* 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.
* 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.”