A special audit involving Harford County contracting procedures found instances where the county relied too much on non-competitive bid service contracts and, as a result, left itself open for possible fraud, misappropriation of county assets and the likelihood it paid more for the services than necessary.
The audit performed by the accounting firm SB & Company of Cockeysville specifically targeted information procurement technology contracts, the majority of which were requested by the Division of Information and Communication Technology, whose director, Justus Eapen, was fired last month by Harford County Executive David Craig, a few weeks before the audit's final report was turned over to Craig and members of the Harford County Council.
Craig has declined to discuss the firing of Eapen, citing personnel confidentiality; however, several well placed sources in the county government said the contracting concerns were at best a contributing factor to his dismissal, which also involved other issues.
A management letter discussing the auditor's findings and recommending corrections was released to Craig on Feb. 3. It has not been discussed publicly. The Aegis obtained a copy of the letter and a document entitled, "Report of Independent Public Accountants on Applying Agreed Upon Procedures – For the Period Ended Sept. 30, 2011," through a freedom of information request.
Only one vendor is cited by name in either document, a Bel Air consultant who provided social media services to the Office of the Chief of Staff, headed by Aaron Tomarchio.
A third document produced by the auditor, an undated agenda for a meeting with Craig and the council, cites specific concerns about an open-ended contract with a Virginia company that provided a variety of IT services to Information and Communication Technology. At least one person who attended the meeting in question said it took place between Christmas and New Year's.
Though the auditors concluded the county's information technology department has made risky contracting decisions, county officials said this week they are confident the procurement department is addressing those issues.
Concerns raised last year
The genesis for the special audit began as SB completed its regular audit of the county's operations for the 2010-11 fiscal year last September. Though that audit was clean, the auditor noted in its most recent management letter that "we noted a certain matter involving a certain internal control and operational matters..."
In going over the annual report at the Dec. 13, 2011 county council legislative session, the auditors said they had concerns with some procurement policies, especially the large number of sole-source contracts in the procurement department.
The subsequent special audit confirmed 19 of a statistically-sampled 21 contracts reviewed for IT services were "piggy-backed" and one was competitively bid. Contracts and vendor disbursements between the dates of July 1, 2009 and Sept. 30, 2011 were reviewed.
Auditors were unable to find the procurement method for one other contract, with Tobias J. Musser of MNS Group in Bel Air, to provide media and communication services via Twitter and Facebook. A copy of the Musser contract, obtained by The Aegis, shows it was executed on behalf of the Office of the Chief of Staff and was for an amount "not to exceed $49,800 per year."
Musser did not return requests for comment earlier this week.
Out of a sample of 15 vendors the auditors looked at, 11 vendor contracts were "piggy-backed" and four did not have contracts, according to the agreed-upon procedures document.
Emergency purchases in non-emergency situations
A Feb. 3 management letter states that piggy-back procedures for service-related contracts "are used typically for emergency circumstances whereby there is not time to prepare a fully competitive request for proposal process."
"Therefore, we typically see these procurement methods for service related contracts to be the exception," the auditors wrote.
The letter also noted that while the rate for service is set, the underlying effort to complete the task is not set, so "the County may end up paying more for an item than was originally expected."
"Additionally, the use of these types of procurements increases the risk of misappropriation of County assets and resources," the auditors wrote.
The undated agenda for the meeting between the auditors and county officials expressed some concerns with specific issues, including "a significant amount of contracts with the company ESI, which subcontracted a significant portion of the work to Hexaware."