2008-01-AU Limited Scope Performance Audit Report Department of Public Works CIP Contract Change Orders and Supplements for FY 2006-2007

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■ DPW and the County have no system in place to document, update and communicate contractor /vendor performance for consideration in future procurements. o Intra- and inter - departmental reporting and communication. ■ DPW administrators confirm that the department lacks a policy, procedure or internal control for determining and avoiding possible conflicts of interest between staff and the professional service contractors they are assigned to rank and select. While all professional services contracts reviewed were awarded to consultants on the County approved vendor list, documentation of their ranking and selection was minimal and inconsistent. ■ DPW does not have performance measures or benchmarks in place that provide a basis for an effective and efficient internal review process. For example, in discussions with DPW personnel, the auditors learned that the same scoping deficiency is currently an issue in three separate CIP projects. ■ DPW does not analyze, document and report causes of and responsibilities for contract modifications and incorporate such information into a quality control system to minimize foreseeable contract modifications and improve the contract management process. General Audit Findings No. 4: The Department of Public Works fails to sufficiently document its activities and decision - making processes related to contract supplements and change orders. • Project engineers and coordinators rely on past experience to determine whether a proposed change order is necessary and priced appropriately. There is insufficient documentation to show how a price or time extension was determined to be reasonable, or what negotiation activity (if any) was conducted. Industry best practices require that an internal independent estimation of time and costs be compared to contractor /vendor proposals for purposes of negotiation and determination of reasonableness and best price. For all practical purposes, in the absence of such documentation, it is impossible to conduct a management or audit review to determine whether negotiations were successful and best prices were obtained. • Contract supplements and change orders were routinely processed after commencement of additional work. The industry best practice of issuing a written change request that documents the problem, cause, additional work requested, and method of cost and time calculation prior to obtaining a contractor quote or vendor proposal (and issuing a contract supplement or change order) was seldom found in project documentation made available to the auditors. Contract supplements and change orders often did not address extension of completion dates even when originally contracted completion dates had already been exceeded. In addition, support documentation for time and material charges