In order to assess the Authority's compliance with its own policies and procedures, we reviewed nine active contracts overseen by eight contract managers. The contracts we reviewed include planning, engineering, consulting, and construction oversight services and have a total value of $1.3 billion.5 The services on these contracts include a combination of discrete deliverables and day-to-day work involving on-site staff support. Our review focused on the Authority's compliance with those contract management policies and procedures most closely linked to controlling costs and ensuring value, including invoice and deliverables review.
The Authority has established procedures requiring a systematic approach to its contract managers' receipt and handling of invoices, appropriate invoice documentation and review, and required approvals for timely processing of payments. For example, Authority contract managers must ensure that contractors bill hourly rates appropriately, that all direct costs are eligible and supported with receipts, and that the totals of each invoice are calculated correctly. In addition, the Authority's procedures require contract managers to complete an approval checklist for each invoice for contracts with values greater than $5 million. These checklists require contract managers to attest to the accuracy of the invoices and the sufficiency of supporting documentation by checking boxes stating that the invoices comply with relevant contract provisions and that all expenses are eligible and supported with receipts. The procedures also require contract managers to keep logs that track invoiced and approved amounts, key dates, and any disputed costs.
| When we examined a selection of invoice approval checklists for the nine contracts we reviewed, we found that the contract managers completed checklists indicating that they evaluated each invoice for accuracy. However, the contract managers for only three of the nine contracts could provide documentation to support the checklists' assertions that they ensured invoiced rates and expenses were allowable. For example, one contract manager provided us with a review spreadsheet in which, in addition to monitoring monthly spending against the contract's value, he tabulated each individual billing rate, the hours reported by task, and all direct expenses. The manager of the Contract Administration Support Unit told us that contract managers can request support from this unit to verify that contractors bill hours against allowable rates, but only one of the contract managers in our review used this resource. | The contract managers for only three of the nine contracts we reviewed could provide documentation to support the checklists' assertions that they ensured invoiced rates and expenses were allowable. |
| We expected to see documentation from contract managers verifying that costs were allowable and accurate because most of the invoices we reviewed were complex; they included many individual pay rates for contractor staff, tens or hundreds of thousands of dollars in direct costs that the contract managers had to verify, and many subcontractor costs. When it relies primarily on the contract managers' attestations on the invoice approval checklists, the Authority risks that those contract managers may not have performed thorough and comprehensive invoice reviews. As a result, the Authority could pay for unauthorized costs. We observed one such instance in which an internal audit that the Authority issued in June 2017 identified that it had paid for more than $1.2 million in questioned and disallowed costs to one of its contractors-costs that either were not supported by adequate documentation or were not in compliance with the contract terms or applicable rules and regulations. | An internal audit that the Authority issued in June 2017 identified that it had paid for more than $1.2 million in questioned and disallowed costs to one of its contractors-costs that either were not supported or were not in compliance with requirements. |
Similarly, although the contract managers we reviewed consistently used required invoice tracking logs, these logs had limited utility. Specifically, the invoice tracking logs serve as a record of the amounts that the contractors bill and the Authority approves each month. When the contract managers enter approved invoice amounts, the tracking logs automatically calculate the remaining contract balance. Although they help ensure that the Authority does not overspend the contract balance, the tracking logs do not demonstrate detailed invoice review any more than the invoice checklists. More importantly, none of the required invoice documents demonstrate whether or how the contract managers performed the critical task of determining that invoiced costs were appropriate for the amount and quality of the contractors' work.
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5 We also reviewed the Authority's oversight of its three construction contracts, which have a combined current value of $3.1 billion. We discuss the management of these contracts in the following sections of this report.