Public Contract Law Journal

Taking a Bite Out of the Big Apple: Local Procurement Lessons from Washington, D.C. and New York City

by Stephanie A. Winkler

Stephanie Winkler (swinkler@law.gwu.edu) expects to receive her J.D. In May 2018 from the George Washington University Law School. She would like to thank her loved ones for their endless support, and her Scholarly Writing professor, Karen Thornton, for her wisdom and guidance during the writing process.

I.  Introduction

A recent series of corruption scandals in Washington, D.C., brought attention to the challenges facing D.C.’s local procurement. National news sources covering D.C.’s procurement-related corruption problems cited them as an example of classic Beltway politics — where “cronyism and procurement issues are related.”1 However, procurement corruption is not a uniquely D.C. issue. Instead, it is well known that corruption is a recurrent issue in municipal contracting.2 At the municipal and local level, procurement corruption is particularly difficult to expose because smaller jurisdictions often lack the extensive regulation found at the federal level.3 However, the addition of dense regulatory schemes is not necessarily the answer.4 In particular, complex regulations may make public contracting inefficient and do little to discourage or expose corruption.5

Instead of instituting layer upon layer of dense regulations, some city and municipal governments have made structural changes or developed institutional checks on the procurement system to ensure integrity, transparency, risk avoidance, and inclusion in procurement.6 New York City serves as an example of a jurisdiction that has restored integrity to its public procurement process by instituting structural changes.7

In the 1980s, New York City faced several procurement-related scandals and responded by overhauling the city’s contracting system and creating an independent body, the Procurement Policy Board (PPB), to combat corruption and streamline the city’s procurement rules.8 New York City’s procurement reform is a useful model for local governments, like those in Washington, D.C., facing procurement corruption and seeking solutions.9 The addition of a New York City-like PPB to Washington, D.C.’s existing procurement structure will provide checks on the city’s legislative power that may be the source of procurement corruption.10 In turn, the Washington-New York solution will provide a useful guide for local jurisdictions seeking to combat procurement corruption without creating significant barriers to entry in the public contracting field.

This Note will examine contracting difficulties faced by local governments through the illustrative case of Washington, D.C. Specifically, in Part I, this Note will explore three major procurement scandals occurring in the past decade in Washington, D.C. These scandals have involved the city’s jails, the District’s lottery contest, and Washington, D.C.’s mayor Marion Barry.11 At the center of each of these scandals lies the Council’s rejection of a contract proposal and subsequent awarding of large sums of taxpayer dollars to a different contractor without any public explanation. The lack of transparency in each of these circumstances has led the public to assume corruption is at the heart of these procurement awards and led to a loss of faith in the city’s contracting system.

Part II of this Note will explore the legal structure of the Washington, D.C., procurement system. Specifically, this section will focus on the role of the City Council in major procurement decisions. This Note will then evaluate the utility and merits of Council involvement in the contracting process. Part III of this Note will discuss the procurement problems faced by New York City in the 1980s and evaluate the structural changes made to New York City’s Charter that addressed and reformed the city’s procurement procedures to address corruption. Part IV of this Note will posit that Washington, D.C., would benefit from making structural changes similar to those made in New York City, while maintaining the institutional checks that benefit the District’s procurement system.

The primary claim of this Note is that restructuring existing political frameworks can combat procurement corruption on the local level. Specifically, this Note posits that legislative involvement in the procurement process — coupled with the addition of an independent, procurement policy board, charged with developing and reforming local procurement practices — would provide significant benefits to local procurement practices.

A.   The Washington, D.C. Problem

In the past decade, Washington, D.C.’s local government has faced several large procurement scandals, each involving the City Council.12 The three recent procurement scandals analyzed in this Note demonstrate how D.C. politicians’ foul play and the lack of transparency has led to a procurement process that appears fundamentally corrupt.13 The appearance of corruption in D.C.’s procurement award system has led the public to lose trust in the contract award process and call for an overhaul of the current contract award process in D.C.14

Media coverage of D.C.’s corrupt professional procurement processes15 most recently appeared in 2015 after the D.C. City Council nullified the granting of a $66.1 million contract to Corizon Health, Inc. to provide health care services at the city’s jail.16 Corizon was awarded the sought-after contract after three procurement specialists conducted an eighteen-month competitive bidding process.17 The Council, in a six-to-five vote, nullified the outcome of the competitive bidding process, resulting in a month-to-month contract with the city’s current provider, Unity Health Care, until another contract was chosen and approved by the Council.18 The opponents of the Corizon contract argued that awarding the health services contract to a “for-profit, scandal-prone company” was not the best way to provide health care to the District’s inmates.19 Advocates of the Corizon contract, including Mayor Bowser and Councilman Jack Evans, saw the contract’s rejection as a disregard for competitive bidding process by members  of the Council.20 Councilman Evans, frustrated with the rejection of the contract, “challenged his opponents on the council to scrap the competitive bidding process and ‘just sole-source the contract to Unity’ since they apparently had already decided which company they wanted.”21

The nullification of this particular contract became the subject of criticism because many suspected the current provider and losing bidder, Unity, of lobbying the Council.22 As the Washington Post reported: “Corizon and its opponents pressed council members aggressively in the weeks leading up to the vote, raising questions about the impact of money and lobbying on council decisions and provoking emotional allegations.”23 The resulting month-to-month contract costs were shifted to District taxpayers, costing an extra $2.4 million per year.24

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