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Audit uncovers serious lapses in oversight of social service contracts
Friday, October 28, 2011 by Josh Rosenblatt
Social service contracting in
This news comes at the tail end of a lengthy and controversial social service contract bidding process that engendered a great deal of public displeasure and resulted in Council initiating a process to amend the city’s convoluted Anti-Lobbying Ordinance.
According to Assistant City Auditor Rachel Snell, an audit of the city’s 82 social service contracts from 2009 to 2011 has turned up numerous inconsistencies, lapses, and concerns. Those contracts add up to about $54 million.
For instance, auditors discovered that the Human Services Division of the HHS Department (which oversees the contracts) has not consistently monitored social service contracts and “cannot provide assurance that contracted services are being provided as purchased by the city,” said Snell. “For example, none of the five contracts we reviewed had on-site monitoring as required. And staff confirmed that on-site reviews were not conducted for any contractors for 2010 or 2011.”
In addition, 14 of 45 performance reports that the auditors reviewed lacked evidence of health department staff review.
“During our site visits with nine contractors, one was unable to provide documentation of services, could not reconcile revenues and expenditures, and was commingling city funds,” said Snell. Another had not been paying payroll taxes, and a third contractor did not have documentation to tie accounting statements to their expenditure reports.
In addition, according to Snell, the department’s contract monitoring program does not adhere to best practices, which call for risk-based monitoring, tying payment to performance, and reviewing invoices prior to payment. That could be because many of the department’s staff have no monitoring experience, and the department lacks a training program.
To top things off, the Auditor’s office reported that the department’s security and data reliability controls over the contract management IT system are “insufficient.”
Council Member Bill Spelman asked the new director of the Health and Human Services Department, Carlos Rivera, how such oversights could have taken place and gone on for so long. “We’ve been issuing contracts for years and years,” Spelman said. “How is it that we’re in this state of affairs right now?”
Rivera, who took over as director on Aug. 1, told Spelman that he has already taken “significant steps to correct these issues.”
“I can’t speak for my predecessor, but what I can do is assure you that this will be corrected,” said Rivera “From my point of view, there’s a definite lack of leadership that I’m not going to be party to. The department will perform up to the standards that are expected.”
Some of the changes Rivera has made include separating the monitoring and compliance assurance of social service contracts from the day-to-day technical assistance and oversight of those contracts. The department has also established a new security system and is working on training protocols and standard operating procedures for contract compliance and contract monitoring.
“We’ve done this through a reorganization of the department,” said Rivera. That reorganization includes the creation of a separate unit within the office of Chief Administrative Officer Kimberly Maddox. That unit, Maddox told the committee, will create and develop a full set of protocols and procedures for monitoring the contracts, oversee monitoring, and even do a portion of the monitoring themselves.
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