By Adam Pagnucco.
Inspector General Megan Davey Limarzi has just released a new report on MCPS’s procurement practices. Among her findings are:
MCPS’s record-keeping practices and manuals for procurement activity contain gaps, are outdated, and are not consistently followed.
MCPS made purchases exceeding $25,000 without Board approval, in violation of law and regulation.
MCPS contracted with active employees for the procurement of goods and services in violation of its Financial Manual.
This last finding is a big one: nine MCPS employees, including seven active ones, were also hired as contractors in FY23 and FY24. Here is the text from the report on that point.
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Finding 3: MCPS contracted with active employees for the procurement of goods and services in violation of its Financial Manual.
The Financial Manual prohibits an active MCPS employee from being hired or paid as an independent contractor or consultant and explicitly states that “employees cannot be treated as employees and independent contractors in the same tax year.” It also requires the written “preapproval of the chief of engagement, innovation, and operations” to hire a retired MCPS employee as an independent contractor or consultant.
We examined individual suppliers within our scope to test for compliance with this prohibition. In that population, we noted the names of at least nine employees who received payments as suppliers. Two of those employees were classified as retired employees at the time they received payments as suppliers; yet we found no pre-approval documentation for one of those retirees that authorized MCPS to hire him as a contractor. Preapproval documentation existed for the other retired employee but was not signed by the chief of engagement, innovation, and operations. Procurement informed us that MCPS eliminated the position of “chief of engagement, innovation, and operations” in mid-2021, but did not update the Financial Manual to reflect a different approver or make other changes that would have negated the need for approval prior to hiring these individuals. The 7 remaining employees each received supplier payments in FY23 and FY24, while they were in active (permanent or temporary) employee status, a violation of MCPS’s established rule. Procurement staff confirmed that they are not checking to determine if vendors or suppliers are active employees and are not aware of any process or mechanism that MCPS has implemented at other levels to track or ensure compliance with Financial Manual requirements pertaining to the hiring of independent contractors or consultants.
Hiring MCPS employees as consultants or independent contractors is not only prohibited by the Financial Manual but this practice is also contrary to standards established by MCPS Regulation GCA-RA, Employee Conflict of Interest, and the BOE’s BBB: Ethics Policy. As a publicly funded entity, MCPS is expected to operate with “the highest level of ethical conduct … to ensure the highest public trust and confidence.” The practice of hiring employees as contractors can lead to acts and claims of preferential treatment and staff using their positions for personal gain or benefit. Awarding contracts to employees and school officials not only creates potential conflicts of interest, ethics violations, and appearances of impropriety, but it can also lead to financial losses to the school system if contracts are awarded at inflated prices because they are not subject to open and fair competition.
Recommendation 3:
We recommend MCPS institute a process to ensure that active MCPS employees are not hired as independent contractors or consultants, and that pre approvals are obtained prior to hiring retirees as independent contractors or consultants.
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There’s a lot unsaid here. How did these employees get these contracts? How much money was involved? What was the nature of the work?
I will be asking MCPS for a list of the employees mentioned in this report along with their positions, salaries, contract terms and contract amounts.