In the wake of a failed contract with a vendor that could potentially cost the state $700,000, state auditors have recommended that the Department of Administrative Services use staff better trained in contract negotiations.
The auditors said in their report released Thursday that red flags should have been raised when a vendor, which the report did not identify, required a 20 percent down payment on a $3.6 million contract for case-management software to be used by the Workers Compensation Commission before any work was performed. They said the Bureau of Enterprise Systems and Technology (BEST), which negotiated the contract on behalf of the Workers Compensation Commission (WCC), didn’t act in the best interests of the state.
After the contract was canceled, the auditors said, the DAS, of which BEST is a part, discovered there was no need to purchase the software because the state already had similar software that would work as well.
A DAS spokesperson said the IT manager for WCC, although nominally a DAS employee for administrative purposes, works at the direction of WCC and does not report to anyone at DAS. He said it is the responsibility of the WCC to oversee that person’s work.
The auditors said their report revealed a lack of communication between BEST employees within the DAS central office and those assigned to WCC. It said DAS approved the requisition, despite being the agency responsible for knowing there was another option. It also criticized the agency for authorizing information technology employees to negotiate the contract without oversight by contracting experts at DAS.
The report said the vendor selection process appeared flawed as proper due diligence, including contacting references, was not considered or documented fully.
WCC disputed the findings in the audit, arguing that it followed proper contract procedures. It said the evaluation process was not flawed and the same vendor would have been hired regardless. The auditors said they could not confirm that the most qualified vendor was selected or that the final determination would have remained the same.
The DAS spokesperson was critical of the auditors findings. He said the auditors reached out to DAS for background information on the master contract but did not give DAS a chance to review their findings in this matter or otherwise comment on them prior to publication, contrary to the auditors’ own practice.
