies and holding parties accountable. Specifically, as of March 2008, the CPO's office cut off approval for ratifications; abolished the ratification committee; and communicated to agency leadership the importance of avoiding unauthorized commitments with vendors and ratifications. Since the March 2008 cut-off, the CPO reports a drop off in requested ratifications to 16 from 116 in the previous year. As of March 2009, the CPO's new procurement policy bans ratifications altogether and... View More
Executive Office of the Mayor	To further discourage the use of unauthorized commitments to vendors, the Mayor of the District of Columbia, in coordination with the CFO and other stakeholders, should, 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.	Closed – Implemented Since 2008, the CPO's office has taken aggressive actions to complete implementation of this recommendation aimed at actively reducing and ultimately eliminating the number of ratifications requested by agencies and holding parties accountable. As further described above and consistent with this and the related preceding recommendations, the procedures put in place by the CPO's office between March 2008 and March 2009 to first stop approvals for ratifications; then use a temporary alternative to ratification ("Quantum Meruit Recovery"), and last implement new policy prohibiting the use of ratifications for unauthorized commitments and employment termination for employees (or supervisors... View More
Executive Office of the Mayor	To strengthen management and oversight practices in the District's procurement system, the Mayor of the District of Columbia should recruit and appoint a CPO with the requisite skills and procurement experience as required in the law.	Closed – Implemented In June 2007, the Mayor appointed an Acting Chief Procurement Officer for the District and in November 2007, that appointment was confirmed by the District of Columbia City Council. According to the Mayor, and in follow-up discussions with the new CPO, the CPO is a Certified Public Procurement Officer with more than 15 years of relevant procurement experience. Specifically, the CPO has extensive career experience leading procurement systems in other states; has served as an active leader in national associations for government procurement and contract management officials, and has worked as an expert consultant to other procurement agencies throughout the country. His qualifications and... View More
Executive Office of the Mayor	To strengthen management and oversight practices in the District's procurement system, the Mayor of the District of Columbia should elevate the CPO's position and office so that it is either in line with other critical cross-government functions, such as the Office of the Chief Technology Officer (OCTO), or higher and would allow participation in cross-cutting executive management, budgeting, planning, and review processes.	Closed – Implemented The Mayor's February 2008 procurement reform plan submitted to GAO and Congressional staff highlighted a revised District government organization chart clearly showing that the Office of Contracting and Procurement now reports directly to the City Administrator as opposed to a Deputy Mayor of Operations. According to discussions with the current Chief Procurement Officer (CPO) and reiterated in the Mayor's June 2007 written response to GAO's report, to be effective, the CPO must be an active participant in the management, budgeting, planning, and review processes when such processes occur at the highest levels of District government. The mayor wrote at that time that he had strengthened... View More
Executive Office of the Mayor	To strengthen management and oversight practices in the District's procurement system, the Mayor of the District of Columbia should direct the CPO to develop a process and tools for frequent and regular interactions with agency heads and program managers to support acquisition planning.	Closed – Implemented Consistent with this recommendation, according to the Chief Procurement Officer (CPO), by April 2010 the Office of Contracting and Procurement completed their efforts with the District's budget and planning office to integrate acquisition planning into each agency's annual budget development and approval process. According to the CPO's office, procurement staff are (1) now able to leverage budget information from agencies to identify advance planning requirements for new procurements; (2) reviewing spend data from the automated procurement system (PASS) to support acquisition planning for expiring contracts and identify opportunities to consolidate contracts for like requirements; and... View More
Executive Office of the Mayor	To strengthen management and oversight practices in the District's procurement system, the Mayor of the District of Columbia should direct the CPO to develop a procurement manual concurrent with revision in the procurement law.	Closed – Implemented In February 2008, the Mayor of the District of Columbia submitted a comprehensive plan and a timeframe to the House and Senate oversight committees, and in April 2009 provided GAO and those committees an update on the District's continuing efforts to address GAO's recommendations. As of April 2009, in response to and consistent with this recommendation, the CPO's office has completed development of a procurement procedures manual for contracting staff, and has it posted on the District government's intranet Web sites for their use. According to the CPO's office, the revised manual is comprehensive and manual lays out in one place policies, rule, and standardized procedures and practices.... View More
Executive Office of the Mayor	To strengthen management and oversight practices in the District's procurement system, the Mayor of the District of Columbia should direct the CPO to establish a plan and schedule for professional development and certification programs for contracting staff and to track personnel trained.	Closed – Implemented In response to and consistent with this recommendation, the CPO's office completed several actions between 2008 and 2008 directed at improving professional development and certification programs for contracting staff and to track personnel training and certifications. For example, in fiscal year 2008, the CPO's office invested resources in training some procurement staff to become Certified Professional Public Buyers by the Universal Public Purchasing Certification Council. Also, in fiscal year 2009, the CPO's office rolled out a certification program, targeted at agency contracting officers and uncertified staff in the CPO's office, that is more closely tied to District guidelines and... View More
Executive Office of the Mayor	To strengthen management and oversight practices in the District's procurement system, the Mayor of the District of Columbia should direct OCTO to work with the CPO to expeditiously complete installation of an integrated procurement data system.	Closed – Implemented Between December 2009 and October 2010, the Chief Procurement Officer's (CPO) office will have completed a series of actions to work with the Chief Technology Officer's (CTO) office to secure necessary funding and finish installing the District's fully integrated on-line procurement data system (i.e. PASS). With these actions, the CPO has gained much needed capabilities for managing and overseeing the city's multi-billion dollar procurement system. Consistent with GAO's recommendation, the District took or plans to take the following specific actions: (1) contract award in December 2009 to the PASS vendor for installation of the final two modules (i.e. Ariba Contract Compliance and... View More
Executive Office of the Mayor	To help ensure the District makes adequate progress in revising its procurement law and improving procurement management and oversight, the Mayor of the District of Columbia should 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.	Closed – Implemented Consistent with this recommendation and on an annual basis since 2008, the Mayor of the District of Columbia is providing an update to the House and Senate oversight committees on progress being made on remediation items in response to GAO's report. For example, in April 2009, the Mayor wrote congressional committees an update on progress being made since the February 2008 comprehensive plan submitted to those committees for (1) revising the district's procurement law and (2) improving procurement management and oversight. According to the Chief Procurement Officer (CPO) in April 2010, future annual letters from the Mayor to GAO and congressional committees will provide updates on the... View More
Office of the Chief Financial Officer	In addition, to further discourage the use of unauthorized commitments to vendors, the Chief Financial Officer (CFO) of the District of Columbia should revise Financial Management and Control Order No. 05-002 to eliminate the use of direct vouchers payments for emergency procurements.	Closed – Implemented In September 2007, the Chief Financial Officer (CFO) replaced Financial Management and Control Order No. 05-002 with a completely new order (No. 07-004). Following GAO's recommendation, the new guidance eliminates the procurement related circumstance that allows direct voucher payments for emergency procurements. The new guidance also provides more detail for certain items and gives examples of payments that are appropriate for use of direct vouchers in addition to defining certain types of payments that are not appropriate. Moreover, in May 2007 the CFO wrote us regarding this recommendation, stated that in implementing the revised order, his office would be reviewing and making... View More
Office of the Chief Financial Officer	In addition, to further discourage the use of unauthorized commitments to vendors, the Chief Financial Officer (CFO) of the District of Columbia should work with the CPO and other stakeholders to 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.	Closed – Implemented Consistent with this recommendation and according to the CFO's office, its actions to revise the financial policy on unauthorized commitments for goods and services was coordinated with the CPO's office to discourage them. As such and consistent with our related recommendations aimed at the mayor's and CPO's offices, as of June 2009, the CPO's office has taken aggressive actions to significantly reduce the number of ratifications requested by agencies and discourage unauthorized commitments by district government personnel. First, as of March 2008, the CPO cut-off approvals for ratification requests from district agencies. Second, as part of a one-time alternative to ratification to... View More
Office of the Chief Financial Officer	In addition, to further discourage the use of unauthorized commitments to vendors, the Chief Financial Officer (CFO) of the District of Columbia should work with the CPO and other stakeholders to 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.	Closed – Implemented Consistent with GAO's recommendation, in September 2007, the Office of Chief Financial Officer (CFO) implemented a revised Financial Management and Control Order (No. 07-004) that makes it clear that improper use of fund purpose and budget object categories could also be subject to both District and federal Anti-Deficiency Act laws. According to the CFO in May 2007, in implementing this revised order, his office will implement the new financial management guidance by reviewing and making conforming changes in all CFO fund obligation and payment processing policies and procedures; the District's automated financial accounting records system; any District laws and regulations; and notify... View More
Office of the Chief Financial Officer	In addition, to further discourage the use of unauthorized commitments to vendors, the Chief Financial Officer (CFO) of the District of Columbia should work with the CPO and other stakeholders to, 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.	Closed – Implemented Consistent with this recommendation and according to the CFO's office, its actions to revise the financial policy on unauthorized commitments for goods and services was coordinated with the CPO's office to discourage them. As such and consistent with our related recommendations aimed at the mayor's and CPO's offices, as of June 2009, the CPO's office has taken aggressive actions to significantly reduce the number of ratifications requested by agencies and discourage unauthorized commitments by district government personnel. First, as of March 2008, the CPO cut-off approvals for ratification requests from district agencies. Second, as part of a one-time alternative to ratification to... View More

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