Report 2004-139 Summary - December 2004
Office of the Secretary of State:
Clear and Appropriate Direction Is Lacking in Its Implementation of the Federal Help America Vote Act
Our review of the Office of the Secretary of State's (office) administration of federal Help America Vote Act (HAVA) funds revealed the following:
- The office's insufficient planning and poor management practices hampered its efforts to implement HAVA provisions promptly.
- The office's disregard for proper controls and its poor oversight of staff and consultants led to questionable uses of HAVA funds.
- The office avoided competitive bidding for many contracts paid with HAVA funds by improperly using a Department of General Services exemption from competitive bidding and by not following the State's procurement policies.
- The office bypassed the Legislature's spending approval authority when it executed consultant contracts and then charged the associated costs to its HAVA administration account.
- The office failed to disburse HAVA funds to counties for the replacement of outdated voting machines within the time frames outlined in its grant application package and county agreements.
RESULTS IN BRIEF
The federal Help America Vote Act of 2002 (HAVA) was passed in October 2002 with overwhelming bipartisan support in response to the controversy and debate over the 2000 presidential election. Intended to make federal elections fairer and more accurate by addressing concerns over incomplete voter registration lists, inaccurate voting machines, and inefficient election administration, HAVA contains numerous requirements that every state must meet when conducting federal elections. These requirements, most of which are to take effect between January 1, 2004, and January 1, 2006, include replacing punch card and lever-operated voting machines, allowing voters to verify their votes before casting their ballots, providing voters with provisional ballots, providing access for voters with disabilities, and creating a statewide voter registration list.
To help states comply with its requirements, HAVA provides funds designated for various purposes, such as administering federal elections (discretionary funds), replacing voting machines (voting machine replacement funds), and complying with HAVA requirements mandating a uniform and nondiscriminatory election process (either discretionary or mandatory requirements funds). In fiscal year 2003-04, California received a total of $180.6 million in federal HAVA funds, and it expects to receive another $169.6 million in fiscal year 2004-05.
As the State's chief elections official, the secretary of state is responsible for implementing HAVA's requirements in California. However, insufficient planning and poor management have hampered the efforts of the Office of the Secretary of State (office) to implement these requirements in a timely way. Before it can spend HAVA funds, the office must receive authorization from the Legislature and the Department of Finance (Finance). As of June 30, 2004, the office had spent only $46.6 million of the $81.2 million in HAVA funds authorized by the Legislature for fiscal year 2003-04.
Although the office developed a state plan describing how it will meet HAVA's mandatory requirements, it failed to develop a detailed implementation plan for each of its HAVA-related projects. In addition, it did not assign to someone within the office overall responsibility for overseeing the implementation of HAVA's requirements. As a result of these and other failures to apply widely accepted management principles, the office is at risk of failing to meet certain HAVA requirements by January 1, 2006. For example, according to its current schedule, the office will not be able to provide a fully functioning statewide voter registration database by the HAVA deadline. Missing the deadline, the office risks having to undergo a special audit by the federal government regarding its implementation of HAVA and its use of HAVA funds.
Additionally, because the office disregarded controls and exercised poor oversight of staff and consultants, its use of HAVA discretionary funds to pay for activities unrelated to HAVA led to questions about the improper use of these funds. Also, the office failed to document the time spent by its staff members on HAVA activities, as required when salaries and wages are charged to a federal fund source. Staff activity reports submitted by two of the employees we reviewed, as well as 62 of the 169 staff activity reports submitted by regional outreach consultants, reported attendance at events—some of which were partisan in nature—that appear to be unrelated to HAVA purposes. Finally, a law firm retained to provide legal advice on issues related to HAVA performed unrelated work such as writing speeches for the secretary of state that had little if anything to do with HAVA and also invoiced and was paid for services that did not conform with the terms of its contract. Partly as a result of these uses of HAVA funds, the office has come under close scrutiny, and other HAVA funds have been held up by Finance pending completion of a detailed spending plan. Further, the office is at risk of having the federal government require repayment of some, if not all, of the HAVA funds it used to pay certain employees and contractors.
The office's practice of using noncompetitive procurement methods for services it paid for with HAVA funds does not ensure that the State received the best value . The office avoided competitive bidding for many HAVA expenditures by obtaining and then inappropriately using a Department of General Services (General Services) exemption from competitive bidding. It justified this exemption due to the urgent need to meet the deadlines for certain HAVA requirements. Most of the contracts entered into under the exemption were for services that did not relate to any specific HAVA deadline and could have been competitively bid had the office planned better. For example, the office entered into contracts with consultants to do voter outreach activities without seeking competitive bids.
Further, the office did not follow best practices in making California Multiple Award Schedule (CMAS) procurements. For example, it did not obtain competitive offers for most of its CMAS procurements, and rather than obtain competitive bids and use one contract, the office used multiple CMAS contracts to obtain information technology (IT) consulting services totaling $631,000 from one vendor and $1,145,000 from another. General Services prohibits the use of CMAS if the procurement of IT consulting services exceeds $500,000. Also, the office failed to follow state procurement policy requiring agencies to obtain at least two informal responsive bids for commodity purchases over $5,000.
Additionally, the office bypassed the Legislature's spending approval authority when it entered into 18 outreach consultant contracts in fiscal year 2004-05 valued at $230,400 and paid contractors $84,600 through its HAVA administration account for services related to those contracts.
Finally, the office failed to disburse voting machine funds within the time frames outlined in its grant application package, internal procedures, and contracts with counties, delaying check delivery by an average of 108 days and causing some to lose interest income they could have used in replacing their voting systems.
In May 2004, in an attempt to address issues related to its HAVA implementation, the office began corrective actions to ensure the proper expenditure of HAVA funds, including terminating its contracts with all regional outreach consultants in late September 2004. Recognizing the need for project management services, in June 2004 the office began soliciting proposals for these services, and gave notice of its intent to award a contract on December 1, 2004.
To ensure that it successfully implements the requirements called for in HAVA, the office should take the following steps:
- Develop a comprehensive implementation plan that includes all HAVA projects and activities.
- Designate the individuals responsible for coordinating and assuring the overall implementation of the plan.
- Identify and dedicate the resources necessary to carry out the plan and assign roles and responsibilities accordingly.
- Establish timelines and key milestones and monitor to ensure that planned HAVA activities and projects are completed when scheduled and meet expectations.
To establish or strengthen controls, comply with federal and state laws, and reduce the risk that HAVA funds are spent inappropriately, the office should take the following actions:
- Establish and enforce a policy prohibiting partisan activities by employees and consultants hired by the office that includes an annual certification that employees have read and will abide by the policy.
- Standardize the language used in all consultant contracts to include provisions regarding conflicts of interest and incompatible activities such as partisan activities.
- Ensure that time charged to federal programs is supported with appropriate time sheets and certifications.
- Follow competitive bidding requirements to award contracts and restrict the use of exemptions to those occasions that truly justify the need for them.
- Follow General Services policies when using CMAS for contracting needs.
- Comply with state policy for procuring commodities.
- Prohibit fiscal year 2004-05 expenditures for non-administrative HAVA activities until it receives spending authority from Finance and the Legislature.
The office states that it appreciates the report and recommendations and intends to implement as soon as possible the recommendations not already implemented. It also provides clarifications on certain issues that it believes need to be included to make the report more accurate. Our comments follow the office's response.