Auditor Of Public Accounts
State Auditor Crit Luallen Releases Examination of City of Georgetown' s Computer Contract. Referral to Attorney General, Commonwealth, City, and County Attorney for Further Investigation.
State Auditor Crit Luallen released a special examination into a series of contracts between CompData, a single employee computer contractor, and the City of Georgetown. The seven findings and fourteen recommendations were given to the Mayor and City Council and have been referred to the Attorney General's Office, the Georgetown City Attorney, the Commonwealth's Attorney, and the Scott County Attorney. The examination, requested by the City of Georgetown, uncovered that the city entered into 14 contracts totaling $740,466 plus daily expenses with CompData from 1998 through 2004. However, total payments from the city to CompData during that time period was $1,869,439.
"This review raises serious questions about the contract as awarded and fulfilled. Further investigation is needed to determine whether criminal or civil proceedings are warranted. The City of Georgetown has many good policies, but they were not followed throughout these contracts increasing the opportunity for abuse and other problems," said Crit Luallen.
When the contract was first awarded in 1998, the city failed to follow established purchasing policies. The initial contract was awarded in a non - competitive negotiation because of an emergency caused by a series of computer system failures. However, no emergency was established by written declaration as required by the City's Purchasing Policy. The city did not follow any of the four approved purchasing methods for subsequent contracts.
Additionally, the City's Purchasing Policy prohibits the delegation of contracting authority for any contract in excess of $10,000. 3 of the 10 contracts over the $10,000 mark were approved by the Finance Director and not the Mayor or Council. Also, $206,411 in payments to CompData were omitted from an encumbrance list provided to each city council member during regular meetings and therefore were not available for council review.
A review of CompData invoices revealed insufficient detail, errors, and questionable charges. Some invoices refer to blocks of hours but no corresponding dates; others were for work that had not yet been performed. On numerous occasions CompData charged daily expenses to multiple clients on the same day and, on three occasions, invoices revealed days in which 20 or more hours were billed to the city and another client.
The vendor created the 14 contracts with little participation from the city. They contained no end dates or limits on payments. The city also signed a Maintenance Agreement covering 2001 through 2004. This agreement, signed by the Finance Director, led to the city paying CompData approximately $900,000 over the amounts obligated by the other contracts. Additionally, the city disregarded its responsibility to monitor contract activity and payments. The city did not compare invoices to the related contracts and hours of work were not verified.
The examination offered the city recommendations to improve contracting policies and procedures that would alleviate many of these problems in the future. These include requiring unique contract numbers assigned to each contract and the contract number being referenced on invoices; each contract being scrutinized by the city at conception and throughout the contract's implementation; and that an attorney's signature be required for large contracts.
It is important to note that when city leaders discovered problems with the contract, they took steps to find the scope and remedy the situation. If they strengthen their controls and then follow them this situation can be avoided in the future." Luallen said.