Consultant Contract Management Audit

Audit ATX speaks with Auditor Henry Katumwa about a recent audit that evaluated  whether the City is managing consultant contracts in an efficient and economical manner. Transcript: https://www.buzzsprout.com/1419979/episodes/18818385-consultant-contract-management-audit

Transcript

CONSULTANT SPENDING AUDIT

PODCAST TRANSCRIPT

Host: Welcome audit enthusiasts and fellow Austinites to another episode of audit ATX, the podcast that dives deep into the audits and investigations our office does to make Austin better for all residents. We're hosts Sam and Max.

Host: Welcome back to audit ATX, fellow City of Austin employees, residents, and listeners around the world. Today, Sam and I are sitting down with Auditor Henry Katumwa to talk about a recent audit our office conducted. This audit looks at consultant spending within the city of Austin. Welcome, Henry. It's great to have you back here on the podcast.

Guest: Thank you for inviting me. It's always great to be on this podcast. I actually enjoy it a lot.

Host: Awesome to be with you, Henry. To get us started here, could you tell us about the objective of the audit? Also, why would someone be interested in reading this report?

Guest: Uh, the objective was to determine if the city is managing consultant contracts in an efficient and economical manner. Why would someone be interested in reading this report? That's a very good question. Over the past three years, the city has spent more than two hundred and seventy nine million dollars on outside consultants using public funds. It's only fair that we, as residents, understand where that money is going and whether it's helping our community. This report explains how those contracts were handled and points out problems that, if ignored, could put city funds and public trust at risk.

Host: Thanks for that, Henry. And I know, like you said, this audit is dealing with a pretty hot topic here in the city of Austin. But before we dive into the technicals here, is there anything you think our listeners should know as far as background information goes?

Guest: Most of the time consultants are hired because city departments do not have staff or specialized expertise to do certain work, or because they want an outside perspective, managing these contracts is a shared responsibility. Departments that request the services handle part of it, including identifying service needs, developing the scope of work, performing contract monitoring to ensure that consultants comply with the terms of the contract and closing out the contracts. The city's central procurement division within the Austin Financial Services handles the other key part. This includes advertising and obtaining solicitations and developing and executing the contracts.

Host: Gotcha. That's helpful. Background information. Can you walk us through the steps that the audit team took to complete the work? More specifically, what did the team look at?

Guest: We talked and surveyed staff from several departments that manage consultant contracts, reviewed consultant spending over the past three years, looked at related plans, policies, procedures and reports. We reviewed a sample of consultant contracts and researched best practices for managing the contracts.

Host: Gotcha. That sounds like a lot of in depth work and analysis both you and your team did here, Henry. But let's go into the findings now. Can you start off by telling us how many findings there were, and then what all you found.

Guest: There are two findings. Finding one, the city may not be able to show why consultant services were needed and how they helped meet city objectives and the needs of residents. We reviewed twenty eight consultant contracts. Like I said, we found that in about forty percent of the contracts. City staff did not do, or at least did not document a needs assessment before hiring the consultant without clearly showing that the services were actually needed. It is difficult for the city to prove that the expense was justified. Number two, in over eighty percent of the contracts, departments did not have a formal evaluation Showing why the work could not be done by city staff. This may create a perception that the contracting process is not transparent, and could raise questions about whether public funds are being used responsibly. Number three are some contract deliverables were not clearly defined and measurable. Clearly defined deliverables help set clear expectations that all parties understand. Otherwise, if they are vague and ambiguous, the city and the consultants may operate with different expectations. And lastly, for four contracts, staff were unable to provide supporting evidence to show that they received all deliverables. Because of this, the city's process for monitoring consultants may be perceived as not being effective or efficient.

Guest: Finding number two city departments do not consistently evaluate the performance of consultants. Eighteen and this is sixty four percent of the contracts we reviewed were closed without a formal review of the consultants performance, even when evaluations were done. The results were not shared with other departments that might hire the same consultant later, and completed evaluations were not always accurate. These evaluations are important. Without these evaluations, the city risks bringing back consultants with known performance problems and even misses chances to push all consultants to provide the highest quality of work for the city. It's definitely important to ensure that the city is hiring and retaining only the best.

Host: Thanks for recapping those two findings for us. What recommendations were made to address them?

Guest: We issued two recommendations. We recommended that the director of Austin Financial Services, number one, provide clear guidance to departments on how to conduct needs assessments and work with the city manager to ensure departments maintain all contract related documents. And number two, work with the city manager to require performance evaluations and lessons learned for all consultant contracts and determine how they should be used in future hiring.

Host: Well, Henry, thanks for coming on the podcast today and going over the report with us. It's always a pleasure to have you on, and we look forward to having you on the next one sometime soon.

Guest: Again, thank you so much for giving me a chance to be on this podcast. I am really looking forward to the next opportunity.

Host: Thanks for listening to this episode of audit TX. For more information about this report, you can visit our website at Austin, Texas dot gov, slash auditor or shoot us an email at Austin Auditor at Austin, Texas dot gov or follow us on Facebook, Instagram and X at Austin Auditor and subscribe on Spotify or Apple podcast.