Damning audit of office supply purchases may lead to worse

A botched effort to buy county office supplies only from small local firms bought 31% from one large non-local vendor. Almost $1.7 million of the initial $3.7 million in buys vanished from the county’s warehouse, where door locks were taped open for three months.

That begins a tale of horrors large and small dredged up in a Miami-Dade audit initiated by two commissioners who wanted to see if the intent to buy office supplies from small local firms was as cost effective as the prior deal with Office Depot.

You could have guessed costs would soar. Battling all the red tape, which includes a 12% average markup from the county store when a department wants office supplies, plus using small local firms couldn’t come near matching Office Depot.

But the audit went beyond price. What it uncovered was far more damning, as the commission heard in a report from its own auditor last week that pointed to more to repair in the county’s operation even if it wanted to spend far more of our money to buy from small local businesses.

The commission and its auditor are independent of the mayor’s administration, which both disputed the report’s impact and said Mayor Daniella Levine Cava had ordered a criminal investigation over its shocking findings.

Among findings were records that changed inexplicably during the audit, multiple ineligible bidders who got funds from the $12 million pool deal, orders for no-substitute brand-name supplies that can raise costs and increase dependence on a single supplier, and prices that soared after lower-price bids had been accepted.

The key department didn’t even consider the county’s order that any office supply buys not subject to federal rules had to go to only local and smaller businesses. The department just let others bid and bought from them.

While a March 2022 memo from Mayor Levine Cava stated that the county would monitor companies “to ensure they were not serving as simple pass-throughs, but offered local employment and warehousing of supplies, resulting in local employment and economic impact,” the audit found, the three departments involved all said that “they do not monitor vendors regarding their pass-through status, local employment, warehousing, or their impact on local employment and economic conditions.”

“It shocks me that people decided not to follow the process,” said Commissioner Raquel Regalado, who with Commissioner René García in 2022 pushed through an order of the audit. “We must be transparent…. When we do something wrong we must be the first to admit it.”

What was wrong? Listen to Commission Auditor Yinka Majekodunmi’s measured comments last week about the office that handles the purchases from vendors, which is supported by a markup of 11% to 20% and has guaranteed customers:

“We have concerns about financial management because … the operation has suffered losses in the last three years,” he said.

“We observed that there was no real approval path when adjustments were being made in inventory. Typically, this is a high-level risk simply because anyone could go into your system and change the quantity of inventory that you have on hand,” which might be one cause of the annual monetary losses. Over four years those unapproved changes totaled $2.9 million, the audit showed.

“When we looked at the inventory balances, what we expected them to have on hand was much [greater] than what they had on hand…. Last year we estimated about $1.1 million less than what they were supposed to have. The previous year was about $530,000, so these are material amounts. We could have $10,000 plus or minus in an operation of this size. But when the inventory deficits come into the millions we had additional concerns, and this is the main reason why we went further to test controls,” a test that – my words here – showed shocking lack of county oversight or concern for what probably included theft.

Carladenise Edwards, the county’s chief administrative officer, told commissioners that “we are all over this” and will work with the auditors. “There is an issue around inventory control and management.”

The mayor has asked county police to look into this, Ms. Edwards said. “We have already initiated a public corruption report” and the administration is confident that it will root out “anything that appeared to be criminal or wrongdoing.”

That this can be embarrassing in an election year is evident. Mayor Levine Cava will do well to get out in front of the probe and make certain that beyond any criminal charges, procedures are swiftly updated, because this report may be only the tip of a chilling iceberg.

For one thing, as Commissioner Regalado pointed out, goods from the $12 million contract aren’t all that may be involved in losses from a warehouse where the locks were taped open for at least three months so anyone could walk in unobserved anytime.

“We were looking at this from the office supply perspective, but there are a lot of other things that are in there,” she noted, “so if an office is redone and they take the computers and the desks and they put it in there … so there’s a lot of back and forth that goes there.”

Even that is a small slice of the dangers.

While the small business office supplies pool is $12.7 million for five years, the county has a vast total of more than $4.2 billion in its 238 pool contracts, Mr. Majekodunmi warned, and this report’s impact could echo there as well. “We observed that the opportunity will be present in other pool contracts.”

We ourselves observe that an independent audit may be needed there too. This might be a one-of-a-kind series of snafus in a single area of the county. Or it might not. The audit uncovered wasteful procedures and far worse. What might an audit find elsewhere?

As investigators look at this audit from a criminal aspect and the administration tries to revamp dangerous procedures, the commission will soon look at it from a legislative perspective.

Commission Regalado has a resolution to be heard July 2 that would direct the mayor to return to buying office supplies from a single vendor under the old contact with Office Depot, scrapping the entire screwed-up small business plan. We concur.