DWM Contract Amendments, Extensions, and Alternative Procurement

dwm contract amendments, extensions, and alternative procurements - June 2025

DWM Contract Amendments, Extensions, and Alternative Procurement
Released: June 2025

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Contract amendments, extensions, and alternative procurements are inherently risky because they can signal a noncompetitive selection of a contractor, putting the city at risk of paying too much and/or accepting low-quality or non-compliant goods or services. This audit assesses whether Watershed Management has controls in place to ensure the department is requesting its procurements fairly and with as much competition as is appropriate.

We recommend that the chief procurement officer provide a list of contract modifications in quarterly reports to the Finance Executive Committee for enhanced transparency. We also recommend that the chief procurement officer establish and provide guidance to all departments on the level of written detail that should be documented and maintained in contract files to justify contract modifications. Finally, we recommend that the city establish a record-keeping process and document retention procedure for contract files, as outlined in the city code.

We found:

We reviewed 298 Watershed Management contracts and found that 237 (80%) were procured using competitive methods—requests for proposal and invitations for bid—and 61 (20%) were procured using alternative methods—sole source, emergency, and special procurement.
Although most of the department’s contracts were competitively procured, 47 of those contracts were later modified, adding money, scope, or other changes using amendments, extensions, and/or change orders. The total value of all modified contracts (both competitively and noncompetitively procured) increased 132% after post-award modifications.
We also found that contract files lacked detailed justification for post-award changes, as well as justification for the user agency’s request and chief procurement officer’s approval of alternative contracts.
Competitive procurement promotes efficiency and transparency, but post-award modifications have the potential to weaken controls, such as appropriate oversight, and missing documentation could be a red flag for potential fraud.