720-913-5000 auditor@denvergov.org

Audit Report

Contract Procurement Processes

The objective of the audit was to evaluate the efficiency, effectiveness, and documentation of the City’s contract procurement processes from the time an agency identifies a need for a good or service to the point a vendor is chosen.

Watch the Audit Committee presentation here soon.

Several governing documents—from the Denver Charter to agency-level policies and procedures— dictate how the City and County of Denver procures certain goods and services. For instance, the Denver Charter grants the Department of Public Works the authority to procure construction contracts for all City agencies except Denver International Airport, which has its own authority. Meanwhile, Executive Order 8 affords all City agencies the authority to procure their own contracts for services.

There are three primary methods to procure goods and services through an expenditure contract: competitive bids, noncompetitive selections, and contract amendments. On-call contracts are typically procured competitively.

We assessed citywide requirements and procedures for contract procurement, as well as those specific to three selected City agencies: the departments of Public Works, Parks and Recreation, and Public Health and Environment. We found gaps in some citywide and agency-level policies and procedures and in how those are implemented.

Citywide Laws and Regulations for Contract Procurement Inadequately Address Conflicts of Interest and Are Not Periodically Reviewed

Agencies do not require conflict-of-interest disclosures for every solicitation, and vendor political disclosures are not required for competitive bids and contract amendments. There is also no process to periodically review and update Executive Order 8 and provisions of City charter and City ordinance that govern contract procurement.

The Department of Public Works’ Policies and Procedures Allow for Inconsistencies in Contract Procurement

Public Works lacks certain written procedures and does not adhere to some existing policies, such as for obtaining required approvals or verifying contractors’ good standing.

Some Elements of the Department of Parks and Recreation’s Policies and Procedures Are Inadequate or Not Followed

Parks does not have or follow certain procedures, such as approving solicitations and retaining evidence of approvals for requests for proposals.

The Department of Public Health and Environment Lacks Comprehensive Policies and Procedures for Its Contract Procurement

Public Health does not have policies for all its divisions and for all parts of the contract procurement process.

Agencies Do Not Have Guidance to Perform Data Analytics and Ensure Confidentiality of Proposals

Public Works, Parks, and Public Health lack adequate procedures for securing vendor proposals. They also do not perform data analytics to identify unusual trends and inefficiencies.

Recommendations

1.1 Require Conflict-of-Interest Disclosures across All City Agencies – The Mayor’s Office should require, through its forthcoming update of Executive Order 8, conflict-of-interest disclosures at the solicitation level for all City agencies that conduct their own contract procurement.

Agency Response: Agree, Implementation Date – December 31, 2019

1.2 Develop Procedures for Conflicts of Interest (Public Works) – The Department of Public Works should work with the City Attorney’s Office to develop and document a solicitation-level conflict- of-interest disclosure procedure and form, so that selection committee members and employees with influence over the bidding process certify they have disclosed any conflicts of interest relevant to a particular solicitation they are involved with and that they have acknowledged nondisclosure requirements related to the project. The procedure should state who is responsible for reviewing these certifications and include what steps to take when a conflict is identified.

Agency Response: Agree, Implementation Date – 120 days following publication of revised Executive Order 8

1.3 Develop Procedures for Conflicts of Interest (Parks) – The Department of Parks and Recreation should work with the City Attorney’s Office to develop and document a solicitation-level conflict- of-interest disclosure procedure and form, so that selection committee members and employees with influence over the bidding process certify they have disclosed any conflicts of interest relevant to a particular solicitation they are involved with and that they have acknowledged nondisclosure requirements related to the project. The procedure should state who is responsible for reviewing these certifications and include what steps to take when a conflict is identified.

Agency Response: Agree, Implementation Date – 120 days after Executive Order 8 revisions are published

1.4 Develop Procedures for Conflicts of Interest (Public Health) – The Department of Public Health and Environment should work with the City Attorney’s Office to develop and document a solicitation-level conflict-of-interest disclosure procedure and form, so that selection committee members and employees with influence over the bidding process certify they have disclosed any conflicts of interest relevant to a particular solicitation they are involved with and that they have acknowledged nondisclosure requirements related to the project. The procedure should state who is responsible for reviewing these certifications and include what steps to take when a conflict is identified.

Agency Response: Agree, Implementation Date – Draft: June 30, 2019
Final: 120 days following the publication of Executive Order 8

1.5 Change City Ordinance to Require Political Contribution Disclosures for Competitive Contracts – The Mayor’s Office should sponsor a change to City ordinance to require political contribution disclosure forms from vendors as part of bid proposals for all solicitations—competitive and noncompetitive. The ordinance change should also require the winning bidder to file their disclosure form with the Clerk and Recorder’s Office.

Agency Response: Agree, Implementation Date – December 31, 2019

1.6 Change City Ordinance to Require Political Contribution Disclosures for Expenditure Contract Amendments – The Mayor’s Office should sponsor a change to City ordinance to ensure expenditure contract amendments that add more than one year to the term of the contract are also included in the requirements for vendors’ political contribution disclosure.

Agency Response: Agree, Implementation Date – December 31, 2019

1.7 Develop Procedures to Ensure Political Disclosure by Vendors – The Mayor’s Office should require, through its forthcoming update of Executive Order 8, that agencies add the political contribution disclosure form to the list of items required to be submitted by vendors for a contract solicitation. The agencies should also be required to review these forms during the evaluation process and to ensure the form of the winning bidder is forwarded to the Clerk and Recorder’s Office for filing. Agencies should also follow up with the Clerk and Recorder’s Office to verify the office has received the form and has made it available for public viewing.

Agency Response: Agree, Implementation Date – December 31, 2019

1.8 Update Executive Order 8 – The Mayor’s Office and the City Attorney’s Office should complete the process of updating Executive Order 8. The updated executive order should require agencies to establish policies and procedures for the whole contracting process and provide more detailed guidance for justifications for contracts longer than three years and amendments extending contracts beyond three years.

Agency Response: Agree, Implementation Date – December 31, 2019

1.9 Periodically Review and Update Contract Procurement Requirements – The Mayor’s Office should establish a process for periodically reviewing the Denver Charter, City ordinances, and executive orders pertaining to contract procurement to ensure they are consistent and appropriately address risks. The Mayor’s Office should then recommend amendments to the City Council, where appropriate.

Agency Response: Agree, Implementation Date – December 31, 2019

2.1 Centralize Contract Procurement Process – The Department of Public Works should centralize its contracting processes within its contract administration team to ensure other divisions within the department do not deviate from the centralized team’s procurement procedures and so the team’s expertise is maximized for the benefit of the department.

Agency Response: Agree, Implementation Date – 120 days

2.2 Establish Policies for Contracting Authority – The Department of Public Works should establish and document policy to ensure adherence to applicable laws and regulations, as well as Public Works’ internal procedures, when the department procures contracts for any external agency that has its own contract-signing authority as the department may not otherwise be able to mitigate contract procurement risks.

Agency Response: Agree, Implementation Date – 120 days

2.3 Update Policies and Procedures for Required Justifications – The Department of Public Works should update its policies and procedures to ensure properly approved justifications for noncompetitive procurements and for contracts longer than three years. These procedures should include a documented secondary review that justifications are collected and are reasonable.

Agency Response: Agree, Implementation Date – 120 days following publication of revised Executive Order 8

2.4 Create Policies and Procedures for On-Call Pools and Single Responses – The Department of Public Works should create policies and procedures for making selections from all types of on-call pools and for requirements when a solicitation receives a single response. These policies should include a requirement for monitoring by management to ensure adherence to policies and procedures and a requirement for documenting that monitoring.

Agency Response: Agree, Implementation Date – 180 days

2.5 Update Policies and Procedures for Contract Procurement (Public Works) – The Department of Public Works should update its existing contract procurement policies and procedures to ensure all required documentation is adequately approved, reviewed, and retained. Specific procedures that need more detail include but may not be limited to: verifying selection criteria, documenting scoring decisions, and checking debarments and certificates of good standing. The policies and procedures should assign responsibilities for monitoring and should include a requirement for documenting that monitoring.

Agency Response: Agree, Implementation Date – 180 days following publication of revised Executive Order 8

3.1 Update Policies and Procedures for Contract Procurement (Parks) – The Department of Parks and Recreation should update its policies and procedures to address noncompetitive procurement, documentation of approvals and reference checks, solicitations yielding only one response, protests, and nonresponsive items. The policies and procedures should assign responsibilities for monitoring and should include a requirement for documenting that monitoring. These policies should also clearly define the roles and responsibilities between the departments of Public Works and Parks and Recreation regarding construction and maintenance contracts.

Agency Response: Agree, Implementation Date – 120 days after Executive Order 8 revisions are published

4.1 Establish and Follow Policies and Procedures for Contract Procurement (Public Health) – The Department of Public Health and Environment should complete comprehensive, department-wide policies and procedures for contract procurement. The policies should include, but not be limited to, guidance for approvals to solicit, analysis of single- bid responses, scoring rationale requirements, justifications for noncompetitive selections, and reasonable justification for contracts lasting over three years. The policies should also state who is responsible for implementing, monitoring, and documenting compliance with these policies.

Agency Response: Agree, Implementation Date – Draft: December 31, 2019
Final: 120 days following the publication of Executive Order 8

5.1 Analyze Contracts Data (Public Works) – The Department of Public Works should establish and document a process to analyze data and identify and address unusual items in the contract procurement process.

Agency Response: Agree, Implementation Date – December 31, 2019

5.2 Analyze Contracts Data (Parks) – The Department of Parks and Recreation should establish and document a process to analyze data and identify and address unusual items in the contract procurement process.

Agency Response: Agree, Implementation Date – December 31, 2019

5.3 Analyze Contracts Data (Public Health) – The Department of Public Health and Environment should establish and document a process to analyze data and identify and address unusual items in the contract procurement process.

Agency Response: Agree, Implementation Date – December 31, 2019

5.4 Ensure Confidentiality of Proposals (Public Works) – The Department of Public Works should identify specific risks in the procurement process related to confidentiality of proposals—including, but not limited to, access to proposals prior to solicitation deadlines—and create internal controls within policies and procedures to mitigate these risks. The department should also consider the implications of confidentiality requirements for later stages of the contracting process.

Agency Response: Agree, Implementation Date – 120 days following publication of revised Executive Order 8

5.5 Ensure Confidentiality of Proposals (Parks) – The Department of Parks and Recreation should identify specific risks in the procurement process related to confidentiality of proposals—including, but not limited to, access to proposals prior to solicitation deadlines—and create internal controls within policies and procedures to mitigate these risks. The department should also consider the implications of confidentiality requirements for later stages of the contracting process.

Agency Response: Agree, Implementation Date – 120 days after Executive Order 8 revisions are published

5.6 Ensure Confidentiality of Proposals (Public Health) – The Department of Public Health and Environment should identify specific risks in the procurement process related to confidentiality of proposals—including, but not limited to, access to proposals prior to solicitation deadlines—and create internal controls within policies and procedures to mitigate these risks. The department should also consider the implications of confidentiality requirements for later stages of the contracting process.

Agency Response: Agree, Implementation Date – Draft: December 31, 2019
Final: 120 days following the publication of Executive Order 8

Follow-up report

A follow-up report is forthcoming. 

In the news

None at this time.

Audit Team: Dawn Wiseman, Cody Schulte, Vilma Balnyte, William Morales, Alexandra Dickerson