Report: Overspending on IT consultants ‘well intentioned’
by Andy Phelan
andy@dekalbchamp.com
Finance Director Michael Bell |
Blaming an aggressive push for technology upgrades and a lack of stable leadership in the county’s Information Systems department, a new report indicates millions spent circumventing proper protocols was not an attempt to avoid bidding.
It is the third review of what county Finance Director Michael Bell’s office called “gross violations” of the county’s procurement and purchasing policy his office said it discovered in 2007. Bell’s department and independent auditor KPMG, hired by the Board of Commissioners, also conducted in-depth reviews.
In March, KPMG reported to commissioners that millions of dollars were paid in 2006 that violated county policy. Hundreds of thousands of dollars more were paid to firms with no contracts at all, they said.
In some cases, dozens of firms were paid millions of dollars over the value of their contracts.
But the latest report – conducted by Nashill Inc., a consulting firm run by former Gwinnett County Commission Chairman Wayne Hill and former Gwinnett County Finance Director Charlotte Nash – at the behest of CEO Vernon Jones, indicated it was done to keep the county operational.
Nashill representatives, who are not auditors, reported that their investigation found no improper relationships, but then qualified that they were not asked to look for any.
The administration’s push to complete technology projects led to an over-reliance on consultants, the report said.
At question is what is known as “bid-skirting” or “splitting” purchase orders, and whether the practice used to achieve lower dollar limits either to avoid the bidding process or laws that require the approval of elected officials, such as the board of commissioners, was done intentionally.
The Nashill report said it was not done on purpose.
In DeKalb County’s case, the Organizational Act says all contracts and purchases greater than $50,000 must be competitively bid, and all contracts and purchases more than $100,000 must first receive board approval.
Contracts and purchases over $50,000 do not have to be formally bid if the vendor has existing contracts with the state of Georgia or the federal government at the time of purchase.
Many of the cases unveiled by Bell and KPMG showed numerous cases of purchase order splitting by the information system director – multiple $49,000 payments made to technology consultants, some on the same day.
In one example of splitting purchase orders, Bell’s internal auditors discovered “nine short-term contracts ranging from $42,000 to $49,500” to technology company Scicom Infrastructure Services Inc. from 2005-2007 that totaled more than $420,000. But Scicom, run by Samit Roy, was paid more than $2.8 million during the audit period, the finance director’s report said.
In the Nashill report’s interview with former county IS Director Jib Chatterje, who ran the department from 2005-2007 and reported to Executive Assistant Richard Stogner, he told Nashill representatives that submitting purchase orders just under $50,000 “was simply a matter of practice.”
Chatterje, who resigned in 2007, left his post while the department was $4.7 million over budget, according to a Nashill interview with county budget analyst Robert Warren.
Warren, who alerted Chatterje to his overspending on IT consultants, asked Chatterje in April ’07 to submit a plan on how to rectify the problem. Warren said Chatterje did not get back to him until July.
A meeting between Warren and Chatterje to further discuss the overages was scheduled for July 16, according to the Nashill report, but Chatterje resigned before the two ever met.
The Nashill investigation also reported Chatterje was a former employee of Scicom, a technology consulting firm that received more than $3 million on a $400,000 contract.
Chatterje told Nashill representatives that when he sought advice on application projects for the county, “he would first go to Samit Roy for a recommendation.”
Part of the dilemma for the Board of Commissioners is that they are being asked to approve $1.4 million to the IS department for the “substantial overrun” in the department’s 2007 budget for consulting services.
Of the seven consulting companies owed part of the $1.4 million, five of them, including Scicom, were flagged by KPMG as firms that received taxpayer money the exceeded their contracts.
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