Contracts are the bread and butter of commerce, a legal promise to do something in exchange for something else.
It is baffling that the city of Denver would routinely allow contractors to begin work before the legal documents are signed, sealed and delivered. In fact, contractors are beginning work before contracts are signed in 75 percent of cases, according to a Denver Post story by staffer Christopher N. Osher.
That’s no way to run a city.
Those numbers come from Auditor Dennis Gallagher, who is planning to conduct a performance audit into the practice. We look forward to his findings.
Gallagher sent a letter to the city last Wednesday, citing another example of a delayed contract and expressing concerns.
Gallagher said he received a change order for nearly $611,000 for a project on Federal Boulevard. The completion date for the work was July 2008, while the council did not approve the expense until a year later, in July 2009.
That is indicative of a significant problem.
The issue started gaining attention this month as City Council members expressed dismay about work performed at the city’s behest by the Colorado Coalition for the Homeless.
Last Monday, council members addressed a request from the city’s Department of Human Services in which they were asked to approve a $525,000 contract for homeless outreach. Given the city’s budget crunch, some had been raising questions about whether the city could afford to spend the money.
Council member Charlie Brown on Monday made an issue of the fact that the coalition had, since April, been performing the work as if it had a signed contract. The coalition was doing so at city request.
Jay Morein, director of business management for the Department of Human Services, had told the council in recent weeks that his agency had given the coalition permission to go ahead with work before the City Council took up the matter.
Council members were concerned about the issue, and for good reason.
As it turns out, only $69,000 of the contract money comes from the city’s strained general fund, which is facing a $120 million shortfall over the next 17 months. The remainder will come from property taxes pledged to the Denver Department of Human Services.
So, it’s not as if the council could use much of the money to reduce the budget gap.
To their credit, council members declined to hold up the contract on principle, since that would hurt the homeless, the most vulnerable among us.
Kelly Brough, chief of staff to Mayor John Hickenlooper, has said the city will work with staff to address the contract issue.
Eric Brown, city spokesman, said a team had been assembled to figure out how to streamline the contract approval process without shortchanging the checks and balances that need to be in place.
We hope so. Mayor John Hickenlooper was elected, at least in part, because of his acumen as a businessman.
This should be right up his alley.
