Through the first three quarters of fiscal 2011, District agencies fell nearly 90 percent short of their legally mandated goal of spending at least half of their discretionary budgets each year with small businesses, a city report has found.
Additionally, D.C. Auditor Yolanda Branche wrote in the report that dozens of agencies that claimed they were on target reported inaccurate figures to auditors.
Discretionary funds are dollars that agencies can decide from year to year how to spend. And in 2011, District agencies were supposed to spend nearly $494 million of those funds with certified small businesses.
| Bad math |
| A report from the D.C. auditor shows 28 city agencies overstated how much of their discretionary budgets they spent with small businesses through the first three quarters of the 2011 fiscal year. Among the worst offenders, and the amount they overstated: |
| > Office of Public Education Facilities Modernization: $75,992,774 |
| > D.C. Public Schools: $17,016,745 |
| > Department of Real Estate Services: $6,100,540 |
But by the end of June 2011 — 75 percent of the way through the city’s fiscal year — the District’s government wasn’t on pace to make its goal. With three months remaining, 84 District agencies spent about $60 million combined with small businesses — 12 percent of the level the law mandates.
Spending figures for the fourth quarter weren’t included in the report Branche issued last month, and she said agencies anticipated significant payments to small businesses in the fiscal year’s closing months.
Brendan Miller, a spokesman for the Department of Small and Local Business Development, agreed.
“The bulk of government spending occurs in the fourth quarter of the fiscal year,” Miller said.
Spending records for the fourth quarter weren’t immediately available.
But before the fourth quarter, more than two dozen D.C. agencies tried to claim credit for more small-business expenditures than they actually made.
Investigators found that 28 agencies, including the Auditor’s Office, misreported their payments to certified small businesses. Those 28 agencies combined to misstate the use of $130,725,220.
Nearly 60 percent of that total was claimed by the Office of Public Education Facilities Modernization. That agency said it had spent nearly $78 million of its discretionary budget with small businesses, but the internal review found that the office had spent only about $1.8 million with those companies, for a difference of nearly $76 million.
Kevin Kovaleski, a spokesman for the Department of General Services, the agency that recently took over the education facilities office, said that office included capital expenses in its report to the auditor.
“It looks like the auditor only reported our operating expenses,” Kovaleski said. “We submit our numbers, and the auditor does their report as they see fit. … We’re tracking different things.”
In December, the District installed a new internal system for agencies to track their progress toward meeting small-business expense goals.
“It is important that agencies meet their mandate of utilizing certified small businesses for procurement opportunities,” Harold Pettigrew, the director of the city’s small-business department, said at the time. “The new compliance monitoring system will allow [us] to effectively monitor that activity.”
