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Friday, August 31, 2012
DoE Procurement: "Fraudulent Unethical Behavior" Rewarded with More Autonomy, Less Oversight
By Selected News Articles @ 6:22 PM :: 6696 Views :: Energy, Environment

Procurement Audit of the Department of Education: Part 1 and Part 2, Report No. 09-03 and Report No. 09-04

Report No. 12-06, by Hawaii State Auditor Marion M. Higa, August, 2012 (excerpt)

In part 1 of our report, we found no evidence that the department has the mechanisms and functions to monitor and review procurement compliance on a regular basis. Even though our audit was based on a relatively small sample size, we uncovered numerous instances of non-compliance and violations of procurement rules and regulations. In addition to the high volume of violations, we also identified several risk factors and indications of potential fraud, which compelled us to expand the scope of our work. We issued a separate report presenting the results of that expanded work.

Part 2 of our report revealed an organizational culture of disregard for procurement rules in the Office of School Facilities and Support Services (OSFSS). That culture had allowed office directors, managers, and staff to believe they had the discretion to unilaterally determine whether compliance with procurement laws and rules was in the best interest of the department. As a result, non-compliant procurement practices were tolerated and, more importantly, unethical and possibly fraudulent behavior has been allowed to thrive.

The response to our audit was swift: the then-superintendent returned procurement authority for construction projects to the Procurement and Contracts Branch. However, five months after the then superintendent rescinded OSFSS’s procurement authority, the then-deputy superintendent restored it. In addition, despite the findings of our audits and its own independent investigator, the department did not take strong disciplinary measures against two of the three OSFSS employees who were found to have committed multiple procurement violations.

Today, two of the employees remain in their same jobs as heads of their respective OSFSS branches, which have been given even greater procurement authority with greatly reduced, if any, oversight by the Procurement and Contracts Branch. As a result, the risk of ethical misconduct in the OSFSS remains high, which creates a perception that the department has done little to address the issues.

Full Text ... Report No. 12-06


·       DoE Procurement audit: Millions wasted by "fraudulent unethical behavior"

·       Hawaii DoE: Cost of waste, fraud, and corruption between $191M and $431M per year

·       Abercrombie campaigns to shield DoE from Audit



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