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NM agencies bypassed competitive bids on $930M in spending

State Auditor Tim Keller

State Auditor Tim Keller

SANTA FE — New Mexico bypassed the competitive bidding process for about $930 million in recent annual spending — sometimes without proper justification, state auditors said.

And the figure climbs into the billions when certain health care contracts are included in the total, according to a 57-page report issued by the state Auditor’s Office today.

Government agencies aren’t always required to seek competing proposals or bids. They can bypass the competitive process in cases of emergency or when only one company can provide the service, among other exceptions.

But State Auditor Tim Keller, a Democrat running for mayor in Albuquerque, said his office found examples of agencies using the exemptions improperly — for convenience, in some cases, not because of a true emergency or similar circumstance.

Part of the problem, he said, is red tape in the bidding process, which can take six months for an agency to complete. The delay motivates agencies to seek exemptions.

“It’s a system that’s inconsistent and broken,” Keller said in an interview, “and it leaves itself wide open to patronage, fraud and corruption.”

Gov. Susana Martinez’s administration disputed some of the assertions in the audit. State officials said that the report overstated some of its conclusions and that there are legitimate reasons to avoid seeking competing proposals.

But the General Services Department agreed with a variety of suggestions from auditors — including better training for procurement officers and other measures to strengthen oversight of government purchases.

The administration’s response to the audit was included in the report.

Auditors noted that the state’s use of the “sole-source” exemption in the procurement code — when only one vendor can provide a particular service because there are no competitors — has decreased since agencies have been required to post their written justifications for it.

The report estimated $56 million in sole-source purchases in the 2016 fiscal year, $105 million in emergency purchases that year and $769 million in spending through other exemptions in the procurement code.

And about $5.6 billion in health care spending was made through exemptions in the code, according to the report.

Government contracts are a significant factor in the local economy, Keller said, making it especially critical that they’re awarded on merit, not favoritism.

“This is a really big, important question for the state,” he said.

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