School audit blasts Dallemand for policy violations, spending

Telegraph staffFebruary 27, 2014 

Former Bibb County School Superintendent Romain Dallemand repeatedly violated school board policy by ordering more than $26 million in technology equipment and services without required, prior approval from the board, according to a 2013 audit of the school system.

One of those purchases -- for nearly $3.8 million -- was for 15,000 virtual desktop devices. Now, more than a year after they were ordered, about 14,800 of the devices still sit unused in a Bibb County warehouse. The order was placed without competitive bids and without prior board approval, the audit said.

But that's just a sample of the scathing findings, which accountant Miller Edwards presented to board members during a Thursday committee meeting. In some cases, the system is now trying to cut its losses -- involving millions of dollars from sales tax proceeds -- by trying to resell both hardware and software that it can't or hasn't used.

Over the main months in question, Dallemand "authorized, directed and coerced staff to make transactions that were in violation" of board policies, said the audit for the fiscal year that ended June 30, 2013. The Telegraph obtained the audit through an Open Records Act request. The audit lists the cause of the violations as an "apparent reckless disregard by the former Superintendent for existing School District procurement policies established by the Board of Education."

After Edwards' presentation and board discussion, board members voted to look into options for investigating the violations and how they happened.

The Bibb County School Board was presented publicly Thursday with its failure to properly approve millions of dollars in purchasing and other financial transactions.

Attempts to reach Dallemand, who left the school system a year ago after the board bought out his contract for $350,000, plus benefits, were not successful. The Telegraph also tried to reach one of his former lieutenants, Susanne Griffin-Ziebart, for comment. Griffin-Ziebert, who served as interim superintendent after Dallemand departed, took a job in Minneapolis last year.

In general terms, the best advice for any superintendent is to abide by board policy and not exceed the spending limit, said Bill Sampson, with the Georgia School Boards Association.

"You just don't do it," he said.

Sampson said that in his experience, such violations happen rarely and can be cause for serious repercussions.

Little board approval

From July to December 2012, Dallemand authorized nine contracts or purchase orders, at least three of which did not involve competitive bidding and most of which did not receive prior board approval, according to the audit. Two of the orders were for more than $6 million, and two others were for more than $3 million.

The audit actually characterized the total value of contracts and purchase orders that didn't comply with school district policies at more than $51 million, but that figure includes such items as "match resources" associated with the Macon Promise Neighborhood initiative. The audit also found issues with the way financial commitments were made to that program.

In one case the audit cited, a purchase order was later voided, and in another case, the initial purchase order was dramatically reduced. The audit gives no indication why those orders changed.

Dallemand was not authorized to obligate the school system for any purchase order above $500,000, and any order above $500,000 also required prior board approval. In some cases, often months later, Dallemand sought and received board approval for several of his actions.

Nonetheless, the audit underscored the need for school officials to follow district policies to the letter.

"In the government sector, even the best and most promising ideas for respective communities still must follow certain protocol for authorization and approval prior to specific actions. Procurement policies and procedures are established by governments for good, fundamental reason and to provide solid internal controls to prohibit significant and material actions (financial and non-financial) from occurring without: a) the exercise of proper due diligence, and b) the approval of such due diligence. Such internal controls should be observed prior to such actions and executions and not via subsequent ratification."

All of the cited violations happened during Dallemand's administration, and policies have been put in place to prevent repeated occurrences, the audit said. Those changes include a $100,000 cap on purchases that a superintendent can authorize without prior board approval. Also, the district hired a director of procurement to oversee purchasing.

Read the full, searchable Bibb Schools financial audit.

Asked about the report, interim school Superintendent Steve Smith declined comment except to say, "The audit speaks for itself."

Last spring, after the wave of purchases, school board members were grappling with millions in budget shortfalls.

A closer look

Here's a closer look at the individual purchases that the audit cited:

--- A nearly $7 million purchase order was issued on Oct. 11, 2012, for technology equipment. That amount was later reduced to more than $950,000. A bid was issued but was not brought to the board before making the purchase.

--- A nearly $6.6 million purchase order was issued on Oct. 11, 2012, for cabling. A bid was issued but was not brought to the board for approval. The board later approved the contract on May 16, 2013.

--- Two purchases totaling $4.2 million were issued on Oct. 11, 2012, for a wireless computer network and networking hardware. A bid was issued but not brought to the board for approval. The board later approved the contract on May 16, 2013.

--- A nearly $3.8 million purchase order was issued Dec. 18, 2012, for "Ncomputing" devices and installation. No bid was issued and no board approval was granted.

--- A $3.2 million purchase order was issued Dec. 18, 2012, for a financial software package. No bid was issued and no board approval was granted.

--- A $1 million purchase order was made Dec. 18, 2012, for program management for the entire technology project. The amount originally was $500,000 when the purchase order was first issued Oct. 11, 2012, but the purchase was later amended. Only the initial $500,000 was approved by the board. Later, it was discovered that work had been completed without purchase orders. The district negotiated a total price of $1.2 million for the work.

--- A $692,300 purchase order was issued Dec. 12, 2012, to a network systems company. The purchase was later voided, and no payment was made. No bid was issued and no board approval was granted.

Selling at a loss

In questioning the purchases, auditors called a couple of them "strange." Some of the larger purchases did not include necessary services, are unusable within the Bibb County school system and are projected to be a financial loss for the system.

Now, the district is looking to resell some of that technology, but it expects to get only about half -- or less -- of what it originally paid.

For example, Dallemand ordered the purchase and installation of 15,000 "NComputing" devices -- virtual desktops -- for almost $3.8 million, the audit said. Now, only about 100 to 200 are being used -- at Northeast High and Springdale and Alexander II elementary schools. The rest -- around 14,800 devices -- have been sitting in a warehouse for months.

If they are declared as surplus items and can be resold, they are projected to sell at only 50 to 60 percent of the original price. That could mean a lost of nearly $1.9 million.

Also, about $3.2 million was spent on unusable financial software without involvement from the district's finance employees, the audit said. The software is inefficient for the Bibb school system, and the company has indicated it will buy the software back from the district for $1.1 million -- which would mean a loss of more than $2 million. The purchase would have replaced a system the district has used for more than 20 years, the audit said.

Both purchases also lacked essential services. The purchasing contract for the financial software, for example, did not include set-up, installation, migration or support services. The purchase agreement for the 15,000 computing devices did not include additional servers, monitors, keyboards or mice to make the devices work, the audit said.

The money to pay for those items was wired on Dallemand's orders, a process that the audit also called "strange."

The audit also criticized the way financial commitments were handled for the Macon Promise Neighborhood project, beginning in June 2012.

Dallemand executed a memorandum of understanding committing resources of four targeted schools, obligating the school district to nearly $19.4 million in match resources over 10 years, the audit said. That included $5.75 million, paid over 10 years, to lease space for the program at the former Ballard-Hudson Middle School on Anthony Road.

A Telegraph investigation last year, however, showed that the total school system commitment to the Promise Neighborhood initiative was closer to $30 million, with the board offering up to $10 million cash over 10 years and nearly $20 million of in-kind contributions.

The audit noted that the school district "was not in compliance with the 'bids or quotations' policy prior to the execution of the official documents obligating the school district.' The school board ratified the lease agreement on Oct. 18, 2012.

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