Purchasing contracts for goods and services that involve more than one city of San Diego department aren't being monitored for compliance, exposing the city to potential cost overruns and other problems, according to a memo released Friday by City Auditor Eduardo Luna.
Auditors found that officials with the purchasing and contracting department believed the deals were being overseen by the divisions receiving the goods and services, Luna said. In turn, the affected departments believed the agreements were being monitored by Purchasing and Contracting, he said.
The issue was discovered during a performance audit of purchasing and contracting that has not been completed.
"We are issuing this memorandum prior to completing our performance audit due to the significant inherent risks these conditions pose to the city," Luna wrote.
"Although the municipal code assigns responsibility for goods and services purchases to the director of purchasing and cotracting, we were unable to identify any written citywide policies, procedures, or administrative regulations that deal with assigning contract administration and monitoring responsibilities regarding citywide goods and services contracts," he said.
An example of a contract that went bad involved the move of 450 municipal employees from leased office space in one downtown building to another two years ago, something then-Mayor Bob Filner said would save the city money. The company hired to handle the move charged the city more than $1.3 million, but about half of that amount didn't come with supporting documentation, Luna said.
He said the lack of oversight of citywide contracts opens the municipal government to a risk of overpayments, not receiving the goods and services, receiving substandard goods and services, and not obtaining required City Council approval when payments climb over the $1 million mark.
In the case of the move of employees, the City Council has not approved the expense over $1 million.
Luna issued two recommendations to purchasing and contracting director Dennis Gakunga — that he make sure that staff is assigned to oversee contracts that involved two or more departments, and that he take steps to enforce the value of the contracts.
Gakunga responded that he agreed with both recommendations. In his position for not quite two years, he's been credited by city officials with overhauling the purchasing and contracting process.
In his response to Luna, Gakunga said staff are going through contract files in order to assign administrators and provide them with the relevant data. He also said a meeting would be held to "ensure there is a clear understanding of the roles and responsibilities of the contract administrator."
The department is also creating a handbook with guidelines for contract administrators, he said.
Gakunga also outlined a host of improvements made in his department, including the registration of 4,700 suppliers into an electronic vendor system, setting up a new contract management model, implementing a procurement forecasting process and increasing dialogue with city department heads and City Council offices — among other things.
