SANTA FE, N.M. — New Mexico state procurement rules designed to ensure competition on contracts for goods and services are being circumvented unnecessarily amid exemptions that cover $6.5 billion in spending each year, the State Auditor’s Office said Tuesday.
A special audit by the office of State Auditor Tim Keller found some state agencies used emergency exemptions in ways not permitted by law and that sole source contracting remains common despite some progress toward ensuring greater competition by posting contract opportunities online.
The report recommends reforms to rein in exemptions to competitive bidding and to streamline contract approvals under a single procurement oversight authority. Agencies typically spend over six months to approve a contract, making it more likely that agencies will look for short-cuts, the audit stated.
State Auditor Tim Keller said current alternatives to competitive bidding were designed to save the state time or money, but have ended up reducing accountability in government and fairness to outside businesses. The audit also found limited oversight of political campaign contributions from contractors hired by the state.
“We’re supposed to protect against pay-to-play and fraud, waste and abuse, and also I think just be accountable for where those dollars are going,” Keller said. “What our audit showed is that, by and large, for billions of dollars, we are not doing that in one way or another. We’re either violating our own laws or we’re not tracking the data.”
In a letter to Keller, Department of Finance and Administration Secretary Duffy Rodriguez called the methodology behind the audit “questionable” and described as conjecture concerns about the general overuse of non-competitive procurement.
General Services Department Secretary Ed Burckle endorsed several suggestions in the audit to ensure the proper use of exemptions to competitive bidding.
New Mexico spends between $10 billion $13 billion in state funds and federal aid each year on procuring goods and services.
Health care contracts signed by the Human Services Department accounted for the bulk of exemptions to the state procurement code — more than $5 million in the fiscal year ending in June 2016.
Auditors found additional agency contracts worth more than $1 billion were issued without seeking competitive bids during the same period.
Emergency procurement provisions were used appropriately after a fire caused a power outage at a corrections facility holding hundreds of inmates. But a sample of 13 sole-source contracts found that 10 did not meet state procurement requirements.
Best practices issued by the office of Gov. Susan Martinez encourage competitive contracting to get the best value, and a procurement reform task force created in 2011 has helped ensure single-source contracts are publicly disclosed 30 days prior to an award.
Bipartisan legislation was introduced this year to revise a list of about 40 exemptions to competitive bidding, but never reached a floor vote.
The special audit found state agencies spent $56 million on sole-source contracts during the fiscal year ending in June 2016. Auditors estimated another $105 million in contracts were exempt from competition under emergency provisions.