HomeMy WebLinkAboutAudit - Other Publications - Public - Ethics Hotline - Downtown Manager Services Solicitation - 7/11/2017
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1 Downtown Manager Services Solicitation
Date: July 11, 2017
To: Kevin R. Phelps
From: Candace MacLeod, City Auditor
Subject: City Auditor’s Ethics Hotline – Downtown Manager Services Solicitation
The City Auditor’s Office administers Glendale’s Ethics Hotline program. The primary
objective of the Ethics Hotline is to provide a means for employees to report activity or
conduct related to City personnel, resources or operations for which they suspect
instances of ethical violations, fraud, waste or abuse.
Background
On May 2, 2017, an employee (complainant) requesting to remain anonymous
contacted the Ethics Hotline regarding alleged issues with the City’s Downtown
Manager Services (DMS) solicitation process. The City issued request for proposal (RFP)
17-12 in September 2016 for DMS; however, the RFP was canceled in November 2016
because only one proposal was received. In January 2017, RFP 17-21 was issued for
DMS and two offers were received. The offers were evaluated by a committee and the
contract was awarded and approved by City Council on May 23, 2017 in an amount
not to exceed $610,510 over the entire five-year term of the agreement.
The complainant alleged the following regarding the DMS solicitation:
• The DMS evaluation panel was biased in favor of the successful offeror.
• RFP 17-12 was canceled to allow for the successful offeror to submit a proposal
when it was rebid.
After receipt of the complaint, the auditor met with staff from Budget and Finance,
interviewed employees on the DMS evaluation panels, and reviewed associated
documentation. The auditor was unable to substantiate the allegations; however, a
number of observations were noted regarding the City’ solicitation process.
Observations
1. Conflict of Interest and Confidentiality Certifications Not Signed
Procurement’s Guidelines for Evaluation Panel Members (Guidelines) are designed to
protect the integrity of the solicitation process and require signed confidentiality and
conflict of interest certifications from panel members. However, City procedures do not
expressly state when these Guidelines should be signed by the panel. Procurement
distributed the Guidelines and the one proposal received for RFP 17-12 to panel voting
and non-voting members. However, the Guidelines were not signed by the panel
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2 Downtown Manager Services Solicitation
members. Procurement reported that the Guidelines were not signed because the
solicitation was canceled. The Guidelines and two proposals received for RFP 17-21
were also distributed to the original panel members for RFP 17-12; however, the panel
was canceled and the Guidelines were also not signed. A new panel was established
and the members were required to sign the Guidelines. The procurement officer
requested that the recipients of proposals for which the solicitation was canceled or
those who’s their membership on the panel was discontinued destroy the proposals.
However, several panel members indicated during the review that they had not
destroyed the proposals. Distributing solicitation responses without obtaining
confidentiality and conflict of interest certifications upfront, or failing to obtain written
confirmation that responses to canceled solicitations are destroyed, reduces the
integrity of the process, and increases the risk that sensitive information (including
pricing) is not properly protected.
Recommendations
Budget and Finance should develop written procedures to ensure confidentiality and
conflict of interest certifications are obtained from the panel when solicitation
responses are distributed and request written confirmation from panel members that
solicitation responses are destroyed when directed to do so by Procurement.
Management’s Response
Concur. Budget and Finance will review existing policies and procedures and develop
written procedures and update Finance Administrative Policy #1, as needed by
September 30, 2017.
2. Detailed Breakdown of Pricing Not Obtained from Successful Offeror
Section 5 in RFP 17-21 and the Best and Final Offer (BAFO) for RFP 17-21 required offerors
to detail all services and activities necessary to perform DMS responsibilities. However,
the successful offeror did not provide, nor did the City obtain, a detailed breakdown of
pricing, including the number of staff hours and hourly rates of staff assigned to the
project, even though they received full points for cost on the score sheet. Only
percentages were allocated by the offeror for salaries, overhead, initial set-up, program
work, and other miscellaneous costs. Lack of detailed offer pricing reduces the City’s
ability to assess how many hours will be invested by the offeror in DMS responsibilities,
lessens comparability amongst submitted proposals, and diminishes the expectation of
fairness.
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Recommendations
Budget and Finance should develop written procedures to ensure price sheets are
completed in accordance with solicitation requirements or request further clarification
on pricing from the offeror.
Management’s Response
Concur. Budget and Finance will review existing policies and procedures and develop
written procedures and update Finance Administrative Policy #1, as needed by
September 30, 2017.
3. Additional Measures Needed to Protect the Integrity of the Solicitation Process
Several measures to protect the integrity of the solicitation process for RFPs 17-12 and
17-21 had not been established as follows:
• The composition of the evaluation panel should be determined prior to distribution
of the proposals. However, in the case of RFP 17-21, the proposals were distributed
to the panel and then the panel was later notified that their membership on the
panel was discontinued in the best interest of the City. Written procedures for
establishing a panel prior to the distribution of proposals have not been formalized.
• The individual proposal scores from panel members were captured by the
procurement officer and totaled to determine the successful offer. However, the
panel members score sheets were not retained for a period of time to allow for a
second individual in Procurement to verify the accuracy of the final scores. Written
procedures for retaining and reviewing panel member scores have not been
developed.
• The cost section for the two proposals submitted for RFP 17-21 was completed and
provided to the evaluation panel prior to completing the scoring for the remaining
sections on the evaluation score sheet. According to Procurement, pricing may or
may not be completed and provided to the panel. Lack of written procedures for
providing cost scores to panel members may result in inconsistent evaluation
practices across solicitations.
Recommendations
Budget and Finance should develop written procedures to ensure: the composition of
panels or decisions to cancel a solicitation are made in advance of distributing
responses; panel score sheets receive a secondary level of review by procurement
staff; and cost scores are distributed to panel members in a consistent manner.
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4 Downtown Manager Services Solicitation
Management’s Response
Concur. Budget and Finance will review existing policies and procedures and develop
written procedures and update Finance Administrative Policy #1, as needed by
September 30, 2017.
4. Inaccurate Information in the Cancelation Letter for RFP 17-12
Per City Code, an RFP may be canceled by the Materials Manager in the best interest
of the City. The City sent a cancelation letter to the single offeror for RFP 17-12 stating
that the evaluation panel made the decision to cancel the solicitation. However, the
full evaluation panel was not involved with this decision, nor did they have the authority
to cancel the solicitation. According to the procurement officer, they were unaware
that the full panel was not involved in the decision to cancel the solicitation until the
Ethics Hotline complaint. After further review, Procurement learned that one voting and
one non-voting panel member made the decision to cancel RFP 17-12. Inaccurate
procurement communications may increase the risk of protest and confusion regarding
the process. Transparency and the expectation of fairness to all is reduced when
decisions to cancel an RFP include only select members of the panel.
Recommendations
Budget and Finance should develop written procedures to control panel cancelations
and ensure external correspondence is accurate.
Management’s Response
Concur. Budget and Finance will review existing policies and procedures and develop
written procedures and update Finance Administrative Policy #1, as needed by
September 30, 2017.
5. Conflict of Interest Guidelines Require Enhancement
The Guidelines state that a conflict of interest should not exist for a panel member
which would prohibit them from providing an impartial evaluation. A review of the
combined evaluators score sheet for RFP 17-21 indicated that points were awarded to
the successful offeror due to their extensive working relationship with Economic
Development and other City departments. However, members of Economic
Development were on the panel. To avoid any perception of a potential conflict, the
City should take extra precautions to ensure panel members are independent in both
fact and appearance.
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Recommendations
Budget and Finance should review existing conflict of interest guidelines and determine
if further controls are needed.
Management’s Response
Concur. Budget and Finance will review existing conflict of interest guidelines and
determine if further controls are needed September 30, 2017.
6. Written Procedures Have Not Been Developed Requiring Departments to Identify
Funding Sources Prior to Initiating Solicitations
In the case of both RFP 17-12 and 17-21, the budget section in the solicitation request
form was left blank. Lack of designated funding sources increases the risk that resources
are expended to plan, develop, and post solicitations without moving forward due to
insufficient funds. Lack of written procedures regarding whether a budget is required for
a solicitation request increases the risk that City resources are used inefficiently or that
funds are overspent.
Recommendations
Budget and Finance should develop written procedures requiring the identification a
funding source prior to initiating a solicitation.
Management’s Response
Concur. Budget and Finance will review existing policies and procedures and develop
written procedures and update Finance Administrative Policy #1, as needed by
September 30, 2017.
cc: Michael D. Bailey, City Attorney
Lisette Camacho, Assistant Director Budget and Finance
Tom Duensing, Assistant City Manager
Brian Friedman, Director Economic Development
Vicki Rios, Director Budget and Finance