Audit finds Board of Corrections bypassed procurement rules for outside counsel; auditors recommend policy and procedural changes

Legislative Audit issued a special report reviewing the Board of Corrections' procurement process for selecting outside legal counsel for the period Dec. 1, 2023, through April 30, 2024, and the committee voted to file the report.

The report matters because it questions whether the board followed state procurement law when it signed engagement agreements and incurred fees without an appropriation or a documented RFQ-based selection, and it recommends clearer procedures to avoid similar issues.

Charlie Camp, legislative audit, told the committee the review excluded litigation substance but documented the timeline and process the board used to select outside counsel. Camp said the board adopted motions on Dec. 8, 2023, to hire counsel and sign engagement agreements, department procurement staff raised concerns that procurement law was not followed, and the department submitted the contract to the Office of State Procurement (OSP) and Legislative Council (ALC) for review. Camp described multiple hearings by the Joint Performance Review Committee (JPR) and concluded the board signed engagement agreements without establishing how the board would pay for services because the board has no appropriation or funding; outside counsel had invoiced over $230,000 as of the report date and invoices were unpaid as of Feb. 11.

Camp summarized audit recommendations including that all board business, including liaison appointments, be presented in public meetings; the board should amend its bylaws to document liaison appointments; the board should consult with department procurement staff and OSP before procurement; the board should adopt motions approving all contracts; contracts should include length and total cost; and OSP should allow an alternate procurement-method option on its portal.

Lee Watson, a member of the Arkansas Board of Corrections, testified after being sworn. Watson said the board relied on Arkansas Code section 25-16-711 and acted under what the board viewed as exigent circumstances related to changes in authority enacted by Acts 185 and 659 of the 2023 Regular Session. Watson said the board believed the matter involved constitutional questions and personnel issues that created an emergency requiring special counsel; he said circuit court and the Supreme Court have taken related actions and that litigation is ongoing.

During discussion, committee members expressed concern that procedures for appointments, open-meeting requirements and procurement were not followed. Senator Dismang and Senator Dismaine asked for clarity that the audit focused on procurement process issues and excluded substantive litigation matters.

Representative Gasaway asked whether the contract had been paid; Lee Watson said the invoices had not been paid. Representative Mayberry asked Watson to summarize the Supreme Court action; Watson said the Supreme Court remanded the matter to circuit court for further proceedings and did not resolve the merits.

The committee filed the audit report by voice vote. The audit record includes documentary evidence that an incomplete state services contract was uploaded to OSP with an RFQ procurement-method entry that audit found was not actually used; audit also noted that outside counsel attended board meetings and spoke at times without being recorded in minutes. Legislative Audit recommended the board adopt explicit procedures to ensure public notice and procurement compliance and to include full contract terms when submitting documents for OSP and legislative review.

The board provided a written response disputing portions of the report; the response requested the audit be revised to find the board acted lawfully and appropriately. Committee discussion noted the board member's response represents that member's view, not necessarily the entire board's position.