Pennsylvania Auditor General Jack Wagner Finds PLCB Contract in Compliance with Law, but Urges Board to Improve Procurement Procedures

    HARRISBURG, Pa., April 29 /PRNewswire-USNewswire/ -- Auditor General
Jack Wagner said today that the Pennsylvania Liquor Control Board did not
violate state law but that it did exercise poor judgment in awarding a
$173,820 employee training contract to the husband of a PLCB regional
manager, creating the appearance of a conflict of interest.

    "In awarding a contract to the spouse of one of its regional managers,
the PLCB should have anticipated the reasonable public questioning that
would result over a potential conflict of interest, regardless of whether
that conflict was an actual conflict or the appearance of a conflict,"
Wagner said.

    Because of the appearance of a potential conflict and other red flags,
such as the wide disparity in cost proposals submitted by prospective
vendors, the PLCB should have seriously reconsidered its decision to award
the contract at all and done the training in house, or rejected all
proposals and started over, Wagner said.

    The Department of the Auditor General conducted the examination at the
request of the PLCB, after concerns were raised about a potential conflict
of interest in the awarding of the retail staff professional development
program contract to Solutions 21, a Pittsburgh consulting firm.

    Wagner commended the PLCB for recognizing the value of an independent
review of the procurement process and for its cooperation in the
examination, including providing immediate and complete access to all of
the relevant documents and personnel, which enabled the Department of
Auditor General to complete the examination in fewer than five weeks.

    Investigators found no evidence that the Western regional director used
the authority of her employment or confidential information to assist her
husband's business in obtaining the contract, Wagner said.

    In her interview, the Western regional director said that her husband
established his business, Solutions 21, prior to their marriage; she does
not have any financial interest in the company; and that she was aware her
husband's company was going to submit a proposal in response to the RFP
issued by the PLCB but she and her husband had agreed not to discuss it.

    Wagner said his department's review of Solutions 21's corporate
documents and the Western regional director's statements of financial
interest found no evidence to contradict her statements. The report notes
that the investigators' ability to determine the substance of
communications between a married couple is obviously limited.

    Although the PLCB followed the law in awarding the contract, Wagner
said, red flags throughout the process should have caused the PLCB to rebid
the contract or consider not awarding it at all.

    One of the unsuccessful vendors, Alutiiq Business Services LLC,
submitted a proposal listing a current PLCB employee, not the Western
regional director, as the on-site staff person required under the contract.
The PLCB's chief counsel became aware that the employee was listed on the
proposal and recommended that, due to a potential violation of state law,
Alutiiq replace the PLCB employee with another individual, which it did,
before the proposals were scored.

    Wagner said his investigators could not determine if the PLCB employee
provided Alutiiq with confidential information that could have assisted it
in preparing its proposal.

    Of additional concern, Wagner said, is that one of the members of the
evaluating committee stated that she had adjusted her scores to ensure that
her top three choices moved forward in the contracting process, even though
it did not appear to affect the overall outcome.

    "Although this contract was awarded according to the letter of the law,
there are several incidents that occurred that raise serious concerns and
put the PLCB's procurement procedures in question," Wagner said.

    Wagner said the examination uncovered several internal control
deficiencies within PLCB. His report made five recommendations to improve
the PLCB's management controls, procurement policy and operational
procedures, and three recommendations related to the prevention of
conflicts of interest. He said the PLCB should:



    --  Develop written policies for areas of the procurement process not
        adequately addressed in the Procurement Handbook issued by the state
        Department of General Services.
    --  Conduct a pre-proposal conference for every request for proposals (RFP)
        issued, or formally document why one is not necessary.
    --  Adhere to the suggested 30-day minimum time period between the issuance
        of the RFP and the due date for the vendor proposed as suggested by the
        Procurement Handbook, or formally document why the time period was
        adjusted.
    --  Provide written instructions for members of future evaluation committees
        to complete the detailed scoring sheets.
    --  Formally document all evaluation committee meetings and all decisions
        made by the executive committee and legal counsel within the contract
        procurement file.
    --  Exercise good judgment when awarding contracts to avoid even perceived
        conflicts of interest.
    --  Ensure that management and employees understand and comply with laws and
        policies pertaining to conflicts of interest.
    --  Require the members of future evaluation committees to properly document
        changes on their individual scoring sheets.
    Auditor General Jack Wagner is responsible for ensuring that all state
money is spent legally and properly. He is the Commonwealth's elected
independent fiscal watchdog, conducting financial audits, performance
audits and special investigations. The Department of the Auditor General
conducts more than 5,000 audits per year. To learn more about the
Department of the Auditor General, taxpayers are encouraged to visit the
department's Web site at http://www.auditorgen.state.pa.us.