Audit finds flaws in contract system

From the Oregonian, July 8 2008

Multnomah County – Cascadia’s plight is cited as an example of lax management

About seven years ago, Multnomah County leaders decided the county could save money and provide better care for mentally ill residents by contracting with an outside company to handle most treatment, housing and crisis services.

The county increasingly awarded contracts to Cascadia Behavioral Healthcare often without asking for bids or putting payment increases in writing. And despite assigning responsibility for more than four-fifths of the mental health system to Cascadia, the county made only limited efforts to ensure that the nonprofit company spent the money properly.

The result is now well-known: Cascadia collapsed in April forcing the county and state to provide a $2.5 million bailout to keep clinic doors open.

An audit of the county’s procedures released Monday highlights Cascadia’s plight as an example of a flawed contracting system.

At risk are hundreds of millions in tax dollars that the county spends on contracts each year — $276 million in fiscal 2007 — much of it handled by the Department of County Human Services to provide lifeline services for residents with mental illness, alcohol and drug addictions, and developmental disabilities.

The audit found that the county hasn’t created uniform policies for contract administration, hasn’t followed the policies already in place and hasn’t built the necessary controls to ensure it gets what it pays for.

In addition, 96 percent of the contracts weren’t completed when the county began making payments — in violation of policy, the audit found.

The auditor’s office has raised many of the issues before and commissioners have put changes into writing, but county managers haven’t followed them, the audit said.

County Chairman Ted Wheeler said in a written response that despite his growing concerns about the county’s contracting practices, he hadn’t realized the scope of the problems.

Wheeler promised to standardize the use of best practices throughout the county — some efforts are already under way — and move to create a community advisory group to review county contracting practices.

“Clearly we have a great deal of work to do,” he wrote.

Auditor LaVonne Griffin-Valade said she was pleased with Wheeler’s response and promised to focus on the issue until the county makes good on the changes.

Without fixes, she said, “There is absolutely every risk that the kind of situation that happened with Cascadia could occur again.”

EXTRA – Multnomah County Auditor’s report on Management of Large Contracts (1.38 MB PDF) The audit does not mention Cascadia per se, but is a general overview of better practices for the County.
EXTRA – Auditor: County’s contracts are poorly managed, Portland Tribune, July 8 2008
EXTRA – Contract system slammed in audit – Report: Without a fix, county risks more human services fiascos, Portland Tribune, July 17 2008
EXTRA – County contract system broken – editorial, Portland Tribune, July 17 2008