Overview
The Massachusetts Office of Business Development (MOBD) has not implemented the Buy Massachusetts Program. As a result, local companies might be purchasing goods and services from companies outside the Commonwealth to the detriment of Massachusetts businesses.
Authoritative Guidance
Section 10A of Chapter 23A of the Massachusetts General Laws requires MOBD to implement a Buy Massachusetts Program to help Massachusetts businesses find and purchase the goods and services they need from other companies located in the Commonwealth.
Reasons for Noncompliance
MOBD’s legal counsel stated that MOBD had not implemented the Buy Massachusetts Program because the Legislature had never appropriated funds for it. Additionally, MOBD contended that since Section 10A of Chapter 23A3 was reenacted in 2010 without material change or special funding, the Legislature had acquiesced in MOBD’s interpretation that the program need not be implemented without an appropriation to do so. However, Section 10A states that funding for this program can come from various sources:
[MOBD] may expend such funds as may be appropriated therefor, and may accept federal funds, or private gifts and grants to assist it in carrying out the purposes as set forth in this section.
Although it appears that MOBD never received special funding to implement the Buy Massachusetts Program, budget data provided to us by MOBD indicated that the agency never requested money for this program.
Recommendation
In addition to requesting an annual appropriation, MOBD should also seek other sources of funding to operate this program.
Auditee’s Response
MOBD is appreciative of the positive acknowledgement of our work in administering the REDO grant program, including your overall finding that MOBD has properly and effectively administered this program. As noted in your report, MOBD awarded 18 grants, totaling $1,010,000, to nine different entities during the audit period. You found that all grants were properly awarded and all grant funds properly distributed for the purposes intended by the program’s enabling legislation.
However, your report also found that MOBD has not properly administered the Buy Massachusetts program due to lack of funding. We acknowledge that the Buy Massachusetts program has not been implemented at any time since the enactment, more than 20 years ago, of G.L. c. 23A, §10A. As legal counsel explained to your staff during the audit process, the statutory language that created the Buy Massachusetts program provides that MOBD “may expend such funds as may be appropriated therefor, and may accept federal funds, or private gifts and grants to assist it in carrying out the purposes as set forth in this section.” MOBD has consistently interpreted that language to mean that creation of the Buy Massachusetts program was contingent on a specific appropriation of funds from the Legislature for that purpose, or the discovery of some other federal or private funding source. To the best of our knowledge, since the enabling legislation was adopted in 1993, no funds were ever appropriated to implement the Buy Massachusetts program, and no other sources of funding to operate the program were ever identified by or made available to MOBD.
Based on the audit finding, your report recommends that “in addition to requesting an annual appropriation, MOBD should also seek other sources of funding to operate this program.”
As to the first part of that recommendation—that MOBD request an annual appropriation to implement the Buy Massachusetts program—MOBD notes that the power to appropriate funds lies with the Legislature. Following the release of your final audit report, MOBD will evaluate whether there is sufficient interest in funding this program to justify a request as part of the FY2021 budget process. Any such request of the Legislature would, of course, not be made by MOBD directly, but only through the Governor’s budget proposal.
The second part of your recommendation is that “MOBD should also seek other sources of funding to operate this program.” The report does not hint at what other sources of revenue might be available for this purpose. While the statute provides, optimistically, that MOBD “may accept federal funds, or private gifts and grants to assist it in carrying out” the Buy Massachusetts program, no such federal funds, or private gifts, have ever been offered for this purpose. To the best of our knowledge, no such alternative sources of funding exist. However, MOBD will commit to seek other sources of funding to operate the Buy Massachusetts program, including by exploring the availability of federal grant programs.
Auditor’s Reply
As noted above, Section 10A of Chapter 23A of the General Laws requires MOBD to implement a Buy Massachusetts Program. While it is true that no special funding has been appropriated for it, that is frequently the case when the general court issues a mandate to an executive agency. It is anticipated that the agency will undertake efforts to accommodate the directive within its budget, to submit a request for appropriations, or, as the mandate language suggests, seek funding from other sources. However, according to the budget data provided to us by MOBD, at least during our audit period, the agency has not done any of these things. Given that the establishment of this program is statutorily required, it is the Office of the State Auditor’s opinion that MOBD should seek funding from sources including the general court; the federal government, which periodically makes grant funding available; and public-private partnerships with the Commonwealth’s local and regional chambers of commerce and other business-oriented organizations. Perhaps MOBD could look to the “buy local” initiative of a sister agency, the Department of Agricultural Resources, for inspiration.
Based on its response, MOBD is considering measures to address this issue.
| Date published: | June 20, 2019 |
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