DEPARTMENT OF CENTRAL MANAGEMENT SERVICES
SPECIAL EXAMINATION –
STATUS OF PRIOR FINDINGS
Issued Pursuant to
October 26, 2005
State of Illinois
Office of the Auditor General
WILLIAM G. HOLLAND
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We conducted a special examination of the Department of Central Management Services (Department) to determine the status of the prior audit findings as reported in the Department's Compliance Examination for the year ended June 30, 2004 (FY04 Report). This testing was performed pursuant to Legislative Audit Commission Resolution No. 134.
The FY04 Report contained 24 findings and recommendations. We determined, as of September 16, 2005, that the Department had:
· Implemented 6 (25%) of the recommendations;
· Partially implemented 4 (17%) of the recommendations;
· Not implemented 11 (46%) of the recommendations; and
· Due to the nature and timing of the required tests, the status of the remaining 3 (12%) recommendations could not be determined at this time. The status of those findings will be reported in the Department's Financial Audit and Compliance Examination for the year ended June 30, 2005.
Specific matters noted by the auditors are detailed on the following pages.
The Department hired a consultant for $995,000 to validate FY04 savings
The Department used an evaluation process that conflicted with the RFP
Best and final offer rates in excess of original rate quoted
On average, contracts were filed with the Comptroller 125 days late
The Department questions $5.2 million in payments to a vendor
Time sheets required by State law not maintained
Specific matters noted by the auditors in their follow-up testing, included:
· As of September 14, 2005, the Department had not yet completed its validation of FY04 projected savings attributable to its various efficiency initiatives. In April 2005, the Department estimated FY04-05 savings at $621 million. As of September 14, 2005, the Department's estimate of FY04-05 savings was $545 million. The Department has hired a contractor for $995,000 to assist in its validation efforts. (Finding 04-11, Status - Partially Implemented)
· Six of 10 FY05 contract files tested (60%) lacked documentation in one or more areas. Concerns were raised about the availability and completeness of information provided to the auditors. Numerous documents expected to be retained centrally in contract files were missing upon initial review. (Finding 04-2, Status - Not Implemented)
· In 1 of 10 FY05 contract files tested (10%), the vendor that eventually received the award provided extensive "pro bono" work to the Department. Certain information developed as a result of the pro bono work was provided to prospective proposers and the vendor was given a waiver by the Department to propose on the procurement.
In another instance, two Department officials met with a potential vendor prior to the issuance of the RFP. No other vendors were contacted regarding the issuance of the RFP. This vendor was subsequently determined to be the only responsive bidder and was awarded the contract. (Finding 04-3, Status - Not Implemented)
· In one of the tested awards, a $162 million contract for pharmaceuticals, the Department used an evaluation process that conflicted with the process specified in the RFP. (Finding 04-4, Status - Not Implemented)
· Of the 10 FY05 contracts tested, we noted the Department allowed a vendor to extensively revise its proposal during the best and final process. The original proposal submitted by the winning vendor for performing various types of pressure washing services quoted statewide rates. The best and final offer revised the rate structure based on regions.
For many of the pressure washing services to be provided, the final pricing by region was double or triple the original
statewide rate quoted in the winning vendor's initial proposal. (Finding 04-5, Status - Not Implemented)
· Six of 8 FY05 contracts tested (75%) were not filed timely. The average length of time between the announcement of the award and the filing of a contract with the Comptroller, for the late filed contracts, was 125 days. In 1 of the contracts reviewed, the Department allowed the vendor to work on the project for approximately 6 months without a formal written agreement in place. (Finding 04-8, Status - Not Implemented)
· We noted contract monitoring deficiencies on two FY05 contracts tested. Additionally, we are continuing to review contracts from the FY04 audit, including the asset management contract, which was terminated May 5, 2005. According to CMS officials and documentation provided to us by CMS fiscal personnel, the Department questions $5.2 million in payments to the vendor. However, due to the intervening cancellation of this contract in May 2005, the Department has been unable to obtain necessary documentation from the vendor concerning these charges. Additionally, CMS documentation delineates $7.4 million in "additional service plans" that were submitted by the vendor for work outside the contract with the vendor. (Finding 04-9, Status - Not Implemented)
· Forty-four of 50 employees tested (88%) did not maintain timesheets documenting the time spent each day on official State business to the nearest quarter hour, as required by the State Officials and Employees Ethics Act. (Finding 04-23, Status – Not Implemented)
The Department agreed with the follow-up report and will redouble its efforts to improve its operations through implementation of the recommendations.
WILLIAM G. HOLLAND, Auditor General
SPECIAL ASSISTANT AUDITORS
Sikich Gardner & Co., LLP were our special assistant auditors for this engagement.