MINOT, N.D. — Having a solid procurement process is important. It doesn't matter if we're talking about a private sector business or the government, you have to establish a process that ensures that transactions are in the best interest of the organization, and not the best interest of some well-connected lobbyist of public official's brother-in-law.
We don't even need the potential for corruption or nepotism to justify procurement policies. The ongoing controversy at the State Investment Board, where the hire of money management consultants is exempt from public procurement policies, has revealed that one company, Callan, has had the state's investment consulting business since the Reagan administration.
During that time the state's pension investments have ranked "among the 10 lowest states" according to the Institute for Pension Fund Integrity, and it's recently been revealed that Callan has been recommending a lot of companies that have also paid the company's foundation for training seminars.
Do you suppose a procurement process might have helped state officials identify these problems?
Problem is, even where procurement laws exist, they're often not followed, and there are few consequences for not following them.
"Because of missing documentation, our team was unable to determine if a total of $334,705 of goods and services purchased were in compliance with state law, North Dakota University System procedures, and Dickinson State University policy," the report concludes.
The primary explanation for this missing documentation? Staff turnover, apparently, which doesn't speak highly for the competency of administrators at DSU. Someone leaves, and suddenly nobody can find the records they were working with?
Breaking down that dollar amount, the SAO found, "Four purchases, totaling $91,768 fell into the $10,000 to$49,999 category, which requires bids from three or more vendors," the report states. "Two purchases, totaling $136,886 fell into the $50,000-$99,999 category, which requires bids solicited through the state’s online procurement office website. One purchase of $106,051 was over $100,000, which requires the use of formal sealed bids and posting to the state's online procurement office website."
But more troubling than these numbers — a $100,000 purchase that didn't follow procurement rules? — is the fact that these problems aren't new for DSU.
"This was a repeat finding from the past two audits," the Auditor's Office said in a news release announcing the report.
“Procurement continues to be an issue in the University System,” Gallion is quoted as saying in that release.
Not only were hundreds of thousands of dollars worth of purchases made outside of the procurement policy required by state law, the North Dakota University System policy, and DSU policy, but this has been an ongoing problem for three audits now.
At what point should there be consequences for this sort of thing?
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Rob Port, founder of SayAnythingBlog.com, is a Forum Communications commentator. Reach him on Twitter at @robport or via email at email@example.com.