San Diego’s city government altered contract spending limits by at least $15 million without required City Council approval, the city auditor revealed in a recent report. The actions have the effect of “diminishing transparency and governance,” the auditor noted.
Additionally, the auditor found that departments brought 19 percent of contract alterations, totaling nearly $64 million, to the City Council for retroactive approval, “creating risks for vendors and City services, and further reducing effective oversight.”
“Incomplete and inaccurate contract information and unwritten policies have led to work inefficiencies and staff errors,” the auditor added.
The city spends hundreds of millions of dollars annually on goods and services contracts to provide services. The San Diego Municipal Code requires the City Council to review and approve large-value changes to those contracts.
The auditor found that 13 percent of the contract alterations the office reviewed did not receive proper City Council approval, and most of the alterations that did not receive approval increased the total value of the contract by more than $200,000.
“Confusion around approval requirements was the leading reason contract alterations were not presented to Council,” the auditor reported.
Retroactive approval of contracts, or “ratification,” is “an exception that should be used as little as possible,” the auditor wrote, but “more than one out of four contract alterations we reviewed were brought to Council for approval retroactively or with little time remaining.”
The auditor found “numerous accuracy issues with contract information” in the city’s computer system and noted that “many past audit recommendations related to system controls and accuracy remain unimplemented, contributing to persistent issues.”