SANTA CLARA — The city of Santa Clara is making some policy adjustments after the Office of the State Auditor found the city had violated a code aimed at protecting transparency in procurement.
The Utah Procurement Code, which includes rules about how a city can purchase or obtain something, was violated by Santa Clara officials, according to the state auditor’s report released Wednesday. The violation stems from a 2014 city purchase of new software built by city employee Bradi Frei, who the auditor’s report alleges didn’t disclose a conflict of interest soon enough.
At the Santa Clara City Council meeting Wednesday, council members unanimously approved an updated purchasing policy to comply with the current Utah Procurement Code.
“It came to our attention that the city was operating under an outdated policy,” City Attorney Matt Ence said at the meeting. “We’ve been working for several months toward adopting an updated purchasing policy for the city.”
In short, because of changes to state law in 2012, city purchasing policies had to be adopted with an official ordinance, or else the city would have to follow the standard state purchasing policy within the Utah Procurement Code. Santa Clara did have a purchasing policy that officials were using, but it wasn’t valid because it was adopted by a resolution — not enacted as a city ordinance, Ence said.
“(The state auditor’s office) held us to the standards in the state purchasing policy instead of our own purchasing policy,” Ence said.
The state Auditor’s Office alleges that Santa Clara did not ensure a city employee properly disclosed a conflict of interest in 2014, which would be a violation of the Municipal Officers’ and Employees’ Ethics Act. The idea that Frei didn’t disclose her conflict of interest until after the software was purchased by Santa Clara is something the city disputes.
Frei, who at the time was an executive assistant for the Santa Clara Public Works and Building departments, used her own time to construct a software program that would work better for planning inspections within the city. Frei didn’t provide a written disclosure of her involvement with the software until February 2015, which is after the city already signed the contract for her software.
Furthermore, the auditor’s report alleges Frei was allowed to have influence over the software procurement process. According to the state auditor’s report, Frei informally gathered and provided comparison data of other software systems to the city to sell her product. To comply with the purchasing policies at the time, the state auditor’s report asserts that Frei’s software needed to be procured through a formal bidding process.
“When employees who have a personal interest are allowed to influence the procurement process,” the auditor’s report states, “there is an increased
risk of fraud, waste or abuse.”
However, Santa Clara officials say Frei verbally let her supervisors know about the conflict of interest “much earlier than February 2015.” In a formal response to the auditor’s report, Santa Clara officials said they regretted not having Frei make a formal, written conflict-of-interest disclosure in December 2014 but disputed the suggestion that a written disclosure was necessary before that.
After Frei’s software started being bought by multiple departments across Utah, she eventually had to leave her job with Santa Clara. After a brief attempt to work part-time with the city, Frei resigned in July 2017.
At the time, in 2013, Frei said she was not building the software to sell it; she was building it to make her job easier because the old software wasn’t doing everything she needed it to. As it grew, Frei said people around her recommended she sell it.
“The intent was just to make the job better,” Frei said. “Nobody was trying to deceive, not follow any rules or get financial gain or anything based on how this went down.”
As did Santa Clara officials, Frei also disputed the auditor’s claim that she was influencing the purchase of her software.
“(Frei’s program) was the cheapest software out of all the other bids,” said Santa Clara City Manager Ed Dickie in February. “It hit all the points we needed a software to do and more. If there are other softwares out there that do what she does, it costs a lot of money.”
Because the updated purchasing policy was formally adopted by the city Wednesday with an ordinance, it will now be the basis for how purchases will be approved in Santa Clara. The new purchasing policy is based off the purchasing policy of Eagle Mountain, Utah, Ence said.
According to Santa Clara’s new purchasing policy, “bids, proposals and contracts which create a conflict of interest under the Municipal Officers’ and Employees’ Ethics Act shall be rejected unless a legally required conflict disclosure has been made by the official or employee subject to the conflict.”
The new policy also reinforces that employees with conflicts of interest will not be allowed to influence the procurement process.
In addition, the city of Santa Clara is holding trainings Thursday for all department heads about conflicts of interests and the new purchasing policy.
“Training will include material regarding the importance of disclosing potential conflicts of interest,” reads the official response from Santa Clara to the state Auditor’s Office.
Read Santa Clara’s updated purchasing policy here: Ordinance No. 2018-10
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