The city’s Human Services Department has quietly dismantled an office that monitors how grants to nonprofit providers are written and spent. According to a June 10, 2019 email from HSD deputy director Audrey Buehring, the office “will be dissolved after March 31, 2020 and will cease full review of contracts for the 2020 Contract Season.”
The office (full name: Leadership and Administration Contracts Unit, or LADCU), was put in charge of contract compliance after a scathing state audit in 2014 concluded that HSD lacked “adequate controls” to monitor how contracts were being written as well as how human service providers were spending grant money. The audit found that the city did not “consistently verify the information it receives” from nonprofit human service providers or keep records adequate to ensure that public dollars were being spent appropriately by providers.
The main problem with HSD’s tracking and compliance system, the audit found, was “the way that the service provider monitoring responsibility is assigned to Department employees,” with the same employees in charge of choosing providers, negotiating contracts, and then “self-monitoring” to make sure the contracts stayed in compliance throughout the year.
The audit found that the city did not “consistently verify the information it receives” from nonprofit human service providers or keep records adequate to ensure that public dollars were being spent appropriately by providers.
After the audit, those duties shifted to the contracts unit, and since then, the unit appears to have lived up to its charge. In the past year alone, LADCU’s four contract reviewers caught dozens of errors in contracts before they went out, including one contract that went through several layers of review before a staffer with the unit caught an error that would have cost the city $2 million, according to an April memo from all six LADCU staffers raising alarms about the change. (The memo was obtained by The C Is for Crank.) LADCU staffers also caught the fact that an HSD staffer had removed mandatory language designed to protect immigrants in multiple contracts, as well as language committing the city to pay “an unlimited sum” for rodent control in several contracts, according to the memo.
The 2014 state audit calling for stricter monitoring of HSD contracts found that in many cases, a single employee was assigned to analyze community needs, pick a provider, negotiate a contract, and ensure that the provider complied with the contract requirements—duties that the auditor called “incompatible.” Under former interim HSD director John Okamoto, the contracts unit began to serve as an extra layer of review by experts whose only job was to ensure that contracts were “accurate, consistent, and compliant” with federal, state, and city requirements, including labor laws passed at the city level.
Once the unit is completely dismantled, starting with next year’s contracting season, their responsibilities will revert to HSD’s various divisions—essentially the same system that led to compliance issues in the first place.
HSD will also create a new “Continuous Quality Improvement” unit to check contracts for compliance after they’ve been signed; but there will no longer be any city staffers exclusively dedicated to ensuring that contracts are compliant with every city, state, and federal requirement before they go out. If errors are caught after the fact, contracts will have to be amended, costing time and money.
According to an internal HSD memo from June, the department decided to shut down the contracts review unit because human-service providers that receive funding through the city “are asking more and more of us, and rightfully so, including better wages for their workers, an annual cost-of-living increase that matches the actual inflation rate in Seattle, fewer barriers in applying for our funding, and simpler contracts. We are years behind schedule in giving this to them because no one ever has the capacity to work on this.” The funding freed up by eliminating contract review jobs, the memo continues, will go toward “reducing operational burdens on providers.”
Ironically, one of the errors the contract review unit reportedly caught last year was a provider that failed to provide the 2 percent wage increase the city required in its 2019 budget. (HSD and the mayor’s office did not respond to repeated requests for confirmation or comment on this question, which I initially asked them about more than a week ago).
“Although we will make our best efforts to support the divisions in this transition, at this time there is no added capacity. We also realize that staff doesn’t just write contracts, there are many other duties they perform that these changes will impact.”
The June memo goes on to explain how the city will get by without the additional layer of oversight that was added in response to the state audit just four years ago: “This change will require every person who touches a contract to have a high level of individual accountability in order to make this work. … If each individual holds themselves to a high level of accountability, then we can operate more efficiently without additional resources.”
“Although we will make our best efforts to support the divisions in this transition, at this time there is no added capacity. We also realize that staff doesn’t just write contracts, there are many other duties they perform that these changes will impact.” Continue reading “City Shuts Down Unit Charged with Fixing Contract Compliance Problems Identified in Scathing 2014 Audit”