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TALLAHASSEE - Auditors on Friday skewered the handling of a $350-million contract to privatize the state personnel system.
Officials at the State Department of Management Services failed to provide adequate safeguards in the contract with Convergys Customer Management Group, the state audit said. And they allowed improper relationships between officials responsible for the contract and personnel who left the state agency and started lobbying it on behalf of their new employer within days.
Dubbed "People First," the new personnel system is one of Gov. Jeb Bush's pet projects and the subject of considerable criticism from legislators.
At the time the contract was issued in 2002, state officials estimated it would allow the state to terminate about 800 workers and save about $173-million.
Convergys has been behind schedule and over budget on the project. The contract signed in 2002 was for $278.6-million over seven years. So far it has been amended six times to $349.9-million and extended to nine years.
The project was so far behind, the state withheld payment of all funds until Sept. 9, when an $11-million payment was made. Auditors say DMS illegally spent more than budgeted two years in a row and illegally attempted to acquire a loan payment from a minority business loan program for a subcontractor, even though the vendor was not eligible.
Cynthia Henderson was at the helm of the department when the contract was awarded. Asked about the criticism Friday, Henderson said she submitted the contract to auditors for review before it was signed.
"We gave it to everyone to comment on," said Henderson, now a lobbyist. "We tried to reach out. Any comment they have now lacks the recollection that they were asked to comment. ... We sought input from every state agency."
Henderson later went to work as a lobbyist for the North Highland Co., a third-party monitor for the state's Myfloridamarketplace project, a procurement system set up by DMS. Auditors said they found no evidence of contact between Henderson and officials at the department after she left.
Henderson said she has been careful to obey a law that prohibits former officials from lobbying the agency they left for two years.
The audit also criticizes the actions of Barbara Auger and Garrett Blanton, former deputy secretaries at DMS who both became lobbyists for Mevatec/BAE, a company that signed an $884,500 agreement with Acclaris, one of the subcontractors hired to monitor the contract with Convergys.
Auditors said Auger went to work for Mevatec a month after leaving DMS and Blanton went to the same company about three months after leaving the agency.
DMS lacks the rules to avoid improper lobbying relationships and needs training, noted Auditor General William Monroe.
In a response to the audit, William Simon, the current DMS secretary, said he agreed new rules are needed to strengthen public confidence that contracts are awarded impartially and to ensure objective evaluation of contracts.
Simon also said legislators should review procurement laws and address conflicts of interest. He also pledged to require employee training and quarterly disclosure statements from any employee with relatives who lobby.