When the Oklahoma State Auditor and Inspector’s Office released an audit last summer revealing government agencies misused nearly $100 million, Rep. Judd Strom set off on a quest.
State Auditor and Inspector Cindy Byrd found two state agencies had misspent $85 million of American Rescue Plan Act dollars. The Oklahoma Department of Human Services had questionably spent $64 million, while the Office of Management and Enterprise Services — the state’s central finance agency — had questionable costs totaling $21.8 million. The Oklahoma Employment Security Commission, the Oklahoma State Department of Education and the Oklahoma Military Department also had questioned costs of over $1 million.
Both DHS and OMES have new leadership since the audit was conducted, but the red flags it raised inspired Strom (R-Copan) to dig into preventing similar spending concerns in the future.
“I gathered up a group of five people, and we went down to the auditor’s office, and we spent the summer going over 20 years of scandals and asked the question, ‘How could we have stopped that?'” Strom said. “What could we have put in place? What could have been in place then that would have stopped this from being able to happen?”
The answers, Strom said, involved contracting safeguards with non-government entities at the state, county and municipal levels. Byrd’s audit highlighted instances of contracted entities using government money outside the scope of their grants, including one example where funds were used for a home kitchen remodel and a new Cadillac, and another where the director of DHS’ Child Care Development Fund awarded her husband $2 million. Byrd said the director, her husband and their two others paid themselves nearly million-dollar salaries for running an afterschool program.
With such instances in mind, Strom set out to require more accountability from non-government entities. Strom’s five-person working group eventually doubled to 10 legislators from both sides of the rotunda and party aisle:
- Rep. Denise Crosswhite Hader (R-Piedmont);
- Rep. Mike Dobrisnki (R-Okeene);
- Rep. Andy Fugate (D-OKC);
- Rep. Gerrid Kendrix (R-Altus);
- Rep. Preston Stinson (R-Edmond);
- Sen. Jerry Alvord (R-Wilson);
- Senate Floor Leader Julie Daniels (R-Bartlesville);
- Sen. Carri Hicks (D-OKC);
- Sen. Jack Stewart (R-Yukon); and
- Sen. Tom Woods (R-Westville).
The legislators ultimately identified and condensed 20 issues into eight bills, House Bills 3413-3420. Several other representatives and senators signed on to those bills, as well.
“It’s incredible to me, because it truly is a bipartisan package. We have members from both sides, and it’s an incredible thing when you’re doing a heavy lift in the Legislature and you have members from both sides of the aisle nodding their head, ‘Yes, this is appropriate and necessary,'” Strom said. “I have Republican and Democrat authors. Probably the biggest political win, I think, this year was convincing David Bullard to hear Carri Hicks’ bill, but he did it.”
Bullard, who chairs the Senate Retirement and Government Resources Committee, laughed upon hearing Strom’s assessment.
“The way I view those bills is it’s a way of stopping us from becoming a no-bid state, which we were quickly becoming,” said Bullard (R-Durant). “So I applaud him in what he was working on. That’s one of those things that is not sexy, but it’s something that’s got to be done to make sure we go through procurement processes and not become a no-bid state.”
Fugate said the reform package constitutes the “most consequential” bipartisan project he had worked on since serving on the health care task force examining Medicaid expansion during his freshman term.
“It’s not as headline grabbing as Medicaid expansion, but (it’s) also extremely important for making sure we have good government here in the state of Oklahoma,” Fugate said. “This is about effective government.”
The eight bills designed to create new guardrails on contracting are:
- HB 3413, by Strom and Woods, requires state agencies’ annual October budget submissions to include lists of contracts and contractors, the cost of those contracts, and their status. The bill further requires agencies to conduct post-contract assessments;
- HB 3414, by Strom and Coleman, creates a reporting function within the OMES and requires documentation about whether contracts are for services or staff augmentation;
- HB 3415, by Strom and Daniels, requires state agencies to report contracts to OMES and contractors to report subcontractors to the agency’s Central Purchasing Department. Further, contracts must include a metric to measure their success, and Central Purchasing must publicly post all contracts and their post-contract assessments;
- HB 3416, by Strom and Alvord, removes professional services from county bidding language and removes reverse-auction bidding;
- HB 3417, also by Strom and Alvord, allows cities to award contracts to the “most responsible bidder” and repeals reverse-auction bidding language from Title 11, Sections 17-115;
- HB 3418, by Strom and Daniels, allows contracts for public buildings and works to be awarded to the “most responsible bidder.” It also requires agencies to consider alternatives to sole-source bidding processes and bars officials from sharing bid notices or submitted bid terms, among other transparency-focused reforms;
- HB 3419, by Strom and Stewart, creates penalties for sharing bid notices or bid information prior to public exhibition, and it disallows violators from contracting with the state or local governments; and
- HB 3420, by Strom and Hicks, requires the state’s chief information officer — who is responsible for all state acquisitions of information technology products — to justify all contracts made “in lieu of” the state’s Central Purchasing Act in a public forum and document all negotiation efforts. The bill also prevents proof-of-concept programs or pilot programs from lasting longer than one year.
‘It eliminates the good-old-boy system’
Six of the eight bills in the package have been passed by the Legislature and await the governor’s signature. House Bills 3413 and 3418 were passed with amendments in the Senate and await another vote in the House to approve the changes or send the proposals to conference committees for further negotiation.
“I hope if we get them all through, as they roll in, that we won’t face the problems we’ve had with coming in every year and getting to hear how much money we lost,” Strom said. “We provide the form, the function and the funding of your government in the Legislature, and then we hand that over to the executive branch to manage that. The problem with that is, with 300 agencies, boards and commissions, that’s hard to manage. But when an audit report comes out that says some obscure agency has lost $7 million over the last four years, I have to go home on the weekend and spend my weekend explaining why I lost those dollars — when I haven’t touched those dollars.”
While some of the reforms are targeted to prevent some of the more overt fraud — like the particularly egregious examples highlighted by Byrd — a less flashy central change is the elimination of reverse-auction bidding. The practice requires contractors to bid with progressively lower prices, and government agencies must take the lowest bid. Reverse-auction bidding is intended to prevent superfluous spending and incentivize contracts to keep their prices low, but critics say reflexively taking the cheapest option can sometimes lead to selecting shoddy workmanship.
The legislation package also aims to rein in sole-source bidding through HB 3418 and HB 3420. In a 2024 audit, Byrd lambasted OMES for failing to seek bids on a series of state contracts, reporting the agency was using a “pilot program” allowing “rolling solicitations” where the CIO and other OMES leaders could make unilateral decisions to place vendors on a list to be awarded state contracts without competitive bidding processes.
“In my opinion, Oklahoma is rapidly becoming a no-bid state,” Byrd said at the time. “This is a grave disservice to every Oklahoman. The ‘rolling solicitation’ design allows for circumvention of financial safeguards and could place potentially better state vendors at an unfair disadvantage.”
Strom noted that concern became a recurring issue he noticed in his review.
“The CIO was a big problem with claiming everything was sole source and nobody else could do it, so we didn’t have to put things out for bid,” he said.
According to Strom, the Association of Oklahoma General Contractors was initially leery of the package but ultimately got on board once the contractors learned more.
“It eliminates the good-old-boy system, because that transparency [created by the bills] enforces the fairness amongst bidding and contracting, and so the good guys don’t have to compete against the bad guys,” he said. “They were worried in the beginning, because it does kind of fundamentally change our contracting process. But as they came in and we discussed it, they now support all the bills. They recognize that it eliminates bad players.”
Bobby Stem, AOGC’s executive director, said Strom was “correct” that his members were “curious about the intent” of his efforts “because our low-bid competitive bids are a cornerstone to building roads and bridges in Oklahoma.”
“When we learned that Rep. Strom simply sought transparency, we realized we had no issues because all of our contracts, expenses and timeframes are public anyway. We have no issue making sure that the Legislature and Oklahoma citizens can see exactly what their dollars are paying for,” Stem said. “With as much investment in infrastructure as the Legislature has made in past years and hopefully will continue to make in future years, it is only right to make sure there is transparency in this process. So, we fully support any legislation that highlights the good players and holds the bad players accountable.”
