Arkansas PBS leaders told state lawmakers Thursday that the network will improve its employee training on procurement law amid a review of its practices.
“We are working to roll out procurement training for every single one of our employees and strengthen our internal controls moving forward,” said Arkansas PBS CEO Courtney Pledger during a meeting of the legislature’s Joint Auditing Committee. “The business of compliance is very, very important to this agency.”
A fiscal year 2022 audit released in February found that the Arkansas PBS Commission circumvented and violated state procurement law. Auditors reviewed the network’s dealings with 10 vendors and found that the agency made multiple purchases just below a $20,000 bidding threshold. It also contracted with two companies owned by the same person. Bids are required when goods and services are obtained from the same company, auditors said.
Auditors also said the commission showed signs of regularly informing vendors how much they would be paid for goods and services. “While this practice does not appear to violate a specific purchasing law, it raises the question of whether a vendor would have charged less had the Agency not provided this information,” the audit said.
As a result of the audit, legislators postponed a decision in August to give Pledger a pay increase. She was set to receive a 5% merit pay increase that would make her salary $188,998. That would be approximately $32,000 more than the maximum salary for her pay grade, requiring approval from legislators.
Before the committee completed its review Thursday, several lawmakers criticized Arkansas PBS’ dealings. Republican Sen. Terry Rice asked if there were instances in which an original procurement contract was signed for an amount under $20,000, then later raised above that bidding threshold in order to purposely circumvent state laws.
“I’m looking for things beyond procurement training,” Rice said. “People who don’t have it, need it. But people who know it and try to go around it is what I’m asking about.”
“I cannot be in every single room at every moment. … I would like to be,” Pledger said.
“I’m asking if there is a pattern,” Rice said.
“I do not believe there is a pattern, no,” Pledger said.
Tom Bullington, deputy legislative auditor for state agencies, said he did not recall seeing change orders or instances in which Arkansas PBS raised firms’ contracts above the bidding threshold. Arkansas PBS CFO Karen Watkins said she would review any contracts that may have fallen into that category.
Republican Rep. Justin Gonzales asked whether Arkansas PBS officials were aware that a business owner who had two contracts under $20,000 had created one of the firms shortly before the procurement deal was put in place.
“Was there any communication with this company, with this business owner, that said, ‘Hey, if you do this with us with a second company, we can split this up into two different contracts and keep it under the $20,000 for each?” Gonzales asked.
“Not to my knowledge,” Pledger said.
“It seems kind of fishy,” Gonzales said.
“As far as we know, it’s how they’ve set up their company to do different types of services,” Pledger said.
“But they just happened to set it up at the time when y’all were requesting a contract that would’ve gone over the $20,000 limit?” Gonzales said.
“Apparently, but not to our knowledge,” Pledger said.
“Well, there seems to be lots of coincidences here,” Gonzales said.
Gonzales asked whether future audits may find similar cases of procurement malpractice. Pledger said that it may be possible due to contracts that span fiscal years.
“But in the future, no. … You will not see them again,” Pleger said. “Now that we see the perception is different, we will be very cautious.”
“I am telling you, you need to start asking questions of your vendors,” said Republican Rep. Jeff Wardlaw, and Pledger agreed.
Watkins said the mistakes reflected “ignorance” on the part of staff, not intentional malpractice. For example, she said creative staffers such as producers should not have added projected budgets to vendor forms. Arkansas PBS has one procurement employee, Watkins said, but some staffers who were not trained well were asked to do procurement work. Better training will correct the mistakes, she said.
Watkins added that Arkansas PBS had hired an additional finance staffer to address the excess workload, bringing the station’s total number of fiscal and human resource staff members to nine. Five of those employees are new.