The Office of the State Auditor has found no violations in its review of purchasing practices by the City of Hobbs, but the office says Hobbs’ procurement code is lacking and criticized the way the city handled two contracts.
And the auditor’s office had a strong message for city officials: We’re watching you.
The state auditor “will continue to monitor the city’s procurement practices as part of the normal audit process, and in accordance with standard procedures, should information come to light suggesting criminal wrongdoing, our office will notify the local District Attorney’s Office,” Deputy State Auditor Sanjay Bhakta wrote to city officials in a letter dated Oct. 17.
Hobbs resident Nick Maxwell initiated the state auditor’s investigation in July. He alleged “less-than-arms-length” city contracts with an attorney and a consultant from Pennsylvania, where Hobbs City Manager J.J. Murphy used to work.
At issue were two city contracts:
- Murphy, Maxwell’s complaint stated, authorized a Hobbs city contract for legal services with Pennsylvania attorney Alan F. Wohlstetter Jr. in November 2014 related to the creation of a police video surveillance system. The contract was capped at $50,000. Murphy and Wohlstetter already knew each other: The attorney had a contract with Wilkes-Barre when Murphy was city manager there, and the two later worked as contractors on a project in Wilkes-Barre after Murphy left the city administrator job.
- The City of Hobbs issued a request for proposals (RFP) for a consultant to help improve its waste and recycling program in March 2014 with a deadline that was less than 10 days away. The city then hired The Medico Consulting Group from Pennsylvania — the only qualified bidder, according to Maxwell’s complaint — and paid the company $28,500 to be told that the city should stick with its existing vendor and “request a new and updated proposal to extend its services.”
Both contracts, Bhakta wrote in his letter, “were handled in a manner that raises significant uncertainty as to whether the City received competitive prices. Additionally, the fact that both firms are from Pennsylvania and have connections to the City Manager’s prior employer raises the appearance that the contracts may not have been at arm’s length.”
“In such circumstances, obtaining more than one price quote can mitigate concerns that work is being improperly directed to a specific vendor at the expense at taxpayers,” Bhakta wrote.
In a statement provided to NMPolitics.net, State Auditor Tim Keller said his office “is concerned about these contracts, in particular the city’s failure to take basic steps to ensure taxpayers were getting a good deal.”
Hobbs is a home-rule city, meaning its own purchasing policies supersede the state’s procurement code. The state code aims to “provide for the fair and equal treatment of all persons involved in public procurement, to maximize the purchasing value of public funds and to provide safeguards for maintaining a procurement system of quality and integrity.”
The city’s policy is less specific, stating that its objective is “to guide City of Hobbs employees in the legal steps required to purchase quality materials and services needed at competitive prices in accordance with regulations set forth by the Hobbs City Commission.”
Bhakta recommended that the city’s procurement code be updated to “meet or exceed the basic protections provided for in state law and regulations for ensuring that the costs entities incur are reasonable and that the process is fair.”
“The city’s transparency and accountability is only going to be as good as its own ordinances,” Keller said. “City leaders should take steps to strengthen their procurement practices, and we will continue to monitor any similar transactions.”
Murphy, in a news release from the city, acknowledged the state auditor’s concerns.
“As we are always interested in improving our processes, modifications to the procurement policy will be made and recommended to the City Commission in the near future,” he said. “This process has inspired areas where improvement can be effectuated.”
The city news release stated that Hobbs works toward transparency. It mentioned a city website that provides information about vendors and other financial data.
“As always, we will continue to function in a manner that will prove us to be good stewards of the taxpayer dollars,” Murphy said.
Maxwell, who initiated the state auditor’s investigation, said the findings “align with my concerns.”
“Cronyism and conflicts of interest in the public trust carry a hefty price,” Maxwell said. “The official findings of the State Auditor’s Office reveal that contracts approved under Murphy’s tenure ‘may not have been at arm’s length.'”