Cam Gordon
BY CAM GORDON
New concerns about city contracts with private and nonprofit groups surfaced in June.
With over $589 million budgeted for contractual services for this year, more than the city will pay in salaries and wages for all city employees, taxpayers may want to take note.
On June 2, the city council audit committee reviewed one contract fraught with problems. It was a 2023 single/sole-source contract for $999,650 with Helix Health and Housing Services which bypassed the usual competitive bidding process and staff review.
“It is my understanding that this was a kind of handshake deal with the mayor,” said City Council President and Audit Committee Chair Elliot Payne, adding that the mayor came “back to city hall saying “Make this happen.’”
The state only allows cities to use a no-bid process for such large contracts under special circumstances, and the city must document the justification ensuring it aligns with state laws and city ordinances.
The justification for the Helix contract said, “Due to the emerging and urgent health and safety issues at the Nenookaasi encampment, the Mayor’s office engaged tribal and community partners to help with solutions that would not only address the immediate health and safety concerns of the encampment, but provide longer term housing, treatment, and resources to prevent encampment residents from moving to another space and setting up another encampment.”
In his review of the contract, Travis Kamm, Community Safety Auditor, found a myriad of problems including duplicate and erroneous payments, overpayments, lack of documentation, and confusion about allowable and unallowable expenses. The city also did not formally approve the use of three sub-contractors as outlined in the contract.
Addressing more general contracting concerns, the new city auditor, Robert Timmerman, said, “significant weaknesses exist in the city’s contract management and oversight practices.” He reported that in some cases, contract recipients had been advanced at the direct request from administration leadership or introduced by council members without standard staff review. “This practice,” he said, “introduces considerable risk, undermines transparency, and erodes critical control processes.”
“Ongoing media coverage, public inquiries, and questions from other oversight bodies,” he said, “further highlight the reputational, operational, and financial risks the City faces in this area.”
According to state law, except under special conditions, any contract over $175,000 should go through an open bidding process. Those, however, are still regulated by the city’s purchasing, target market, living wage, conflict of interest, prevailing wage, small and underutilized business program, and ethics ordinances.
Under current city rules the council must approve any contract that the City enters that is over $175,000 but they do not approve and have typically never formally and publicly reviewed those at or under that amount.
“This policy is meant to strike a balance between financial oversight and logistical practicality,” said Council Member Robin Wonsley (W2). Several of these no-bid contracts, she added “have raised serious concerns about public dollars being awarded to questionable contractors.”
In response to these concerns, Council Member Emily Koski (W11) led the Council to pass a directive to get a comprehensive 10-year review all contracts of $175,000 or less.
The staff review of all those no-bid contracts from 2015 – 2025 in June revealed 5,197 separate contracts that were $175,000 or less. Of those, 2,990 were professional service contracts (78 of those at the no-bid maximum of $175,000) and 2207 were for construction services. They were used across at least 9 departments and went to 1,927 separate individuals, businesses, or nonprofits, meaning some entities got several contracts over the years.
Now, for the first time, the information on all these no-bid contracts has been made available to the public at https://lims.minneapolismn.gov/File/2025-00234.
“I appreciate this legislative directive for ensuring transparency in contracts of all sizes,” said Wonsley, who is drafting an ordinance change to require regular disclosures of all contracts under $175,000 that are entered into without Council approval. “This will mean that instead of receiving 10 years of retroactive reporting at once, Council and the public will be able to review the contracting choices made by the mayor’s administration on a quarterly basis throughout the year,” she added.
There are many reasons given for outsourcing city services.
Outsourcing is most often done when the project or work has a clear ending point, like a study or a construction project. It can also help reduce costs, depending on the funding and length of the contracts. The services can be more easily ended and there is not risk of the city potentially laying off city employees.
It some cases it can also mean something is easier to get approval, as it can be approved as a one-time and not an ongoing expense. In this way new programs can be tested and piloted without a long-term commitment of funds.
Having the work done by city employees, however, can mean better jobs with better benefits, as well as better hiring practices, supervision, and oversight.
If contracts are to be used, Timmermann recommends that the city should prohibit the advancement of named contractors and grantees by elected officials without a full staff review. He also wanted to see better training of contract managers in each department and monitoring of those managers’ performance to ensure contract provisions are followed and documentation provides evidence that contract requirements are met.
Aisha Chughtai
Council Member Aisha Chughtai (W10) called the problems Timmermann outlined “unacceptable.” “If re-elected,” she said, “I want to continue to increase oversight on every dollar that is spent on contracts, [and] increase capacity within the City Auditor’s Office to strengthen our independent oversight and accountability tools.”
“I also want to ensure that we are returning core services to being run by the City’s frontline employees – the vast majority of whom are unionized – instead of private entities who are unaccountable to residents,” Chughtai added.
This may be especially important for critical work, like 911 behavior crisis responders, or those serving the city as a violence prevention outreach workers or safety ambassadors. These workers should have a more careful and thorough hiring, training and supervision process, especially as their work becomes considered a core city service.
Chughtai may be pointing in the right direction for these, and other, workers when she said,
“Audit staff, committee members and most council members appear to agree that there is a need to improve practices.
“The city could at least establish defined processes with clear oversight, transparency and review of all contracts, including smaller contracts and larger single/sole-source contracts that bypass the open bidding process as well as evaluate when and how to bring more services in-house, where management, accountability, and workers’ rights can be better ensured.”
