Missouri spent millions on pandemic no-bid contracts. Lawmakers are now debating reforms
After the state spent tens of millions of dollars through emergency, no-bid contracts at the height of the COVID-19 pandemic, lawmakers debated a pair of bills Tuesday that aim to increase transparency and ensure emergency contracts aren’t extended in perpetuity.
The bills, sponsored by Republican Reps. Doug Richey of Excelsior Springs and Brad Hudson of Cape Fair, were heard Tuesday in the House Special Committee on Government Oversight. Each would institute additional reporting requirements on state purchasing when normal procurement processes are bypassed.
Richey, the chair of the Subcommittee on Federal Stimulus Spending, said the bills were borne out of discussions on how to best appropriate the influx in federal stimulus funds coming to the state and to streamline a “a very complex, and in some cases, unnecessarily cumbersome” process.
Hudson, the chair of the Subcommittee on Appropriations – General Administration, said the bills are “the beginnings of an attempt at [request for proposal] reform in Missouri.”
They would impose a one-year limit on contracts where competitive bid requirements were waived when it’s determined only one vendor can provide the necessary services or when emergency procurements are issued. When emergency procurements are awarded, the state must plan to implement a competitive bid process within a year, and emergency procurements could be extended if necessary while a competitive bid process is ongoing.
“Emergency procurement as we know is sometimes necessary, but we’d like to see that move as quickly as possible into a competitive situation,” Hudson said. “I think that’s best for the state. I think that’s best for our constituents.”
State contracts made under emergency procurement were repeatedly extended amid the pandemic, when the Office of Administration took the unprecedented step of granting emergency authorization to allow state agencies to make purchases over $50,000 to respond to COVID-19 without following the typical process or getting prior approval.
Records and logs obtained by The Independent through open records requests last year documented how state agencies spent tens of millions of state and federal funds through the emergency procurement process while the authorization was in place, including on consulting firms and temporary staffing companies to supplement personnel.
According to Office of Administration records that date back to 2002, it was the only time the agency’s Division of Purchasing granted an emergency procurement authorization statewide to executive branch agencies it oversees, a spokesman previously said. It was in place for a little over a year through March 2021.
The legislation heard Tuesday would also require the commissioner of administration to develop reporting requirements when contracts exceed $1 million, like requiring corrective action plans and their status and delivery schedule compliance.
When the Office of Administration develops a “qualified vendor list,” which allows the agency to verify a list of vendors who meet minimum requirements, the bills stipulate it must be compiled by issuing a request for proposals and placing acceptable vendors onto the list.
When a qualified vendor list is utilized, the Office of Administration must post a notice on MissouriBUYS, a state portal for contracts and bids, and contact eligible vendors to respond. On a quarterly basis, qualified vendor list requests, project details, vendor responses and those selected must also be posted. Similarly, state contracts issued to a single feasible source must also be posted on MissouriBUYS and updated quarterly.
“At the end of the day, we want a fair process that vendors who are competing for contracts know that these are the rules of the game, and it is fair to everyone interested,” Richey said. “There is transparency.”
Rep. Wes Rogers, D-Kansas City, also raised whether it would be possible to encourage the state to give business to locally-owned companies or products that are manufactured within Missouri. Hudson said, “I would not argue with you one bit,” and noted there’s a wide range of areas within the procurement process that lawmakers could address.
The Missouri Chamber of Commerce and Industry was the only entity to testify in support of the bills, with no one testifying in opposition.
Kara Corches, the chamber’s vice president of governmental affairs, said the state’s procurement process needs modernization, noting some provisions of state law regarding Missouri’s request for proposal process are decades old.
“We want to make sure that our process is both efficient and effective for taxpayer dollars,” Corches said. “We think that our process is really rigid right now, and so it’s hindering our access to high quality products and solutions.”
Hudson and Richey said they’ve had productive discussions with the Office of Administration on the bills and expect there to be tweaks as they move forward. Chris Moreland, a spokesman for the agency, said it has “many of the same goals” as the bill sponsors.
“We look forward to working together to find new ways to make the procurement process better for all,” Moreland said.
The agency previously said it had no immediate plans for an audit of emergency spending it authorized during the pandemic, pointing to the fact that it required agencies to keep logs documenting their purchases and that state Auditor Nicole Galloway has reviewed how federal stimulus funds are spent.
Top lawmakers on the House Budget Committee previously said they planned to play an oversight role in how funds were spent through emergency contracts, and Rep. Peter Merideth, D-St. Louis, had requested the Office of Administration document its oversight of such purchases.
In a September letter in response to Merideth’s questions, Budget Director Dan Haug said that the agency had recently added a new requirement that a “contractor performance evaluation report” be completed upon conclusion “for all key contracts,” which he defined as those generally over $250,000 a year in value.
“The information on this report can then be considered in future bid evaluations,” Haug wrote in the letter, a copy of which was obtained by The Independent.
Haug also wrote the Division of Purchasing doesn’t have dedicated staff to handle emergency procurements, and suggested increasing staffing to have a dedicated team of procurement specialists “is the best method of addressing this issue in the future.”
A fiscal analysis of the bills estimates up to three procurement specialists would be needed to implement the bills’ provisions at a cost of up to $300,000.
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