Kansas agencies skipped the state's competitive bidding process more than 1,000 times over the past eight years, gaining permission to spend $550 million on no-bid contracts and purchases.
The state has approved $115 million in noncompetitive transactions already in 2018, far outpacing the past few years, according to records obtained by The Eagle. A significant chunk involves a controversial Kansas Department of Revenue contract to outsource dozens of jobs.
And records show the Kansas Department of Commerce bypassed competitive bidding to pay the director of the Governor’s Council of Economic Advisors more than $472,000 since 2011.
The state has used no-bid transactions to do everything from provide medical services to buy groceries. Agencies have sought no-bid contracts totaling more than $4 million for consultants over the past few years, for example.
Proponents say sometimes only a single company is capable of doing the work. But others contend more oversight is needed and that more competitive bidding would drive down prices and save tax dollars.
Agencies can skip competitive bidding through a process called prior authorization. That requires the head of the agency and the director of purchases in the Department of Administration to certify that forgoing competitive bidding is in the best interest of the state.
The process leaves companies and individuals interested in competing for the work only a week to object. And they usually don't: Information from the Kansas Department of Administration shows no one protested more than 1,000 transactions that bypassed competitive bidding over the past eight years.
Gov. Jeff Colyer’s office said he will work with lawmakers to make government more transparent, but he did not answer a question about whether the governor thinks Kansas skips competitive bidding too often.
Colyer "has been working hard to make Kansas government more open and transparent through a number of executive orders, signed bills and his direction to state agencies. Current law already requires agencies to provide notice to the public before a large contract is awarded without a competitive bid,” spokesman Kendall Marr said.
Some lawmakers say the current system is not enough. They say they need to receive more information about contracts.
They also suggest that large contracts should trigger a review by the Legislature because agencies can put lawmakers on the hook for millions of dollars in future spending.
“We’re the appropriators. We’re the ones that are supposed to decide how the money is spent and if we’re caught off-guard — of not being privy to a contract a department has entered into — we have to stick to the obligation the department or agency makes,” said Rep. Troy Waymaster, the Republican chairman of the House Appropriations Committee.
The Eagle analyzed eight years of data obtained under the Kansas Open Records Act. The information lists every prior authorization above $100,000 since the start of 2011, roughly the start of Gov. Sam Brownback’s administration.
The data goes beyond agencies controlled by the governor to include other parts of government, such as the judicial branch.
Among the no-bid authorizations:
▪ A $2.6 million sponsorship by the Kansas Lottery at the Kansas Speedway in April 2018
▪ A $3.9 million pilot project for bulk fuel purchases at the Department of Transportation in 2012
▪ A $3.5 million authorization to the company Software AG for maintenance and support to the Office of Information Technology Services in 2017
The data suggests the state spent roughly $550 million on contracts that did not go through the competitive bidding process. The total is likely higher because the information doesn’t include contracts below $100,000.
It's difficult to know exactly how much the state spent; a prior authorization allows an agency to spend up to a certain amount, but doesn’t require it to. It is possible that in some cases the contracts came in below the prior authorization amounts.
Some purchases stand out
The data also provides a window into how agencies are spending resources, and some proposed purchases stand out.
Approximately once a year, the Kansas Department of Commerce filed a prior authorization to pay Stan Ahlerich, the director of the Governor’s Council of Economic Advisors, around $120,000. Ahlerich left the council in 2016.
When Brownback created the council in 2011, he specified it would receive staff support from the Department of Commerce using only existing agency resources.
The agency said Friday that Ahlerich was never a state employee. Commerce spokesman Kevin Doel said that meant the agency had to contract with Ahlerich.
Asked why the agency didn't go through a competitive bid to award the contract, Doel said in an email that "Ahlerich had unique historical knowledge, economic experience, and other skills to serve as Executive Director of the Governor’s Council of Economic Advisors." He noted that Ahlerich had previously been president of Kansas Inc., which was replaced by the council.
Outsourcing IT jobs
Kansas has been turning to no-bid contracts since well before Brownback became governor. But the Kansas Department of Revenue’s decision to skip bidding on contracts that will outsource dozens of IT jobs within the agency and overhaul its tax collection system has drawn new scrutiny to the process.
The costs of the agency’s contracts are pegged at more than $100 million over 10 years — the largest prior authorization contracts during the Brownback-Colyer administration.
Rep. Kathy Wolfe Moore, the ranking Democrat on the Appropriations Committee, said the Legislature is due answers and that the committee should examine the issue during the 2019 legislative session.
“This came relatively quickly after the Legislature left Topeka. There certainly was ample time to talk to us about this, inform us of this, tell us about this, but that didn’t happen,” Wolfe Moore said.
Secretary of Revenue Sam Williams said he is happy to provide information about contracts, but he rejected the idea the public should play a greater role in negotiations.
“I’m in the position I’m in because someone who was elected chose me to be in that position. And the decisions I make — the negotiations — whether that was a good decision or a bad decision is going to be between me and my boss,” Williams told reporters recently.
Josh Svaty, a Democratic candidate for governor, said he will propose legislation that would create review standards for contracts that extend beyond a governor’s four-year term. Sometimes long-term contracts that last longer are required, he said, but they should be vetted.
The KDOR contracts are another instance of “reckless governance, unfettered by effective oversight,” he said in a statement.
“Things in the Statehouse must change. The culture of secrecy is unchecked and has rendered our legislators unable to provide tough oversight,” Svaty said.
State 'likely paying more'
No-bid contracts have been in the spotlight in Kansas before. When Mark Parkinson was governor in 2010, state auditors found that in the previous five years, Kansas had authorized more than $900 million in purchases that bypassed competitive bidding.
The figure is not directly comparable to the data provided to The Eagle because the data provided to the newspaper excluded purchases under $100,000. Auditors in 2010 also questioned the accuracy of the data they received.
The auditors found that the Department of Administration, which must sign off on large no-bid contracts, at that time didn’t follow some best practices, including having written policies and procedures. Auditors recommended that the department include a unique identifier for each transaction in order to track purchases — a recommendation the state appears to have adopted.
Like today, auditors noted then that “legislative concerns have been raised that State agencies are sole-sourcing contracts that should be competitively bid, and that the State is likely paying more than necessary as a result.”