Auditors: Social Services Department Overspent, Mishandled Contracts

The state’s auditors just completed a report on the Maryland Department of Human Services (DHS), and the results are not squeaky clean.

DHS overspent $4 million on an information technology contract as a result of inadequate contract administration, according to the report released yesterday by the State’s Office of Legislative Audits (OLA), covering the period beginning in August 2012 and ending in August 2015.signature-contract-2654081_1920

In addition, DHS paid $8.4 million over and above its authorized contract approval amount and $4.5 million above the department’s appropriation, without seeking Board of Public Works (BPW) approval, as required under State procurement regulations. The report indicates that DHS failed to disclose the unfunded liability to the Comptroller’s Office, as required.

The report indicates that DHS overpaid two legal firms by $616,000, by entering in emergency contracts with them guaranteeing minimum compensation amounts.

Finally, the report indicates that DHS failed to properly store and protect “sensitive personally identifiable information.”

While DHS did not contest most of the OLA findings and recommendations, the department did disagree with the auditors’ findings regarding the legal firms’ contracts. From the department’s response:

After DHS failed to obtain the approval of the [Children In Need of Assistance, or] CINA contracts by the Board of Public Works in August 2013, BPW directed the Department to enter into emergency contracts. DHS senior management engaged in negotiations in order to obtain the emergency contracts, which resulted in continuation of legal services for children with no disruption in services. The two contractors provided legal services for several thousand children under the emergency contracts.

Maintaining stability was of paramount importance to the Department and a failure to reach an agreement with the seven vendors would have resulted in upheaval for approximately 16,364 children and the risk of children losing statutorily mandated counsel. ….

DHS also believes that the OLA analysis is incorrect. ….  [T]he contractors provided high quality representation for the children at a reasonable rate.

Nevertheless, DHS indicated that its current legal services contracts do not include guaranteed minimums.

The report, which includes DHS’ responses, is available here.

The Baltimore Sun covers the story here.