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Berkeley auditor flags millions in noncompetitive contracts, urges code changes and digital tracking
Summary
City Auditor Jenny Wong told the Berkeley City Council an audit found 94 city contracts worth about $43 million that did not go through competition; auditors recommended code changes, better waiver forms, staff training and a modern contract management system.
Berkeley City Auditor Jenny Wong presented an audit of the city's noncompetitive contracting practices, telling the City Council that the city executed 94 noncompetitive contracts in fiscal year 2024 totaling about $43 million and that some contracts likely could have been awarded through competition. "Although we found no evidence of misconduct in Berkeley during our audit, contract corruption cases in neighboring jurisdictions show the importance of having an open, competitive contracting process," Auditor Jenny Wong said.
The audit examined the city's largest contracts and a sample of the 100 largest active contracts, manually reviewing more than 300 contract PDFs and every waiver of competition because the city's financial system did not track competition consistently. Auditors found differences between the purchasing manual and the waiver request form, which may have made it difficult for staff to determine when waivers were appropriate.
Wong said the audit identified two recycling contracts executed in fiscal 2022 with the Ecology Center and Community Conservation Centers that together covered roughly $41 million for the first five years and could approach $85 million with optional extensions. "Although competition is a best practice and is required for service contracts over $50,000, neither the city charter nor the Berkeley Municipal Code explicitly require service contracts like these to be competitive," the auditor said.
The audit documented other problems: paper-based contract workflows that hampered tracking and caused misplaced files, inconsistent contract training, vacancies in the General Services Division and frequent contract amendments that increased original contract values (when the team reviewed sample amendments they found an average increase of about $218,000 per contract and that 70% lasted beyond five years).
The report made 13 recommendations, including adding explicit competition requirements to the municipal code for service contracts, pursuing open competition for the recycling contracts, updating purchasing manual and forms, expanding staff training and adopting a comprehensive electronic contract management system. City management "agreed or partially agreed" to the recommendations and provided an action plan, the auditor said.
Martin Bork, executive director of the Ecology Center, spoke during public comment and called his agency's contracting with Berkeley "open, very transparent, long and in-depth negotiations" that included third-party verification and extensive operational detail. "We feel that the city has gotten excellent results through these contracts," Bork said.
Council members thanked the auditor and encouraged further committee-level review. Several members signaled interest in pursuing code updates to clarify when competition is required and in scheduling deeper dives after the current budget process. Councilmember Humbert and others suggested placing follow-up items on committee agendas to explore policy changes and the fiscal impacts of implementing the audit recommendations.
The audit does not itself create a formal obligation to reopen awarded contracts; rather, it provides recommended policy and operational steps for council and staff to consider moving forward. The city manager said management had already implemented some recommendations and would continue to work through the action plan listed in the management response.
