Audits find lax legal reviews of state contracts
Posted June 21, 2012
RALEIGH, N.C. — A pair of audits released Thursday say North Carolina is failing to provide required legal reviews for government contracts valued at $1 million or more.
The state Department of Justice and Department of Administration are failing to follow a 2010 law that requires big contracts for everything from supplies and equipment to printing and building maintenance to be read by a lawyer before they are signed to ensure the terms are favorable to the state. The law was enacted after other audits found that contracts had been mismanaged.
The state government spends about $242 million a month on contracted services, State Auditor Beth Wood said.
"If we continue to let these contracts go without a review, continue to go without being monitored, then you're going to continue to have wasteful spending in our state government," Wood said.
Some contracts don't include penalties for non-performance, so if the vendor does not deliver, the state has no recourse, she said.
Administration Secretary Moses Carey disagrees with the auditor's contention that 26 months is enough time to put a system in place to ensure the reviews occur.
"The Department of Administration is deeply engaged in procurement transformation, a strategic and deliberate process that will comprehensively change the way the state buys goods and services. This is a complex and time-consuming endeavor," Carey said in a statement. "As the auditor is aware, there is no funding for contract support as we develop procurement rules and policies, standardize manuals and create relevant training. We are doing all this with in-house resources while also addressing the day-to-day business needs of the state."
Chief Deputy Attorney General Grayson Kelly said his agency is available to perform contract reviews when asked, but is not required to determine whether all contracts above the limit undergo review.
Noelle Talley, spokeswoman for the Department of Justice, said state auditors interpreted the state law incorrectly and noted that they failed to find any evidence that any contract received by DOJ failed to receive an appropriate legal review.
Wood said the department has no system for tracking major state contracts to ensure that they are reviewed, and she urged the department to work with the Department of Administration to develop such a system.