in Houston, Texas
Auditors detail problems with Houston ISD procurement process
Thursday, Mar 29, 2012, 04:48PM CST
By Mike Cronin

It is difficult to tell why certain vendors were chosen over others in the Houston school system’s contract-awarding process, an auditor told school trustees this morning.

“There are no specific bridges from procurement-committee recommendations (of vendors) to the school board for approval,” said Charles G. Yaple, a certified public accountant with Null-Lairson, a Houston accounting firm.

Sometimes that resulted in different vendors appearing before the Houston school board than district evaluators had suggested for selection.

Null-Lairson; MGT of America, a consulting firm based in Tallahassee, Fla.; and Mariga CPA in Houston completed a roughly four-month audit of the way Houston Independent School District officials purchase goods and services and award contracts.

School board members paid $87,500 for the audit.

“It’s obvious that this was necessary,” Trustee Anna Eastman told Texas Watchdog after the meeting. The board’s vice president specifically pointed to the gap between the list of vendors district evaluators recommended the board should see and the different list that sometimes appeared before trustees.

That happened with one contract board members approved for Westco Ventures LLC, a company owned by Trustee Paula Harrisclose friend, Nicole West, in January last year. Yaple told trustees Westco was originally not on the recommended list, but after Westco complained, the company was added.

Some trustees appeared not to know that chronology until Yaple described it to them.

Westco has done more than $1 million worth of business with HISD. Harris voted to approve at least four school-district contracts that included work for Westco. After Texas Watchdog and the Houston Chronicle repeatedly asked her about the practice, Harris said in August she would no longer vote on contracts involving Westco.

Harris was not present at this morning’s meeting. Superintendent Terry Grier also was not present.

Eastman was the first board member to call for an audit in August of HISD’s procurement practices due, in part, to questions raised by Texas Watchdog.

“It’s incredibly important that at all times these things are airtight, but particularly now because we’re in such difficult budget times,” Eastman said during the meeting. “It's uncomfortable, but critical that we see this through.”

Neither the final Null-Lairson report, nor a draft of the report, was available for the public to view this morning. Yaple said he would release the draft report after proofing it later today. (Update: Read the draft report here.)

The audit found no improper influence by board members in HISD’s contract-awarding process, Yaple told Trustee Harvin Moore during the meeting in answer to a question posed by Moore.

Null-Lairson also did not find any evidence of a systemic problem that corrupted contract awards, Yaple told Moore.

Former HISD procurement chief Stephen Pottinger told Texas Watchdog last year that Harris’ request had prompted a meeting between Pottinger and West. And Texas Watchdog stories have also raised questions about contracts awarded to Southwest Wholesale Nursery, a Houston-based company, and Morganti Texas.

Null-Lairson also reviewed those two contract awards.

“Did HISD hold up its end of the bargain by providing all the data you requested?” board President Mike Lunceford asked Yaple.

“Yes,” Yaple replied.

In a PowerPoint presentation, Yaple provided many recommendations to improve HISD’s procurement practices.

They included:

  • Annual board-member training on conflict-of-interest issues
  • Board members should communicate with the superintendent about potential contracts, and not district staff or vendors
  • Developing a policy to cover all board travel, lodging and entertainment expenses
  • Board members should disclose any financial relationships or governance responsibilities – such as sitting on boards – that exist with potential vendors, and abstain from voting on those respective contracts
  • Adopting procedures to allow votes on contracts with vendors who have made campaign contributions to trustees.

Some of those policies might have enabled the public to learn earlier than it did about Trustee Larry Marshall’s two all-expense-paid trips to Costa Rica in 2010, arranged by Texas state Rep. Borris Miles, who also is an HISD vendor.

Marshall held a campaign fundraiser on one of those trips, Texas Watchdog reported last year.

Still, Null-Lairson’s audit conclusions appear to be gentler than those arrived at by the Washington-based nonprofit Council of the Great City Schools in its October report. Grier sits on the council’s executive committee.

Authors of that report concluded that the ways HISD does business “lead to a perception of manipulation of and distrust in the procurement process;” price often didn’t count enough in district purchasing of materials and services; and that “the majority of the district‘s purchasing... is awarded based on a number of weighted factors that are not always transparent or consistently applied."

Null-Lairson analyzed 15 contracts, ranging from less than $50,000 to greater than $100,000, Yaple said.

Auditors interviewed Grier, former HISD superintendents, and the school board’s nine trustees and examined district purchasing records to complete its report, Yaple said.

CORRECTION: This story was updated at 6:16 p.m. to correct the last name of the CPA with the auditing firm Null-Lairson. His name is Charles G. Yaple.

Contact Mike Cronin at or 713-228-2850. Follow him on Twitter at @michaelccronin or @texaswatchdog.

Photo by flickr user mtjmail (tiggy), used under a Creative Commons license.

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Thursday, 03/29/2012 - 08:21PM

So, the firm didn't see anything wrong with Harris calling bond staff to her office for meetings or the fact that a number of her friends who have never done business with HISD before and who most of the time had no experience in their contract areas have done millions of dollars of business with HISD since Harris got elected. The firm saw no problem that Marshall received a $25,000 check not reported as a campaign contribution from a vendor who got business from HISD. The firm thinks it's OK that for the second time there is a lawsuit costing hundreds of thousands of education dollars going to defend actions by Marshall involving improper meddlling in contracts. The firm saw no problem that the board voted to each pull $13 million from bond funds to distribute in their districts on their pet projects regardless of the needs of the entire district. Really? Wow I'm stunned. I see alot wrong with that.

Sunday, 04/01/2012 - 09:03AM

Just to note the confusion as to why the audit was so politically correct. I guess the audit consultant was trying to please thier client. For instance, if the auditors examined the past three job order contract procurements, they would have seen the pattern of consistently changing the recommended award list from procurement to the Board favorites. We all understand that large companies have deep pockets and donate indirectly so as not to get caught. For instance, donations under the disguise of "rebuilding schools" or "community support". This is a clever way to get contracts but it might be time for the school district to award contracts to the best value and most qualified vendors. The board forgets that all of the businesses that submit for work are comprised of taxpayers. The sad result of this issue is that many very good vendors have walked away from HISD because they don't want to be associated with the non-compliance issues. There are still plenty of good companies with great reputations in Houston but unfortunately HISD has lost access to them due to their own actions. What ethical person whats to be associated with this unethical system? As a result, HISD spends more money and gets poor quality. They should clean up their image. As a citizen, I have to agree with my fellow Houstonians and note that we are embarressed of the school district! Some cities are proud of their schools. Why is it so difficult to do what is right and ethical? And to think these people represent the group that teaches our next generation.....

Tuesday, 04/03/2012 - 09:40AM

When is the public going to finally realize that something is wrong and actually uncover the dishonesty, fraud and waste. Minority vendors have to jump through so many hoops to get certified and when you finally become certified to do business with HISD you are never chosen. Someone needs to look into the printing department. The district rejects printers but use their printing department to do print jobs citywide. If the schools have print jobs they are put on the back burner. But you are not allowed to use an outside printer.

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