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Who the hell admits they ordered an audit of the auditor?
And the guffaw moment comes here:
During the audit, a routine matter, CMS officials thumbed through Holland’s records to see whether his office complies with the standards he imposes on state agencies. Ed Wynn, CMS’s general counsel, said he ordered the unusual step and that it was absolutely not geared to intimidate the auditor
Why does Ed Wynn have a job this morning?
Cutting The Caucus Off at the Knees
And LaHood is there with the quotables:
I said to him, ‘You’re the only one who can resolve this thing,’ ” said Rep. Ray LaHood (R-Ill.), recounting a conversation he had with Hastert last week. “He knows that. He knows it is in his lap.”
LaHood said he also told a senior Hastert aide: “You have to pivot, you have to eat some crow, you’ve got to get it behind you.”
Hastert, however, is expected to face some resistance today when, aides said, he plans to put his proposal before his GOP colleagues at their weekly strategy session.
But he’s not done. The Journal Star got to him
LaHood said many Republican lawmakers were frustrated at the prospect of being asked ? for the second time this year ? to roll back a vote that had proved politically unpopular.
“People fell on their sword” when they rescinded the rule in January concerning possible indictments of GOP leaders, LaHood said. “Now it’s the same thing.”
He and others are concerned about negative publicity that the rule changes involving the ethics committee have generated, LaHood said.
“My hometown [newspaper] in Peoria has written three editorials about this ? every editorial writer in the country is writing about this,” he said.
To which, one must ask, who the hell didn’t think this was going to happen? I mean really? You have a Majority Leader who is ethically challenged and you change the rules concerning how an investigation starts? Besides it just being a bad idea in the first place–doing it under these circumstances was just stupid.
I Bet He Stopped By Avantis Too
Cross, a Wesleyan Grad in 1980, was in Bloomington on Monday. Did he bring back any bread for Rhodes?
Kass Takes Shot at Saviano and DeLeo
Whether Saviano is or not is something I don’t know so I’ll avoid that, but the hysterical thing is that Lee Daniels thought he was and when Saviano would yell and scream at him during House Republican caucus meetings, he’d just take it and turn white from all the reports I’ve heard. That alone would be worth the price of admission.
Where This Goes from Here
Look for the press and AGs office to go after all of the CMS contracts and beyond that–all the big contracts they can find and determine who the subcontractors are and how they got to be subcontractors.
Even if one were to just view this as massive incompetence, the administration is in a lot of trouble because CMS being the agency in trouble means every instance of procurement is now worth looking at and any type of problem can fit into a nice neat message that the problem continues for the administration.
By CMS fighting back, it created a bad story into a hellish story. And Rich points out they are still making it worse.
An Early Warning on CMS Real Estate Issues
From Illinois Issues. Of course, the problem with the article isn’t that Illinois is paying for $24 million for IPAM services, it’s actually paying closer to $30 million.
And yeah, Roskam was on top of this one. So credit to him.
UPDATE: Pat Guinane wrote in below to point out the amendments were tacked on after his story. I was trying to be funny and make a joke, so no offense intended towards Pat who wrote a good story.
Savings, You Want Actual Savings? Picky, Picky
The Rockford Register Star set up the next bit of the report well with the following story:
SPRINGFIELD — When Gov. Rod Blagojevich set out to streamline government at the start of his term two years ago, he pushed a law requiring agencies to put money saved from operating efficiencies into a special savings account.
But state audits show that the 2003 cost-saving plan led to widespread confusion among state agencies, which raided their own programs — ones that didn’t necessarily correspond to areas of cost savings — to find money to chip in to the savings account.
At the same time, the bulk of the cash from the agencies was simply funneled through the savings account to the Illinois Department of Central Management Services, the state’s central procurement and management agency, and general operations.
The so-called savings were supposed to correspond to efficiency devolving from CMS, which now manages contracts and facilities previously handled by individual agencies. But the individual agencies had trouble identifying savings that trickled down to them.
Conversely, the Department of Transportation (IDOT) was billed $17,061,200 during FY04 but Department documentation showed that IDOT only saved $1,232,179 from the procurement efficiency initiative. Consequently, IDOT paid $15.8 million more into the Efficiency Initiatives Revolving Fund than the Department of Central Management Services documentation showed IDOT realized in savings. Likewise, the Department of Revenue (DOR) was billed $4,321,900 during FY04 but only saved $238,302 from the procurement efficiency initiative. In total, Department documentation showed that there
were 4 ?Winners? and 35 ?Losers? from the efforts of the procurement efficiency
initiative. The chart below summarizes the percentage of billed savings actually realized by the State agencies:
Much more there for detail, BTW.
The State Finance Act clearly states that the scope of CMS? charge was to identify ??. where cost savings are anticipated to occur.? The Department
took efforts to anticipate as precisely as possible where cost savings would occur. Thus, CMS did adequately determine the amount of savings.? The auditors seek to hold the Department to a different standard than the statutory one: that the Department must identify were cost savings occurred, and then using this unilaterally re-written standard, find that the Department failed to meet the correct statutory requirement. Such a conclusion is not only contrary to the statute, but also illogical.
? Given the cost savings are anticipated, not actual, a measure of deviation is reasonable.
Auditor Comment:
Comment 96: The Department?s citing of the State Finance Act is not relevant to this finding. In this finding, the Civil Administrative Code is used as criteria. 20 ILCS 405/405-292.
Comment 97: Given the large discrepancy between procurement savings billed and savings realized by most State agencies, the auditors concluded that the ?measure of deviation? experienced not was reasonable.
Chambers Sounded the Alarm
Back in December Aaron Chambers was all over the story of contracts not being approved, but work beginning under the terms of the contract. That’s when State Comptroller Dan Hynes wisely withheld payment on two contracts.
The Auditor addresses the same issues:
FINDING: (Not Timely in Executing Contracts)
The Department of Central Management Services (Department) was not timely in executing contracts with vendors for contracts awarded. Additionally, the Department allowed vendors to initiate work on these projects without a written contract in place. This compromises the Department?s accountability to the public, and increases the likelihood that the State?s interests are not protected and that State resources are wasted or misused.The Procurement Code dictates that ?Whenever?a contract liability?exceeding $10,000 is incurred by any State agency, a copy of the contract?shall be filed with the Comptroller within 15 days thereafter.? (30 ILCS 500/20-80 (b)) Further, for professional and artistic contracts, if the contract was not reduced to writing and filed with the Comptroller before the services were performed, the agency must file a written contract with the Comptroller along with an affidavit stating that ?the services for which payment is being made were agreed to before commencement of the services and setting forth an explanation of why the contract was not reduced to writing before the services commenced.? (30 ILCS 500/20-80 (d))
The Department, in a document titled ?Changes to the CMS Procurement Organization & Processes FAQs?, provides guidance to agencies on when
negotiations are most effective. See inset for guidance provided by the Department. Additionally, a correspondence from the Department and the Governor?s Office to agencies dated August 27, 2004 presents a flow chart of the procurement processes implemented at the Department indicating the time frame between ?approve award? and ?prepare final contract? to be seven days.
While the Department proposes to hold agencies to set time frames for negotiating and executing contracts, the Department did not follow these same guidelines. In 100 percent (9 of 9) of the contracts we reviewed, the Department allowed vendors to initiate work on the project without a formal written agreement in place. These contracts were estimated by the Department to have a maximum contract value of $69 million with an FY04 financial commitment of $32 million. On average, the length of time between the announcement of the award and the filing of a contract with the Comptroller was 149 days (with a range of 87 days to 248 days). The average length of time between beginning work on the contract and the filing of the contract with the Comptroller was
125 days (with a range of 75 days to 234 days). The table below provides a breakdown for all nine contracts reviewed:
CMS Response:
? More than 90% of Department contracts are executed in a timely manner.
? Selection of sample of 9 of CMS? most complex contracts provides a completely misleading picture and is; by the auditors? own admission, not a representative?but a ?judgmental? sample.
? Thus, its use of a percentage statistic in its report is invalid and misleading. The correct statistics are than less than 10% of all CMS contracts in the most
recent reporting period are late filed.? This percentage is less than the percentage of many other entities, including the General Assembly and the Treasurer?s Office.
? But, even as to these 9 agreements, the auditors ignored the fact that there were timely interim agreements that were executed with the vendors that covered their services until the final contracts were completed. The auditors specifically identified and tested these agreements (as the work papers
demonstrate), but they omitted them, without basis, from the report (See 04-8 Attachment A ).
? At the Exit conference, the auditors contended that these interim agreements were not really agreements, but that position is directly contradicted by:? Their own work papers that tested these as contracts.
? Their own test for determining whether something is a binding contract (see discussion below).
? Even a cursory review of the contracts demonstrates that they are binding contracts.
? These interim agreements met standard contract law requirements. See 04-08 Attachment B.
Auditor Comment:
Comment 80: In no instance is a percentage used without including raw numbers; therefore, our use of percentages is not misleading. Unlike the audit findings, CMS uses percentages in its responses without providing any raw numbers to put those percentages into context. Further, unlike
the audit findings, CMS?percentages are supported with any documentation. notComment 81: This audit is of the Department of Central Management Services. However, the auditors would point out that, in considering significance, the nature and amount of a contract would generally be considered. Failure to reduce a $24.9 million contract to writing before services commenced is qualitatively different from any such failure that might be related to small or routine contracts. However, since CMS does not provide any further information on its claims, the auditors are not in a position to address its points with regard to the operations of other State agencies that are not the subject of this audit.
Comment 82: Comment 82: In 9 out of 9 contracts tested, CMS allowed vendors to commence work before a written contract was executed. For 2 of the 9 awards, the Department entered into ?interim agreements.? However, the Procurement Code does not use the term ?interim agreement.? Further, when tested by the auditors, it was noted that these ?interim agreements? lacked required terms and conditions necessary to constitute ?contracts.?
For instance, the ?interim agreement? with EKI did not contain a detailed scope of work section or financial conflict of interest disclosure forms. (As stated by CMS in a cover sheet to the interim agreement, ?The final definitive agreement will require significant negotiations regarding the statement of work and our expectations.?) We stand by our recommendation that CMS should take the necessary steps to increase timeliness in reducing contracts to writing.
It continues though
Comment 83: We do not agree that CMS?failure to reduce 9 out of 9 contracts tested ? with a total value of $69 million ? to writing before services commenced constitutes a ?limited? situation.
Comment 84: Since the law requires reducing these agreements to writing before the services are performed(30 ILCS 500/20-80 (d)), any discussion about whether or not this represents good public policy is rather esoteric. However, as auditors, we continue to believe that having a fully executed and timely contractual agreement represents prudent business practice and helps to avoid potentially costly disputes and litigation. Further, when the public does not know the actual scope of work and the cost of such work until the final contract is
filed.
What Does All This Mean?
IlPundit offers up a good summary if RFP Madness is making your eyes glaze over.
However, it?s worth noting that the decision by the administration and CMS to avoid responsibility and to attack the professionalism and ethics of Bill Holland and the Office of Auditor General will likely go down as perhaps the stupidest political decision in the history of Illinois politics.
CMS is the most hated agency in state government. They start the game without any friends.
There’s more…