Audit finds delays, lack of oversight in state procurement upgrades under Hogan

A new audit revealed various deficiencies, including a lack of oversight and delays in a $38 million systems upgrade, in the Maryland Office of State Procurement under former Gov. Larry Hogan, leaving what one state senator called “a mess” for the Gov. Wes Moore administration to clean up.

The audit, released earlier this month, found that the office did not adequately monitor the implementation of the state’s new procurement system, delaying the project and increasing its cost just a few years into a 10-year contract, which the Board of Public Works approved in 2019.

“There was a lot included in this report that was truly eye-opening, and there needs to be a lot better oversight and accountability of how (the Department of General Services, which oversees the Office of State Procurement) is managing and overseeing the various state contracts that are being worked on,” said state Sen. Clarence Lam, chair of the legislature’s joint Audit and Evaluation Committee.

The primary responsibility for the office’s shortcomings falls to the former Gov. Larry Hogan administration, said Lam, who was a frequent critic of the administration.

He said the prior administration left “a mess in DGS” for the Gov. Wes Moore administration to clean up.

“They’ve only been in office for four months,” Lam said of the Moore administration. “There was very little they could have done to resolve these issues or prevent these issues from occurring.”

DGS, in its response to the audit, said many of the delays and cost overruns were caused by fallout from the COVID-19 pandemic.

In a statement Friday, Hogan spokesman Michael Ricci said, “Taxpayer money didn’t need to be spent to learn that doing thousands of emergency procurements during a global pandemic was at times challenging, or that getting a cutting-edge platform off the ground would be a big task and go through some changes over time.”

The Office of State Procurement, which had 78 filled positions as of June 2022 and a budget of about $9.7 million, is responsible for overseeing state contracts for commodities like energy, auto parts, medical supplies and food; for services like engineering, construction and facilities maintenance; and for certain capital construction costs.

The office awarded about $868 million in procurements in fiscal year 2021.

A lack of oversight has delayed the office’s 10-year project to revamp the state’s procurement system by more than three years and the cost was up by nearly 20% as of February, the audit states.

State agencies, counties, municipalities, public colleges and universities and public school systems, among other entities, are required under state law to use the state’s procurement system, eMaryland Marketplace Advantage (eMMA), to publish awards of more than $50,000.

Registered vendors can use the system to get notices of bid opportunities and to submit bids.

In the audit, the Department of General Services states that it had a comprehensive plan at the beginning of the project implementation but that the plan has repeatedly been “re-baselined.”

The department’s response in the audit states, “As with most large IT project deployments, schedules are impacted by many issues, which include an 18+ months delay during the COVID-19 pandemic for this project.”

The office, though, was originally scheduled to implement the new system in March 2020, Lam said.

As of February, the office still didn’t have an estimate for when the system would be fully implemented, he said.

“If you’re paying someone to do something, you need to make sure that you’re staying on top of them and keeping them on schedule to the extent that you can,” Lam said.

Lam said the lack of oversight may also be a result of the Office of State Procurement being understaffed, leaving it unable to properly monitor and manage the contracts. But, he said, it’s not an excuse and the office should ask for more staff members.

The audit found the Office of State Procurement didn’t report all emergency procurements to the Board of Public Works, which it’s required to do. The office failed to properly report $32 million out of $110 million in emergency procurements awarded between September 2020 and February 2022, the audit states.

The office also did not always follow state regulations for emergency procurements at the start of the COVID-19 pandemic, the audit states.

“That highlighted a lot of things that we suspected were happening incorrectly during the pandemic,” Lam said. “There was a lot of money spent with not a lot of oversight or accountability.”

The office couldn’t provide documentation of the basis for $55 million for emergency procurements between March 2020 and March 2021, including justification for the use of the emergency procurement method or how the vendors were identified.

A response from the Department of General Services in the audit states, “The state of Maryland’s COVID-19 response was organized around one core mission: to prevent as many deaths and hospitalizations as possible while ensuring that Marylanders can go about their normal business in a reopened economy safely … the COVID-19 pandemic required actions that have not been undertaken in over a century, or perhaps never in the history of the state.”

The audit also stated that the Office of State Procurement didn’t adequately monitor certain state agency procurements that were specifically subject to its oversight.

Lam said the audit will be part of hearings the legislature’s joint Audit and Evaluation Committee is expected to hold later this year.

“There are enough significant findings in this audit that we would like the Department of General Services to come before the committee to answer questions and have an opportunity for us to ensure that there’s proper accountability to address these findings,” he said.

This story has been updated to include a response from a spokesman for former Gov. Larry Hogan.