Arkansas PBS officials tell lawmakers agency is working on procurement training for employees

Following procurement law part of mission, they respond

Courtney Pledger, the chief executive officer of Arkansas PBS, speaks in the Governor's Conference Room of the state Capitol in Little Rock in this Feb. 4, 2019 file photo. (Arkansas Democrat-Gazette/Staton Breidenthal)

Arkansas PBS officials told state lawmakers on Thursday that the agency is working to roll out procurement training for its employees and compliance with state procurement law is very important for the agency.

Courtney Pledger, chief executive officer for Arkansas PBS, and Karen Watkins, chief financial officer for Arkansas PBS, made the points during the Legislative Joint Auditing Committee's committee on state agencies' meeting Thursday.

In August, the committee on state agencies learned that Arkansas Legislative Audit had found that Arkansas PBS circumvented and violated certain aspects of state procurement law by, among other things, making several purchases just below a threshold required for obtaining bids. In August and September, the committee delayed completing its review of the audit of Arkansas PBS for fiscal year 2022 that ended June 30, 2022.

"We are working to rollout procurement training for every single one of our employees and strengthening our internal controls moving forward," Pledger told lawmakers Thursday.

"The business of compliance is very, very important for this agency," she said.

In its audit of Arkansas PBS, Arkansas Legislative Audit reported that it selected 10 vendors used by the agency with transactions both above and below the $20,000 threshold for obtaining funds, and found on multiple occasions the agency entered into agreements to procure goods and services from two companies owned by the same person. If the goods and services had been obtained from the same company, bids would have been required, according to the auditors.

State Rep. Jeff Wardlaw, R-Hermitage, questioned whether there were amendments to the initial contracts at later dates so the amended contracts eventually exceeded the $20,000 threshold for bidding.

Pledger said "not to my knowledge."

Wardlaw said "when looking at your report at first glance two months ago there was a loophole and ... we have language to put in procurement law in fiscal session [starting in April] to close that loophole."

"But you could escape [legislative] review, had you initiated the contract at under $20,000 and then amended it above at a later time," he said. "I don't want any agency doing that. I think that's escaping the public eye with public dollars."

Watkins said, "I haven't noticed anything like that going on."

Rep. Justin Gonzales, R-Okolona, questioned whether Arkansas PBS had communication with the business owner, who owned two companies, to split the work with the agency into two different contracts and keep each contract under $20,000.

Pledger said, "not to my knowledge."

Gonzales said, "that seems kind of fishy."

Arkansas PBS said in its written response to the audit that services were obtained from two different vendors, each with its own tax identification, and the amounts contracted with each vendor did not exceed the $20,000 bid threshold. This was for a 30-day daily production shoot and there are no other qualified vendors in Central Arkansas who offer these services, the agency said.

One company provided specialized lighting and grip equipment and the services of a principal lighting director, and the second company provided certified skilled technicians to operate the specialized equipment, Arkansas PBS said.

Wardlaw said, "it doesn't look good when you got one guy that owns two different companies, one is formed eight days before the work is taking place, and the amounts come in just under $20,000 on two contracts.

"I am telling you, you need to start asking questions of your vendors," he said.

Pledger said she agreed with Wardlaw.

Legislative auditors said Arkansas PBS made numerous purchases below the $20,000 threshold for obtaining bids.

Arkansas PBS said in its written response to the audit that it works on hundreds of projects in any given year and many projects require contracted services, and many of the contracted services for an individual project fall under the $20,000 bid threshold.

"The fact that some procurements fell just below the threshold in [fiscal year 20222] is incidental rather than by design," the agency said.

Pledger said she doesn't believe Arkansas PBS has advised vendors to submit prices for services below $20,000 to allow the agency to give vendors contracts without seeking bids for services.

"We were advised that if the transaction was legitimately under $20,000 that it was fine to do.

"Now that we see the perception is different, we will be very cautious of that," Pledger said.

Watkins said the agency's employees will be trained in procurement law and standard business practices to make sure the state gets a good bang for the buck.

Sen. Joshua Bryant, R-Rogers, asked whether Arkansas PBS is taking steps to discipline employees to change habits at the agency.

Watkins, who joined Arkansas PBS after fiscal year 2022, said the agency has added one additional fiscal staff member to address "the volume issues that we are having."

"We have nine total fiscal and HR [human resource] staff members [and] five are new, so there already has been turnover, and the agency initiated that turnover in the fiscal division to correct these issues," she said before the committee decided to complete its review of the audit of the agency.