State government spends more than $1 billion on goods and services a year – from computers to consultants – all of which soon might come under a single official and single set of rules.
A consolidation sought by Gov. Chris Gregoire’s administration would give new authority to oversee contracts and discipline contractors to the head of the four-month-old Department of Enterprise Services. It is moving through the Legislature.
No opposition surfaced at a hearing Saturday. The largest state-employee union says it would deter abuse by contractors that don’t do their jobs and leave it to state workers to redo projects. The state’s main business group doesn’t perceive widespread abuse but says it supports the centralization of contracting.
The proposal might prod more competition. A contract would have to be reopened to bidding for substantial amendments or “change orders.” There would be less central oversight of competitively bid contracts and more for no-bid, or “sole-source,” contracts.
“Where we’re going to focus our energy is sole-source, for all types of contracts, because that’s where people see the potential for abuses,” said Roselyn Marcus, who leads the department’s contracts division.
But important details wouldn’t be hammered out until after the proposal becomes law, such as how big a no-bid contract has to be before it needs approval by the agency.
The DES director would write those rules. In Gregoire’s administration, that’s Joyce Turner, a veteran of state government.
Marcus said such thresholds should be flexible to allow for changes with time and differences across agencies. Right now, they’re set in law. For example, permission is needed for sole-source personal-service contracts that surpass $20,000.
Those larger contracts also require a published notice in a newspaper as well as online; publishing them in a newspaper would no longer be required under the proposal unless the director decides to include it in her rules.
HIGHER-ED RULES
Also still up in the air is how the proposal will affect colleges and universities, which have their own thresholds for competitive rules. The department would take on authority over some of them.
The Washington Federation of State Employees says it’s concerned about potential exemptions for higher education.
Whether through the department’s rules or a new law, universities want to raise the threshold for when some competitive-bidding rules kick in, to match up with what’s done for technology contracts.
Universities must post online to seek out bids for large contracts. Then they must plow through “responses from around the world,” said Barry Johnston, Washington State University’s assistant vice president for business and finance.
Posting bids “does provide a lot more competitors to compete for a particular acquisition. At the same time, it’s a lot of staff time to review each of those responses,” Johnston said. “It creates quite a burden.”
A separate bill in the Legislature would loosen those and other requirements on universities – saving the University of Washington more than $1 million a year, said the university’s director of state relations, Margaret Shepherd.
Some lawmakers are sympathetic to the requests, given that the state has slashed higher-education funding and could do so again this year. UW says it has taken a 50 percent cut in state funding over three years.
CONTRACTOR ABUSE?
As part of the overhaul, lawmakers are considering giving the director wide authority to disqualify contractors from bidding for up to three years for poor performance, contract violations, or criminal or ethical problems.
The proposal would place contractors under state ethics rules that apply to state employees, and would restrict them from giving gifts.
The Association of Washington Business says it still is looking at the details of the law but supports the concept of centralization. Right now, many businesses offer both goods and services to the state and have to go through two types of processes for contracts.
Amber Carter, a lobbyist for the association, said that if the state adds more rules for change-order competition, state officials should consider the full implications of bids, not just the dollar amounts.
“It’s easy to get underbid if you don’t include all of the costs,” she said.
The Federation of State Employees singled out change-order competition as an important reform, saying there is widespread abuse. Projects expand to include unrelated tasks and costs mount without enough oversight, said Jeanine Livingston, the union’s contracting-compliance manager.
“There’s a big loophole in the use of change orders and work orders,” Livingston said.
The federation’s examples of abuse mainly come in public-works contracting, an area the consolidation and new rules wouldn’t cover. That includes projects such as construction on state buildings and highways. The union said the proposal should be expanded to cover it.
The proposal includes rules intended to prevent the state from doing business with companies that use sweatshop labor. Republicans hope to eliminate that provision, calling it a side issue.
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