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An Audit Report on Selected State Contracts at the Texas Education Agency

July 2013

Report Number 13-042

Overall Conclusion

The Texas Education Agency (Agency) complied with most requirements related to planning and procuring its $462 million contract with NCS Pearson, Inc. (vendor) to provide student assessments for Texas public education students. However, it did not ensure that the contract contained sufficient detail about deliverables and costs to independently determine the reasonableness of changes in the price of the contract. That limits the Agency's ability to assess the fiscal effect of changes to statewide testing requirements in House Bill 5 (83rd Legislature, Regular Session).

Although statewide tests were administered and graded in a timely manner, the Agency lacks adequate processes for monitoring the contract. The Agency's Student Assessment Division manages the student assessment contract. However, that division does not have comprehensive written policies and procedures for monitoring the contract, which has contributed to inconsistencies in approvals of key deliverables. Student Assessment Division managers also lack required contract management training.

The Agency does not comply with regulations related to disclosing whether vendor employees formerly worked for the Agency. The contract was amended in May 2011 to remove the requirement for the vendor to (1) disclose its intention to employ a former Agency employee or retiree and (2) restrict a former Agency employee or retiree from working on services or a project that the former employee or retiree worked on while employed by the Agency. At auditors' request, the Agency identified 11 former employees who worked on student assessments for the Agency and later worked for the vendor as temporary or permanent employees (see Chapter 1-C on page 9).

The contract contained all essential contract terms in the State of Texas Contract Management Guide, and the Agency processed contract payments in a timely manner according to the State of Texas Contract Management Guide.

Auditors communicated other, less significant issues regarding the procurement and management of the contract separately in writing to the Agency.

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