Top city of San Diego executives need to address continued problems with the administration and oversight of municipal contracts, city auditors recommended Thursday.
A review of 50 select municipal contracts, and a further examination of six of them, turned up weaknesses in an oversight process in which some of the deals are administered by the Purchasing and Contracting Department, while others and handled by individual city departments, the city auditor’s office reported.
The structure led to a situation where some contracts were not properly executed; work in another started before the deal was finalized; purchase orders were not properly tied to the contracts; extensions weren’t completed before agreements lapsed; and invoices were paid without verifying that the pricing spelled out in the contract was followed, according to the report, which was requested by the City Council’s Audit Committee.
The auditors also found that some procurement and authorization procedures weren’t followed; staff didn’t take advantage of discounts from vendors for early payments; and that 10-15 percent markups were found above department-approved pricing.
Most of the contracts given more thorough scrutiny were with landscaping firms, and also a crane supplier and a heating and air conditioning company.
San Diego officials have for years been concerned about the effectiveness of the Purchase and Contracting Department, which underwent a series of leadership changes and has more recently been subject to several reforms.
Among the 10 recommendations from the auditors: “The city’s executive management, led by the chief operating officer, should take a lead role in systematically addressing contract administration and oversight problems.”
The auditors said top management needs to ensure that department directors provide their contract administrators with training and other information necessary to understand and satisfy contract administration requirements; set expectations and establish standards of performance; and conduct ongoing evaluations to make sure that correct procedures are being followed.
In a memo, Assistant Chief Operating Officer Stacey LoMedico agreed with each of the recommendations.
City officials released a statement in conjunction with the audit that said the Purchasing and Contracting Department began redesigning the city’s procurement processes, with help from the Department of Information Technology, over the past year.
“The contract oversight function in the city was overdue for an overhaul, and we’re in the midst of that now,” said Kristina Peralta, the city’s purchasing and contracting director.
The city, according to the statement, is also drafting a comprehensive procurement manual of processes and guidelines for contract administrators citywide, and investing in a contract sourcing solution that will provide the department with the tools needed to centrally manage the contracts.
–City News Service
