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*** UPDATED x6 *** Audit finds CMS violated procurement code with Barney’s warehouse lease

Wednesday, May 16, 2018

* First, a little background from April of last year

Illinois is spending millions to rent a warehouse in Springfield to store Department of Human Services’ records when it could have been purchased for substantially less, state Sen. Andy Manar said Tuesday.

Manar, D-Bunker Hill, said the administration of Republican Gov. Bruce Rauner signed a five-year, $2.4 million lease for property at 2410 South Grand Ave. E. that could have been purchased for about one-third of that cost.

The warehouse was the former home of Barney’s Furniture before the store moved to a new location on Wabash Avenue last year. Chicago-based Climate Controlled Holdings LLC bought the building from Barney’s. That sale closed at the beginning of this year, Sangamon County records show. Climate Controlled then leased the building to the state for five years at a cost of $478,256 annually the first two years, $487,881 for years three and four, and $497,507 for the final year.

The latest county assessment shows the property has a fair market value of $1.2 million. Manar said Tuesday the building could have been purchased for $750,000.

* The Illinois Auditor General is out with its report today, and it’s stinging

The decision to enter into the lease actually involved two different leases – one for a file storage warehouse and one for an IT (Information Technology) and Telecommunications Support Center. After the winning vendors were selected but prior to the final award, the Department of Central Management Services (CMS) switched the purposes of the leases and the using agencies. However, CMS violated a provision of the Illinois Procurement Code by awarding leases to vendors who were not qualified respondents for the leases awarded. For example, the vendor awarded the warehouse lease was not a qualified respondent under the Procurement Code as it had submitted a response for the IT and Telecommunications Support Center and not the warehouse lease. This was no fault of the vendors as the decision to switch leases was made by CMS. In addition:

    • Offers were evaluated and awards selected based on the requirements set forth in the solicitation document. These requirements were then changed.

    • CMS and the Chief Procurement Office for General Services have characterized the switch of the leases as substituting using agencies. However, the switch was not a simple substituting of using agencies. Not only were the agencies changed, the purposes of the leases were changed, the structural layouts were changed, the tenant space requirements were changed, and the prices offered were changed.

    • Other responders did not get the opportunity to change their bids to meet the new lease requirements violating the principle of fair and equal treatment.

    • By not rebidding, CMS may have excluded potential bidders who were not afforded the opportunity to bid on the new space requirements.

    • The State Purchasing Officer responsible for reviewing the leases could not provide adequate documentation of review.

Other key findings of the audit include the following:

    • The information provided by CMS to the Procurement Policy Board for the Department of Human Services (DHS) warehouse lease was misleading and incomplete which hampered the Board’s ability to review the lease. A draft version of the information sent to the Board contained additional language explaining the switching of leases but it was removed in the final version sent to the Board.

    • The amount of space requested in the DHS space request was insufficient to meet its file storage needs. DHS also could not provide documentation demonstrating any cost savings resulting from consolidating files.

    • CMS did not conduct an analysis of the cost-benefit of purchasing instead of leasing the property at 2410 South Grand Ave. East.

    • DHS has not conducted a comprehensive cost- benefit analysis of digitizing records.

Sheesh.

* Wait. There’s more

The switching of leases lacked transparency. The information provided by CMS to the Procurement Policy Board for the DHS warehouse lease was misleading and incomplete which hampered the Board’s ability to review the lease. Based on the information provided, the Board would have been unable to tell that the lease originated as an IT and Telecommunications Support Center. A draft version of the white paper prepared by CMS contained additional explanatory language that was removed in the final version sent to the Board.

* Just a couple of recommendations from the full audit report

The Department of Central Management Services and the Chief Procurement Office for General Services should put procedures in place to ensure that leases are awarded only to qualified respondents who submitted bids meeting the original lease specifications. […]

The Procurement Policy Board should consider developing a written conflict of interest policy for Board members to clarify instances where a conflict may exist and establish steps to take when a conflict does exist.

I’m sure there will be react, so this post will likely be updated.

*** UPDATE 1 *** GOP Rep. Dave McSweeney…

The Performance Audit report on the Barney’s warehouse lease is a devastating indictment of incompetence and wasteful spending. My HJR 63, which I worked closely on with Senators Manar and Tom Cullerton, helped bring light to this situation. I hope that all ten recommendations by the Auditor General are immediately implemented.

*** UPDATE 2 *** Democratic Sen. Tom Cullerton…

“The release of today’s audit report on the Gov. Bruce Rauner’s corrupt insider deal is eye opening. I was honored to work with Senator Manar and Representative McSweeney to pass HJR 63. Many questions are still left out there including whether Governor Rauner will ever admit his failure in leadership and the obvious corruption revealed within this report. I trust the Attorney General is reviewing the details of this audit.”

*** UPDATE 3 *** Democratic Sen. Andy Manar…

Audit results released today regarding the Rauner administration’s pricey lease of a Springfield warehouse for paper storage confirms what some lawmakers have known all along: that the deal doesn’t pass the smell test.

State Senator Andy Manar (D-Bunker Hill), chairman of the Senate Appropriations II Committee, said he is troubled by the audit report.

“At various points in the process, people chose to ignore rules, guidelines and best practices that are there to eliminate questions about backroom deals and political favors,” Manar said. “This was an unnecessary cost to taxpayers, and it seems to me the problems uncovered by this audit merit further scrutiny.”

“I still have a lot of questions, and I think it is clear more conversations should occur, not the least of which are about the ethical expectations and the spending priorities of the Rauner administration,” Manar said.

“Ultimately, I think the average Illinois taxpayer doesn’t believe we should be spending money on politically connected leases for storing paper. We have more important needs in Illinois. I’ve never understood why any of this happened to begin with.”

*** UPDATE 4 *** Comptroller Mendoza…

We are studying the Auditor General’s disturbing findings about the Rauner Administration manipulating leases to reward insiders. The stinging audit finding that the Rauner Administration violated state procurement code vindicates our decision to put a hold on the payments of these leases.

The Comptroller’s office exists to serve as a watchdog for the taxpayers of Illinois and when state contracts are found to be in violation of state laws or codes, you can bet I will hold those up for review. A decision about whether or when we release the hold on these payments will come after further review of these alarming audit findings.

*** UPDATE 5 *** CMS…

As the Auditor General’s report notes, the Illinois Chief Procurement Office (CPO), which oversees State procurements agreed that CMS properly complied with Section 40 of the Illinois State Procurement Code.

However, per the Auditor General’s recommendations, CMS has taken steps to tighten up the leasing procurement process. We have made improvements that will ensure more comprehensive documentation, including revision of the agency space request form to clarify reasons for choice of location. CMS is also revising its process to require formal documentation of decisions on leasing vs. purchase of real property. CMS has proposed legislation (SB3143) to annually analyze all leases with a purchase option and to provide recommendations to the General Assembly on leasing vs. purchase decisions. The Department has also implemented better procedures to protect confidential information, and to ensure that staff adheres to recommended practices throughout the procurement process going forward.

*** UPDATE 6 *** Pritzker campaign…

“Violating procurement law, skirting accountability requirements, and handing out no-bid contracts to unqualified vendors is how Bruce Rauner does procurement reform,” said Pritzker campaign spokesman Jason Rubin. “This scathing report shines a light on a failed governor whose mismanagement keeps costing Illinois taxpayers.”

- Posted by Rich Miller        

55 Comments
  1. - Da Big Bad Wolf - Wednesday, May 16, 18 @ 11:24 am:

    But tell me again how Mendoza’s purchase of a used car is a problem.


  2. - Skeptic - Wednesday, May 16, 18 @ 11:27 am:

    And yet “Procurement” was one of the “44″ TA items that Rauner bragged about.


  3. - RNUG - Wednesday, May 16, 18 @ 11:29 am:

    Anybody who never did procurement for the State KNOWS you can’t change the bid specs after you open the bids … unless you throw it all out and re-bid.

    It smelled then send it smells worse now.


  4. - RNUG - Wednesday, May 16, 18 @ 11:30 am:

    Darn autocorrect … never should be ever … send should be and


  5. - JS Mill - Wednesday, May 16, 18 @ 11:33 am:

    I guess when Rauner said “procurement reform” was a goal he didn’t mean it the way we all thought he did?

    This isn’t shaking up Springfield.


  6. - DuPage Saint - Wednesday, May 16, 18 @ 11:42 am:

    Picky picky picky. This was for Cellini (sp?) so it is ok


  7. - wordslinger - Wednesday, May 16, 18 @ 11:48 am:

    The Cellini Gang Rides Again is a curious chapter in the Rauner story.

    What does he need them for? I thought the deal was if you had all that dough, you were incorruptible.

    This one is so blatant with the stink, you don’t know whether to laugh or cry.


  8. - DuPage Bard - Wednesday, May 16, 18 @ 11:48 am:

    Won’t matter he’ll just lie about it again


  9. - RNUG - Wednesday, May 16, 18 @ 11:49 am:

    == Bruce’s next costume be an orange jumpsuit. ==

    Won’t happen on this unless there is a email trail. Too many steps removed from the Governor’s Office.


  10. - Duopoly - not neceesary to block - Wednesday, May 16, 18 @ 11:52 am:

    =Please, please, please, let Bruce’s next costume be an orange jumpsuit.=
    There’s a couple politically-connected Springfield affiliate companies of CCH. (See IL SOS business records). There was too many “procurement errors” to make this accidental. Most people in IL think this stuff is cute, but it really needs to be punished.


  11. - 360 Degree TurnAround - Wednesday, May 16, 18 @ 11:53 am:

    They should have stored it in the empty Mitsubishi plant in Bloomington.


  12. - Anonymous - Wednesday, May 16, 18 @ 11:54 am:

    Yet both CMS and the CPP responded saying this was all good, no violations, no story here.

    You have to question the competence of the so called independent CPO (remember the leaked e-mail where she was the hand picked choice for Rauner).


  13. - Rufus - Wednesday, May 16, 18 @ 11:55 am:

    A 15 year loan on $750,000 building at 3% provides us with a payment of $62,824.94 per year. With a lease of $478,256 you get a 660% gross profit. The People in CMS are unbelievable corrupt.


  14. - Annonin' - Wednesday, May 16, 18 @ 11:55 am:

    React?
    How about a few words from the Sangamo Co States Atty?
    He want more loopholes of procurement in the TA


  15. - Cubs in '16 - Wednesday, May 16, 18 @ 11:57 am:

    Even if Rauner can’t be linked directly to this it still happened on his watch in his agency. If nothing else it provides campaign fodder for the Pritzker camp.


  16. - Annonin' - Wednesday, May 16, 18 @ 11:59 am:

    Could it also be time for one of “watchdoggers” to run the GovJunk Investment list through the Paradise Papers search engine?


  17. - Perrid - Wednesday, May 16, 18 @ 12:01 pm:

    Just today Rauner hit JB for corruption - being connected to Chicago/Madigan/Blago/Berrios. The irony is palpable.


  18. - Give Me A Break - Wednesday, May 16, 18 @ 12:03 pm:

    “How about a few words from the Sangamo Co States Atty?”

    You new around here? LOL, the Sangamon County GOP members live at the trough on leases, they have “their guys” all over the Procurement boards.

    When the media asked one of them about this lease, Valla ran like a little girl and jumped into an elevator.


  19. - RNUG - Wednesday, May 16, 18 @ 12:09 pm:

    == but it really needs to be punished. ==

    At best, you might get the Director of CMS .


  20. - Flynn's Mom - Wednesday, May 16, 18 @ 12:31 pm:

    Is this utter incompetence or something more sinister? How many other “deals” are out there that should be examined?


  21. - Anonymous - Wednesday, May 16, 18 @ 12:35 pm:

    “At best, you might get the Director of CMS .“

    Currently being trusted to fix the Quincy veterans home debacle?


  22. - Demoralized - Wednesday, May 16, 18 @ 12:37 pm:

    ==The People in CMS are unbelievable corrupt.==

    I take exception to that. Anyone who has dealt with procurement knows it’s a nightmare. I don’t disagree that the procedures in the case weren’t followed, but to state that the “people” are corrupt is over the top.

    And, if we’re talking about a purchase, you’ll find that most of the time purchasing a building would be cheaper than a lease. Problem is that it’s impossible for agencies to do that. That’s something the General Assembly needs to address.


  23. - Mr. K. - Wednesday, May 16, 18 @ 12:50 pm:

    So, okay, let me get this straight.

    44 items on the original Turnaround Agenda.

    Rauner asked: well, which were implemented?

    “Um, procurement reform. That one.”

    And now … this.

    It’s great that a savvy business person is in chage. Or not in charge. Or at least in charge according to his own estimation.

    I mean, because, you know … if one those politicians were in chage we’d be in pretty deep.


  24. - Annonin' - Wednesday, May 16, 18 @ 12:53 pm:

    We put a lot of faith in the Sangamo SA once he see the part about destroying documents. Makes it a lot easier.
    And they can type out a FOI/subpoena for the emails between GovJunksters and CMS


  25. - regnaD kciN - Wednesday, May 16, 18 @ 1:05 pm:

    “At best, you might get the Director of CMS.”

    “Currently being trusted to fix the Quincy veterans home debacle?”

    Most recent Golden Horseshoe award winner for Best Director?


  26. - 47th Ward - Wednesday, May 16, 18 @ 1:10 pm:

    ===“At best, you might get the Director of CMS .“

    Currently being trusted to fix the Quincy veterans home debacle?===

    Maybe this explains the $230 million price tag for that project?


  27. - Anonymous - Wednesday, May 16, 18 @ 1:37 pm:

    I vote sinister
    I’d also bet there are more insider deals that should be audited and similar results will be found


  28. - Chris Widger - Wednesday, May 16, 18 @ 1:39 pm:

    ==Many questions are still left out there including whether Governor Rauner will ever admit his failure in leadership and the obvious corruption revealed within this report.==

    Why would he say this? Would anyone applaud that? If not, why would he ever do that? We create the politicians we want to lead us by our choices.


  29. - Henry Francis - Wednesday, May 16, 18 @ 1:48 pm:

    ===“At best, you might get the Director of CMS .“

    Currently being trusted to fix the Quincy veterans home debacle?===

    Maybe this explains the $230 million price tag for that project?==

    Don’t forget that we are paying Mr. Hoffman $20k a month to oversee the Quincy solution. He must have Donna Arduin’s agent.


  30. - Juvenal - Wednesday, May 16, 18 @ 1:56 pm:

    There must be something wrong with Google today.

    I cannot find any mention of this story on the wensites of the IPI or its affiliated entities, Project Six or its affiliated entities, Dan Proft or his affiliated entities, the Illinois Mirror or its affiliated entities, or the twitter feed of any Tribune columnists that sit on the Tribune editorial board.

    Weird. Or maybe ‘Wired.’


  31. - Mr. K. - Wednesday, May 16, 18 @ 2:34 pm:

    Bravo Mendoza.


  32. - Procurement Refugee - Wednesday, May 16, 18 @ 2:43 pm:

    Chicken or the egg? Multiple state agencies have been in the press for a variety of mis-steps in the procurement process. Is there rampant abuse or uninformed staff getting things wrong? The common thread through all of them is the independent oversight of the Chief Procurement Office. If the agencies are trying to do the wrong thing, or are completely incapable then the oversight is supposed to either stop them from doing the wrong thing or help them to get it right. Otherwise, what does the oversight add? Someone tell Mister Brown his table is ready.


  33. - Annonin' - Wednesday, May 16, 18 @ 2:51 pm:

    Tribbies probably gave it biz editor who is makin’ into a Sunday story on the profitability of small warehouse leases


  34. - Chris Widger - Wednesday, May 16, 18 @ 2:57 pm:

    ==The Comptroller’s office exists to serve as a watchdog for the taxpayers of Illinois==

    Is this true? I don’t mean that rhetorically–is this a fair characterization of the position?


  35. - Oswego Willy - Wednesday, May 16, 18 @ 3:02 pm:

    ===Is this true? I don’t mean that rhetorically–is this a fair characterization of the position?===

    (Sigh)

    - Chris Widger -

    Why do ya think Illinois has a Comptroller AND a Treasurer?

    Use the google, get back to me.


  36. - Anonymous - Wednesday, May 16, 18 @ 3:05 pm:

    This is peanuts compared to the Deloitte contract. I’d like to see how that was bid. And how much more is going to be needed to fix it


  37. - Oswego Willy - Wednesday, May 16, 18 @ 3:06 pm:

    - Chris Widger -

    I’ll give you a hint… it’s not a Hodge podge reason…


  38. - Swift - Wednesday, May 16, 18 @ 3:07 pm:

    AG report specifically states the property owners did nothing wrong, “This was no fault of the vendors”, pg. v. I get what Mendoza is doing, but this is all on CMS, not the property owners.


  39. - Henry Francis - Wednesday, May 16, 18 @ 3:16 pm:

    While the Guv loves to play 7 degrees of Kevin Bacon where JB is 1 degree of anyone and everyone who is corrupt, I prefer analogies.

    Joe Berrios is to JB Pritzker as
    Bruce Rauner is Bill Cellini


  40. - RNUG - Wednesday, May 16, 18 @ 3:18 pm:

    Not really surprised. CMS lost most of the people who knew how to procedurally / legally do procurement. The last time I dealt with CMS (under Quinn) as a vendor, I had to explain to CMS that the proposed contract violated the law and I refused to bid on it. Previously, as a CMS employee doing RFI/RFP/RFQ’s, I used to have to explain to vendors why their responses didn’t comply.


  41. - Demoralized - Wednesday, May 16, 18 @ 3:19 pm:

    ==I get what Mendoza is doing==

    When she withholds payments because she has a disagreement with the policy or a paritcular decision then as far as I’m concerned she’s overstepping the authority of her office. And I belive she has in some cases. But, given this audit she may now be able to make an argument that the contract isn’t valid and, thus, no payments can be made.


  42. - Demoralized - Wednesday, May 16, 18 @ 3:21 pm:

    The funny thing RNUG is that agencies now rely on the CPO (i.e. the OIG) to ensure that the rules are followed. When you can’t even count on the watchdog to actually provide competent oversight then that makes the agency’s jobs extremely difficult.


  43. - RNUG - Wednesday, May 16, 18 @ 3:23 pm:

    == This is peanuts compared to the Deloitte contract. I’d like to see how that was bid. ==

    If they were smart and legal, they pre-determined the bid specs or they wrote a sole source justification statement and got it signed by the agency Director. The first is in a gray area; the second is legal as long as the proper paperwork is done.


  44. - RNUG - Wednesday, May 16, 18 @ 3:38 pm:

    If the Legislature isn’t happy about these leases, they can explicitly list them in the FY19 budget with a $0 amount, in effect line item non-funding said contract, which should have a non-funding clause.


  45. - RNUG - Wednesday, May 16, 18 @ 3:40 pm:

    == “Violating procurement law, skirting accountability requirements, and handing out no-bid contracts to unqualified vendors is how Bruce Rauner does procurement reform,” said Pritzker campaign spokesman Jason Rubin. ==

    JB will have some low hanging fruit when he takes office and starts to eliminate waste, fraud and abuse.


  46. - Huh? - Wednesday, May 16, 18 @ 3:42 pm:

    it depends on how the Deloitte contract was procured. if that contract was a quality based selection money is discussed after the consultant is selected.


  47. - RNUG - Wednesday, May 16, 18 @ 3:48 pm:

    == that contract was a quality based selection money is discussed after ==

    You can (or at least used to) justify sole source on issues other than money.


  48. - Poetic - Wednesday, May 16, 18 @ 4:19 pm:

    Seems like a CPO that came from CMS legal is a little too cozy for the expected level independence that this job requires


  49. - Annonin' - Wednesday, May 16, 18 @ 4:20 pm:

    CPO signed off
    Did that occur before or after CMS shredded the files?


  50. - Anon - Wednesday, May 16, 18 @ 4:21 pm:

    “At various points in the process, people chose to ignore rules, guidelines and best practices that are there to eliminate questions about backroom deals and political favors,” Manar said. “This was an unnecessary cost to taxpayers, and it seems to me the problems uncovered by this audit merit further scrutiny.”

    That’s rich. Someone needs to ask him how his former babysitter turned Animal Control Administrator got a $47,000 payout for “unused vacation time” when supporting groups of the AC had voted in years past to pay for extra hires in the same department…only to be rebuffed by the Animal Control Department.


  51. - Ike - Wednesday, May 16, 18 @ 5:13 pm:

    Anon - ok, we should look into that too. But that doesn’t excuse Rauner. Two wrongs don’t make a Bruce Rauner right.


  52. - Handpicked CPO - Wednesday, May 16, 18 @ 6:38 pm:

    When you read the full report, it looks like the state procurement officer who works for CPO Daley didn’t review the request with any thoroughness , just a very quick look before he provided CMS approval. I’d be curious at to what the SPO looked at before approving and how much time he spent on it. Any way I look at it, there is either lackadaisical review or sheer incompetence or something more nefarious in the review process by the CPO and SPO-any of those choices don’t provide taxpayers any solace that the watchdog isn’t a fox. As pointed out by other commentators, the CPO was the prior procurement lawyer for CMS and was Rauner’s choice for the “independent ” CPO. Sad.


  53. - Anonymous - Wednesday, May 16, 18 @ 7:27 pm:

    Time to clean house.


  54. - Handpicked CPO - Wednesday, May 16, 18 @ 7:46 pm:

    Which house?


  55. - Da Big Bad Wolf - Thursday, May 17, 18 @ 7:38 am:

    So after Illinois sells the Thompson Center and the people working there need to move to other offices, are we to expect more “Barneys”?


Sorry, comments for this post are now closed.


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