State agency divided up contracts to skirt rules, audit says
The agency in charge of Maryland’s juvenile justice system dodged the state’s competitive bidding process by artificially dividing contracts into smaller dollar amounts, according to a state audit released Wednesday. The findings were referred to the state attorney general for investigation.
State regulations require contracts worth more than $15,000 to be advertised online and approved by the Board of Public Works or an agency’s internal procurement office. The audit found that the Department of Juvenile Services got around that rule by keeping contracts below that $15,000 threshold.
For example, one vendor received 25 separate purchase orders for similar services over three days in July 2014, each one for less than $15,000 dollars.
“Now, you would think you could bundle those up very easily, and if they were bundled up, then they would have had to go through the central procurement office,” said legislative auditor Thomas Barnickel.
From July 2014 through June 2016, the department paid out $7.5 million in contracts that were each worth less than $15,000.
Barnickel called the activity “suspicious.”
“What also made it suspicious is that these were routine types of goods and services that you could buy locally, but yet these companies were being awarded contracts to provide these services many miles away,” he said.
Secretary of Juvenile Services Sam Abed said the smaller contracts were meant to entice small businesses to compete.
And he said emergency maintenance issues can also create a need for multiple, small-figure contracts with the same vendor in a short time period.
“If we have an air conditioning unit go down in a facility, we will immediately procure for a new air conditioning unit,” he said. “If one goes down in a facility nearby — another facility — we will immediately procure for that same thing. Or if a roof has a leak.”
All of those repairs would be categorized as maintenance, he said, so it would look like a series of small contracts for similar services.
The Attorney General’s office declined to comment.