contract compliance audit - status report

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Office of the City Manager INFORMATION CALENDAR February 26, 2008 To: Honorable Mayor and Members of the City Council From: Phil Kamlarz, City Manager Submitted by: Robert Hicks, Director, Finance Subject: Contract Compliance Audit – Status Report SUMMARY The City Auditor’s Office performed a Citywide audit in FY 2004 on various aspects of contract compliance. At the time the audit was conducted the City Manager’s Office was responsible for contract issues. The current Finance – General Services Manager was hired in February 2004, as the audit was concluding. In April 2006, contract compliance responsibilities shifted to Finance – General Services. In February 2007 the current Contract Administrator was hired and all City contract management has become the responsibility of this Administrator. The objectives of the audit were to determine: • Whether departments were in compliance with the City’s competitive solicitation policies. • Frequency of contract services being performed prior to contract execution. • Whether contracts were executed or amended after the expiration of the contract. The Audit Report was submitted to Council on May 18, 2004 with 5 of the recommendations implemented. An update on outstanding recommendations was provided on December 12, 2006 with 4 recommendations remaining to be implemented. The status of these recommendations is reported here, and a report on the three open recommendations, all of which are in process, ...

Informations

• Publié par: Uste
• Nombre de lectures: 15
• Langue: English

Extrait

Office of the City Manager

2180 Milvia Street, Berkeley, CA 94704 ● Tel: [phone] ● TDD: [phone] ● Fax: [phone]

E-Mail:

[e-mail]

Website:

http://www.ci.berkeley.ca.us/manager

INFORMATION CALENDAR

February 26, 2008

To:

Honorable Mayor and Members of the City Council

From:

Phil Kamlarz, City Manager

Submitted by: Robert Hicks, Director, Finance

Subject:

Contract Compliance Audit – Status Report

SUMMARY

The City Auditor’s Office performed a Citywide audit in FY 2004 on various aspects of

contract compliance. At the time the audit was conducted the City Manager’s Office was

responsible for contract issues. The current Finance – General Services Manager was

hired in February 2004, as the audit was concluding. In April 2006, contract compliance

responsibilities shifted to Finance – General Services. In February 2007 the current

Contract Administrator was hired and all City contract management has become the

responsibility of this Administrator. The objectives of the audit were to determine:

•

Whether departments were in compliance with the City’s competitive solicitation

policies.

•

Frequency of contract services being performed prior to contract execution.

•

Whether contracts were executed or amended after the expiration of the contract.

The Audit Report was submitted to Council on May 18, 2004 with 5 of the

recommendations implemented. An update on outstanding recommendations was

provided on

December 12, 2006

with 4 recommendations remaining to be implemented.

The status of these recommendations is reported here, and a report on the three open

recommendations, all of which are in process, will come to Council by March 2009.

The complete Citywide Contract Compliance Audit can be found on the City’s website

at:

http://www.cityofberkeley.info/auditor/currentaudits.htm.

CURRENT SITUATION AND ITS EFFECTS

Of the 13 recommendations outstanding since the Audit Report was issued, all but three

are implemented.

Finding 4

Contracts Executed or Amended After Contract Term Expired

Recommendation for City Manager (4.2):

We recommend that the contracts online

procedures be updated to include the City Attorney’s June 23, 2003, provision

documenting the authority of the City Manager to extend the term of a personal service

contract by giving written notice.

Contract Compliance Audit – Status Report

INFORMATION CALENDAR

Page 2

City Manager’s Response:

Fully Implemented.

Finding 5: Project Managers Exceed Approved Spending Limits.

Recommendation for City Manager and Finance (5.1):

We recommend that the

online contract procedures be updated to explicitly state that a new contract, blanket

purchase order, or voucher, should not be used to pay for expenditures associated with

an existing contract.

City Manager’s Response:

Not Implemented. This recommendation will be implemented

by the end of March 2008 as Contracts Online is being revised, with an exception that a

new contract will have to be executed once a contract has lapsed or has not been

extended before the contract term end date.

Recommendation for City Manager and Finance (5.3):

We recommend that

Purchasing consider developing a tracking mechanism to document and report on the

frequency, dollar amounts, and associated vendors tied to the names of project

managers who inappropriately use purchase orders and vouchers to pay for services

that should be established through a contract. This report should be prepared by

Purchasing and distributed to Department Directors with copies to the City Manager

periodically throughout the year.

City Manager’s Response:

Not Implemented. The General Services Manager and

Contract Administrator are investigating using “Impromptu” software to extract data from

FUND$ to produce reports for distribution. The investigation of whether the City’s current

software is capable of generating the needed reports will be concluded in March 2008.

Finding 6:

Contract Management System (CMS) Data Was Inaccurate and

Incomplete Recommendation for City Manager, Finance, and Information

Technology (6.3):

The City Manager should also consider requesting Information

Technology to make the following changes to the existing system:

•

Adding a look up feature for project managers, departments, and vendor names

either in the existing CMS system or a future system.

•

Adding a required field for contract amounts and not-to-exceed amounts.

•

Eliminating the “Effective” date code, since most project managers use it

interchangeably with the “Start” date code.

City Manager’s Response:

Alternative Partially Implemented. A Contract Imaging

Project was started in November 2006, which is the first phase of fully automating

contract management and oversight citywide. This project will provide a means to get all

the disparate documents indexed and cross-referenced, and will provide an important

foundation for future automation. Modifying CMS is not in the best interest of the City at

this time.

Contract Compliance Audit – Status Report

INFORMATION CALENDAR

Page 3

BACKGROUND

Citywide contract management was overseen by staff in the City Manager’s Office

(CMO) for several years. In early 2006, the new position of Contract Administrator was

established and filled in Finance – General Services, and contract management shifted

to the Finance Department. Subsequently, the Contract Administrator was replaced by

the incumbent, who has worked attentively and cooperatively with City staff, including

the City Attorney and City Auditor, to update materials and make the contract process

as effective, efficient and professional as possible.

Along with contract management responsibilities, an original version of “Contracts

Online” moved from CMO to Finance, and this material and the interface have been

extensively updated to reflect current information and procedures. This is a complex

and detailed project, which has made great progress and will continue this year.

The Citywide Contract Compliance Audit was conducted when the management of

General Services, which includes procurement, was in transition from a previous

manager through the hires of two interim staff, before the current General Services

Manager came on board. As previously stated, there was also a change in personnel for

the Contract Administrator position during this time.

POSSIBLE FUTURE ACTION

Future actions include continued improvements to all City contract processing and

related systems, and necessary revisions to content and forms in Contracts Online.

FISCAL IMPACTS OF POSSIBLE FUTURE ACTION

Without adding any additional staff beyond the present budgets of Finance or other

departments, the primary fiscal impacts would be in savings resulting from the most

effective and efficient use of current resources. This includes cooperation among all

parties to enhance staff capacity, soliciting the best possible prices for goods and

services, and expediting and monitoring contracts, while assuring compliance with all

City policies and procedures.

CONTACT PERSON

Henry Oyekanmi, Contract Administrator, Finance, 981-7326

Sharon Thygesen, General Services Manager, Finance, 981-7329