MONTPELIER — Vermont's state auditor sharply criticized the state's contracting practices in a report issued Monday, saying more than 41 percent of contracts reviewed were issued without competitive bidding, many of them without adequate justification.
Auditor Doug Hoffer's office reviewed nearly 1,000 contracts entered into by five different state agencies and departments in fiscal 2015 and found that "the high frequency of sole source contracts across the five departments and agencies in this analysis raises serious questions about the effectiveness of the state's contract management. ... State officials have a responsibility to the public and to Vermont businesses to make every effort to competitively bid contracts."
The Agency of Education, the Agency of Human Services Central Office, the Department of Buildings and General Services, the Department for Children and Families, and the Department of Vermont Health Access were subjected to the auditor's review.
All five responded by saying there were flaws with some of the findings.
But Administration Secretary Justin Johnson, whose job entails granting exceptions to the rule that state contracts be put out to competitive bid, wrote in a formal response, "I generally agree with the observations outlined in the report and will work with agency secretaries and departmental commissioners to strengthen the oversight and review of the contracting process ... ."
Competitive bidding is designed to ensure that taxpayers get the best available deal on goods and services bought by government, and to ensure that companies have an equal crack at getting state business. Waivers from the competitive bidding process are to be granted only for "extraordinary circumstances," according to a state policy adopted 20 years ago.
But the auditor's report, labeled "Sole Source Contracts: Extraordinary Use in Ordinary Times," found that far from extraordinary, sole-source contracts were commonplace, and cost the five agencies and departments a combined $68 million in fiscal 2015. That didn't include a $90 million sole-source contract with the University of Vermont Medical Center for funding graduate medical education for three years. The auditor's report called that "a legitimate use of the sole-source guidelines."
"Although some sole source practices were appropriate, many contracts raised questions and concerns about the possible abuse of sole source procedures," the report said. "Frequently, sole source justifications lacked any mention of extraordinary circumstances, let alone evidence of them."