A new report from Arkansas Legislative Audit to the state’s Legislative Joint Auditing Committee identified “a personal relationship between the former Department of Information Services (DIS) Director and a vendor representative that affected various procurements.”
The report, dated Thursday, May 18, and discussed by the committee and a member of state audit staff on Thursday, June 8, does not identify former DIS Director Mark Myers by name — but covers the fiscal year ending June 30, 2016 — a period during which Myers headed the department.
Myers, a self-described “nontraditional CIO” with priorities of rolling out broadband to all K-12 schools in the state, and improving cybersecurity, ascended to the post on Jan. 19, 2015. He tendered his resignation on Nov. 23, 2016 after less than two years on the job, after reportedly having been asked to do so by Gov. Asa Hutchison.
The circumstances surrounding Myers’ swift exit from the public sector have not previously been discussed in depth by the state agency.
But the report indicates a review of Myers’ texts and emails stored on agency servers revealed to auditors “a personal relationship between the director and a vendor representative involved in at least three agency procurement projects.
“This relationship and the correspondence contained on the servers appears to conflict with state law and the agency’s technology policy, respectively,” the report said, also indicating the director in question resigned Nov. 23.
The projects in question, totaling slightly more than $8.2 million, were:
A data consolidation proof of concept, for which the “agency procured $642,552 of vendor equipment through Reseller A in August 2016,” including equipment, software licenses and services — though a “replacement invoice” in the same amount deleted the “services portion of the initial invoice.” Arkansas state code, auditors noted, requires contracts for services and totaling “at least $100,000 be presented to Legislative Council.”
“By misclassifying the services as equipment and software licenses, the agency avoided legislative review,” auditors wrote.
A unified communication project for which the agency bought $584,521 in equipment to build and implement a video infrastructure that would enhance an existing state system. The agency decided to buy the equipment because “integration services could be received at no cost” and using it would reduce travel costs. But agency staff said the free integration services were not received “and that integrating the equipment will cost approximately $21,000.”
The equipment was purchased through another reseller, Reseller B; and as of February 2017 “the agency had yet to utilize equipment costing $255,901.”
A K-12 upgrade project, a collaboration with the Department of Education to “provide a secure K-12 backbone network” and increase school bandwidth throughout the state. Staffers stated several networking retailers were contacted for the upgrade, auditors wrote. But “after only a short period of time, the former director decided to use the vendor and Reseller B before any other quotes were received.”
The state, auditors noted, ultimately spent $6,973,922 on equipment from “Reseller B,” and they said use of the vendor without “sufficient input from agency personnel with technological knowledge” appears to be “questionable and not in the best interest of the state.”
In summary, based on a review of the three projects and the alleged personal relationship, auditors wrote, “it appears the former director violated standards of conduct contained in state law, potentially wasted state resources, and did not adhere to the agency’s technology policy.”
“We recommend agency management and staff comply with the agency’s technology policy and applicable state law and receive appropriate training on ethics and procurement law,” auditors wrote.
In an email to Government Technology late Friday, Deputy Legislative Auditor Jon Moore said the committee voted to file the report "so no further action is necessary" by auditors.
"We have referred the report to the local prosecutor and a criminal investigation is under way. Because of the ongoing investigation, I can not provide any details other than what is in our report," Moore said via email.
There was no response late Friday to an email sent to J.R. Davis, the governor’s communications director.
DIS, now led by Yessica Jones, said in a series of responses also included in the audit, that it will follow state recommendation on the first project, has voided the purchase order and will not be submitting payment.
On the second project, DIS said it has identified a vendor and obtained a statement of work to provide “integration services in conjunction with other enhanced unified communication services to meet customer requirements,” and is developing a strategy for how best to use the video infrastructure equipment.
As to the K-12 upgrade, DIS said “it has been an accepted departmental practice for agency personnel with technological knowledge to determine best of breed and pricing factors prior to making a recommendation to the director.”
The director, DIS added, will develop a policy to formalize this practice and “effectuate” the state’s best interests.
The Arkansas Times’ Max Brantley wrote that the report was discussed at a Legislative Joint Audit committee meeting on June 8, but its counsel declined to comment to the Times, beyond the report.
“Upon inquiry, we have been informed that there is an ongoing criminal investigation by a law enforcement agency regarding this matter,” counsel replied in Brantley’s article.
Writing about a presentation Moore made on June 8 to state lawmakers, the Arkansas Democrat-Gazette’s Michael R. Wickline reported Moore told officials it appears Myers “‘violated standards of conduct in state law, potentially wasted state resources and failed to adhere to the department's technology policy,” based on a review of the projects and the reported relationship.
Moore confirmed to lawmakers the situation is under investigation, Wickline reported, noting he was limited “to how much new information I go into. …”
But, the Democrat-Gazette reported, Myers defended the purchases in a letter to state lawmakers, “saying the purchases were well below the prices the department could have paid”; and indicated he didn’t play favorites due to any relationships “‘real or perceived,’” and repeatedly consulted with DIS’ then-chief operating officer.
The Democrat-Gazette also reported that Moore confirmed the inquiry “is an ongoing criminal investigation,” in response to a query from Rep. Dwight Tosh, R-Jonesboro, but declined to say which agency is conducting it.