Lawmakers Request State Audit of Large No-Bid Contracts

Lawmakers on Wednesday officially requested the California State Auditor investigate how often the state awards large contracts without following the competitive bid process.

In a unanimous vote, the Joint Legislative Audit Committee approved an audit of the California Department of General Services and the California Department of Technology.

At issue is the extent of non-competitive bids awarded to private companies for goods and services provided to the state. State law requires private entities and individuals to bid for contracts as a way to ensure a good price, but there are exemptions.

Those exemptions concern lawmakers who want to make sure taxpayers aren’t being fleeced.

“The Legislature has oversight responsibility to ensure that taxpayers’ dollars are spent wisely and in accordance with the law,” Assemblymember Brian Jones, R-Santee, said in a statement after the vote.

Jones, who authored the audit request, added that the use of non-competitive bid contracts “has the effect of inflating the costs of goods and services” and “their use should be minimized and avoided wherever possible.”

Earlier this year, Jones dropped a bill that would have required all state agencies notify the Legislature when contemplating a non-competitive bid award of $1 million or greater. He introduced the bill after learning that one company had secured 34 contracts totaling $75.3 million in two years, with each contract exempt from competitive bid requirements. That same unnamed company also won a single $37.5 million competitive bid.

Instead of pursuing his bill, Jones agreed last month to an audit request to determine how widespread non-competitive contracts have been in the last five years.

The committee asked the state auditor to evaluate the following:

• What is the total number of contracts valued at $1 million or more awarded?
• Of that total, how many were awarded without competitive bids?
• What legal authority (statute, regulation, policy) allowed the contracts to be awarded without competition?
• Using a representative sample of the no-bid contracts:
  • Was there a clear justification for why the contract should be non-competitive?
  • Are the state laws being consistently applied throughout the sample?

It is unclear how quickly the state auditor will take up the issue. It was one of 11 audit requests before the committee Wednesday and the auditor can choose which issues to address first.