Audit says Department of Commerce violated state law in brand refresh

Published: Oct. 14, 2019 at 12:38 PM CDT
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An audit of the North Dakota Department of Commerce says the department violated state law when they redid the “Be Legendary” logo and brand.

The audit says two temporary contracts were used to keep the cost under the financial threshold, but the contracts should have been treated as one contract. The cost for the two contracts was $87,162.50.

The audit also says the department violated its appropriation by charging $853,908 to the wrong biennium. According to the audit, the department made a $310,931 payment for work after the appropriation period ended and an advance payment of $458,801 which was prohibited in the contract for the Enhanced Use Lease Grant program.

“Circumventing procurement laws and authorizing unsupported payments does not promote transparency and accountability but instead, undermines the public’s trust in its government institutions,” said auditor Josh Gallion.

The audit also says the Department didn’t monitor contract deliverables of a contract that cost $253,921, and payments of $123,750 were made to unapproved subcontractors.

The Department of Commerce responded saying, “We disagree with the finding that the Department “violated state law by circumventing procurement requirements related to the ‘Be Legendary’ logo and overall brand refresh”. As correctly stated in the audit report, the value of this contract was $9,500, and as such, did not require a competitive bid process under procurement rules. Contract deliverables were met prior to the contract being completed. Subsequently, temporary workers were hired to perform work that was connected to the brand refresh but was separate from the contract deliverables. We acknowledge there was overlap in the time frame of the contract and the temporary employment as the final contract payment was made in November 2018, and the temporary employees began employment with the Department in October 2018. After the hiring of the temporary employees, the OMB Procurement Office was consulted, and steps were taken to ensure the contract was appropriately terminated after final payment. The Department will ensure there is a clear separation between contract deliverables and temporary employment arrangements in the future and that all procurement requirements are followed.”

Gallion responded saying, “The Department did not have evidence to support that the services from the Original Contract were completed before the Temporary Employment contracts were negotiated in September 2018 and effective October 1, 2018. Without this evidence and that the duties of both contracts overlapped, the work was a continuation of the same services in the Original Contract. The two individuals providing services under the Original Contract continued to be treated as contractors.”

According to the auditor’s office, they will present the results to the Legislative Audit and Fiscal Review Committee, and they can refer any violations to the Attorney General’s office. The next meeting of the committee is November 6.

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