California Audit Faults UC System for Flouting Contract Rules

SACRAMENTO, Calif. (CN) – The University of California skirted contract guidelines and extended lucrative contracts without soliciting bids from new vendors, the state auditor said Tuesday.

According to the audit, the UC Office of the President failed to enforce contract guidelines and allowed some of its campuses to replace full-time employees with low-wage workers to perform jobs like landscaping, security and janitorial services.

State Auditor Elaine Howle says lawmakers should clamp down on the university’s noncompetitive bidding and force campuses to justify using contract workers when university employees are available.

“The university’s overly broad definition of professional services limits the use of competitive bidding and some locations awarded contracts to vendors through a non-competitive process without proper justification,” the audit states. “In addition, a lack of clarity in the displacement guidelines may reduce their effectiveness.”

Auditors reviewed 31 service contracts at five different locations and found that university employees were displaced without justification at two campuses. But most of the university locations are “generally” adhering to the university’s contract policy, according to the audit.

In 2016, the University of California, San Francisco, outsourced an information technology project it estimated would save $30 million. The campus displaced 49 full-time employees without providing the Office of the President adequate notice or analysis of the move. Some employees found other positions, 17 retired and 15 were fired.

The decision roiled local lawmakers and university employees and drew national media attention. Howle says it’s too early to tell if the decision will actually save the San Francisco campus money.

The University of California is the state’s third largest employer with 10 campuses, five medical centers and more than 200,000 employees. It spent $8 billion on contracts for goods and services in fiscal year 2015-2016.

The report follows an April audit that blasted UC President Janet Napolitano and her office for not reporting $175 million in reserves.

“In effect, the Office of the President received more funds than it needed each year, and it amassed millions of dollars in reserves that it spent with little or no oversight from the regents or the public,” the April audit states.

Napolitano refuted the audit’s findings, claiming that the reserves were much lower and intended for “unexpected expenses.”

Tuesday’s audit found that the University of California, Davis, amended a contract with a food service vendor 24 times, increasing its value from $71 million to $237 million. Howle says while the campus didn’t explicitly violate the university’s contract laws, it should have solicited bids from other vendors.

“The lack of such a restriction opens the door for potential abusive contracting practices by allowing the university to avoid the biddings process through repeated contract extensions,” the audit states.

In response to the audit, Napolitano said the university will revise its displacement and competitive-bidding guidelines.


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