Portland Public Schools disputes audit as Oregon officials consider criminal investigation 

Even as the Oregon Department of Justice considers a criminal investigation into Portland Public Schools (PPS), the district is contesting the audit that warned its bond program had a heightened risk of fraud.

“While PPS takes all of the audit’s observations, findings and recommendations seriously, it does not agree with the tenor of the report’s narrative and frequent implication of impropriety,” wrote PPS Senior Chief of Operations Dr. Jon Franco, as reported by Willamette Week.

The district released the final version of the audit Wednesday, which is “largely unchanged” from a draft audit publicized by the news outlet in September.

Meanwhile, the secretary of state has referred concerns about the district to the Oregon Government Ethics Commission and the state’s Justice Department “for potential ethics and criminal investigations,” according to OregonLive.com.

Much of the audit involved the district’s relationship with Procedeo, a construction firm based in Texas.

“In four findings, auditors determined PPS had failed to establish a sound business case to offload bond management services to Procedeo, and cautioned that the district had become overreliant on the external consultant,” Willamette Week wrote last month. “Auditors said the district followed Procedeo’s advice to reduce PPS’s own in-house staff, gutting the district’s ability to operate independently while increasing Procedeo’s billings.”

As previously reported by Heartlander News, the $61 million contract caused so much controversy that it sparked a rare public apology in December from the school board, acknowledging members “fell short in tone, in empathy and in clarity” when hearing concerns.

Risks of bias, favoritism

The audit conducted by Sjoberg Evashenk Consulting (SEC) found “risks of bias and favoritism” and noted the district had overspent on the contract compared to the market rate, according to Willamette Week.

In response, the district said it “followed all proper procurement procedures” and disagreed with the audit’s recommendation to renegotiate the contract’s compensation structure, the news outlet reported.

“Officials noted that a district review had determined the fees it was paying Procedeo were in line with the documented range for comprehensive program management services.”

Other points of contention included showing a detailed staffing plan, providing hourly estimates for staffers and reviewing bond contract work scope before execution.

The district also took issue with the audit’s mentioning conflicts of interest and calling for stronger contract solicitation processes, Willamette Week observed.

“Under Oregon ethics law and applicable public procurement rules, having prior discussions with or even prolonged previous dealings with a proposer is not a basis for dismissal from the evaluation committee and does not require disclosure,” the district concluded.

However, SEC replied to the district’s response by warning even “perceived conflicts of interest” can raise questions as to whether bias influenced procedural outcomes.

“They can undermine trust and public confidence – often just as much as if a real conflict existed,” auditors explained. “Government entities need to take precautions to avoid situations where the public could view a public official’s actions as giving an unfair advantage to one proposer over another, even if individuals act fairly and unbiased in their decision-making and an entity followed laws and its internal policies.”