An Audit Report on Selected Contracts at the Department of Public Safety
Report Number 13-038
The Department of Public Safety (Department) sufficiently performed several planning, procurement, formation, and oversight activities for two contracts audited. However, auditors identified several opportunities for improvement in those areas for similar contracts in the future.
The Department executed a contract for the Driver Responsibility Program that has resulted in $1.1 billion in state revenue collected since fiscal year 2004. Additionally, the Department procured the rebuilding of aircraft engines for 68 percent of the authorized cost.
The Department reported to the Legislative Budget Board that it awarded $88.2 million in contracts from September 1, 2010, through December 31, 2012. Auditors tested the two contracts for compliance with applicable statutes and rules, Office of the Comptroller of Public Accounts requirements, and Department policies and procedures (see Appendices 2 and 3 for more information about the contracts audited). Specifically:
- Driver Responsibility Program contract – The Department entered into a contract with Municipal Services Bureau to collect surcharges due from the Department's Driver Responsibility Program. That contract was executed in August 2004. As of December 31, 2012, the Driver Responsibility Program had collected surcharges for the State of between $36.8 million and $173.4 million annually. During the same time period, Municipal Services Bureau collected an additional $20,000 to $15.6 million annually for its services. That contract will expire in September 2013.
- Aircraft engine rebuild contract – The Department procured aircraft engine rebuild services for its Gulfstream Commander 1000, Twin-Engine Airplane (Twin Commander) under a statewide contract. The Department began planning for that procurement in fiscal year 2009. In August 2012, the Department issued a purchase order for those services with a maximum value of $480,000 to Mid-Continent Airmotive, Inc. The rebuilds were completed and the airplane was returned to the Department in March 2013 for a final cost of $326,115.
The Department substantially implemented 27 of 30 recommendations related to its contract with Municipal Services Bureau made in An Audit Report on the Department of Public Safety's Implementation of the Driver Responsibility Program (State Auditor's Office Report No. 05-040, July 2005). In addition, both contracts audited contained all essential contract terms listed in the State of Texas Contract Management Guide.
The Department began to implement a series of efforts to identify and address contracting weaknesses in fiscal year 2012. Those efforts occurred after the Department had procured the Driver Responsibility Program contract, but before it had procured the aircraft engine rebuild contract. Those efforts included a management initiative, an Assessment of Contract Management report by the Department's Chief Auditor's Office, and the reallocation of staff to the contracting function. For the two contracts audited, auditors identified certain areas that should be improved. Specifically, the Department should:
- Improve enforcement of its contract approval process to help ensure that all internal and external reviews are completed.
- Communicate all changes to solicitation selection criteria to potential bidders in a timely manner.
- Verify that procurements made under a statewide contract are consistent with the terms of that statewide contract.
- Obtain sufficient documentation of goods and services received prior to payment, and process and properly authorize payments within the time frame required by the Prompt Payment Act.
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