OKLAHOMA CITY (KFOR) – Oklahoma Attorney General Gentner Drummond issued a formal opinion Thursday affirming a recent report by the Legislative Office of Fiscal Transparency (LOFT) that found significant shortcomings in state purchasing oversight.
The opinion was requested by state Rep. Ryan Martinez, R-Edmond, after the LOFT report found state agencies spending more than $3 billion without oversight during Fiscal Year 2022 alone.
In 1959, the Oklahoma Legislature created the Central Purchasing Division to provide oversight and accountability for purchases made by state agencies.
Government groups have to go through this division to get purchasing approved unless there is an exemption.
The Central Purchasing Division has been part of the Office of Management and Enterprise Services (OMES) since 2011.
Drummond says OMES is required to maintain oversight of all agency purchases, including verifying an agency’s claim that an acquisition is exempted from the Central Purchasing Act.
“We have a legal opinion that we’ve gone by for a while that basically excluded us from the authority over exempted agencies [so] if there’s a different or better legal opinion, we support it,” said OMES Interim Executive Director John Suter, following the LOFT report.
Both the Attorney General and LOFT Executive Director Mike Jackson say the impact of the Central Purchasing Act has been diluted over the decades, allowing certain state agencies to have limited exemption from it.
When the Central Purchasing Act was created, it provided just seven exemptions that state agencies could use to make purchases outside of the division’s control.
Today, LOFT estimates there are 87 full or partial exemptions.
“To permit blanket exceptions without requiring oversight by OMES would provide sweeping and carte blanche authority to administrative agencies, risking that they might irresponsibly discharge their trusted duties to care for taxpayer funds,” said Drummond. “This was certainly not the intent of the Legislature; that intent requires concluding that OMES has a duty to ensure ‘that government officials are accountable to the public and are discharging their duties competently and responsibly,’ including by overseeing exemptions of all kinds.”
Drummond found that OMES has not followed its duty to verify whether a claimed exemption is legitimate.
“Given the entirety of the legislative scheme, this office concludes that OMES is required to maintain oversight and responsibility for all agency acquisitions,” he wrote. “This necessarily includes routinely verifying an agency’s claim that an acquisition is statutorily exempt. This determination is consistent with the intent of the (Central Purchasing) Act, which ultimately is to protect the public at large by promoting economy in government and reducing the likelihood of fraud.
“The LOFT report on the State’s purchasing system is a solid examination of what unthinkably has been allowed to become a seriously flawed process,” he said. “It appears as though reforms are needed to ensure accountability and oversight of taxpayer funds. It is incredulous to think no one questioned what we now know was occurring within the Oklahoma Tourism and Recreation Department or that an executive branch agency was exempted from an $18 million purchase, despite the law plainly limiting the exemption to purchases not exceeding $250,000.”
In April of 2022, the state canceled its contract with Swadley’s after allegations of fraudulent activity and improper bidding practices came to light. The company was accused of misspending millions of taxpayer dollars, an accusation the restaurant group denies.
“During the time OTRD was making payments to Swadley’s, the agency was also the subject of a P-card audit. Among the Audit Team’s findings were a violation of competitive bidding requirements, split purchasing to avoid purchase limits, improper documentation of purchases, improper purchasing of IT equipment, and prohibited purchases of alcohol. Despite nine formal findings, the Audit Team found that OTRD ‘significantly complied with the State Purchase Card Procedures and the agency’s internal purchase card procedures,’” the LOFT report states.
In an emailed statement to KFOR, OTRD said they did not have a comment.
Even after the findings were brought to light, officials say the Central Purchasing Division didn’t suspend the agency from being able to use a purchase card, reduce its purchasing power, or increase the number of audits conducted on the Department of Tourism.
When the agency was accused of making split purchases, which was classified as a felony, LOFT says the division didn’t alert anyone.
Drummond urged state legislators to give serious consideration to recommendations made in the LOFT report issued earlier this month. Read his full opinion here.