A Performance Audit
An Audit Report on the Texas Multiple Award Schedule (TXMAS) Contracts Program at the Office of the Comptroller of Public Accounts
October 2016
Summary Analysis
The Office of the Comptroller of Public Accounts (Comptroller’s Office) has complied with statutory requirements to base contracts available through the Texas Multiple Award Schedule (TXMAS) contracts program on contracts that other governmental entities have awarded through a competitive process. However, it should strengthen controls over the following aspects of its administration of the TXMAS contracts program to help ensure compliance with other statutes, rules, and policies and procedures:
• Ensuring that TXMAS contracts meet customers’ needs and protect the State’s interests.
• Preventing unallowable purchases through TXMAS contracts, and ensuring that incidental charges associated with TXMAS purchases are appropriate.
• Calculating and collecting the administrative fees and rebates that TXMAS contractors must pay the Comptroller’s Office.
As required by Texas Government Code, Section 2155.502, the Comptroller’s Office based TXMAS contracts on contracts that the federal government or other governmental entities had previously bid using a competitive process.
However, the Comptroller’s Office should strengthen its efforts to ensure that TXMAS contracts meet customers’ needs. For example, the Comptroller’s Office has not conducted annual studies of state agency purchases required by Texas Government Code, Section 2155.072, to determine whether the State would benefit by adding certain services to statewide contracting programs such as TXMAS. In addition, ensuring that state agencies submit required vendor performance reports for TXMAS purchases could help the Comptroller’s Office evaluate future contract proposals and assess whether TXMAS contracts meet customers’ needs.
The Comptroller’s Office should also strengthen its efforts to prevent unallowable purchases through TXMAS contracts and strengthen controls over the incidental charges associated with TXMAS purchases. For example:
• State agencies and certain governmental entities are required to follow Texas Government Code, Chapter 2254, to procure professional and consulting services. The procedures in that statute require awards to be based on factors such as demonstrated competence and vendor qualifications. However, TXMAS contracts are based on competitive awards. Auditors identified 9 state agencies that had ordered $15,695,081 in professional and consulting services through TXMAS contracts between June 1, 2014, and February 18, 2016.
• Incidental charges associated with TXMAS purchases are intended to be limited to installation, installation parts, inside delivery, or set-up. However, auditors identified inappropriate incidental charges for administrative fees and rebates that TXMAS contractors must pay the Comptroller’s Office, as well as the inappropriate use of incidental charges for items (such as chairs) that should have been purchased through a contractor’s catalog or contractor price quotes. Auditors identified instances in which the inappropriate use of incidental charges reduced the State’s rebate revenue and resulted in overcharges to customers.
While the Comptroller’s Office is not statutorily required to monitor how customers use TXMAS contracts, it has the information necessary to do so and has begun to make efforts to ensure that customers use TXMAS contracts appropriately.
The Comptroller’s Office sends invoices to TXMAS contractors for the administrative fees and rebates they owe (see Chapter 2 for additional information on administrative fees and rebates). As of February 19, 2016, the Comptroller’s Office had invoiced TXMAS contractors $2,160,043 for rebates and $6,067,770 for administrative fees on TXMAS sales in the TxSmartBuy ordering system between June 1, 2014, and February 18, 2016.
The Comptroller’s Office bases the invoice amounts on contractors’ sales to TXMAS customers. However, the Comptroller’s Office should strengthen controls to ensure that the sales information on which it bases invoices for administrative fees and rebates is complete .
The Comptroller’s Office should consistently send delinquency notifications to TXMAS contractors that do not pay administrative fees and rebates in a timely manner and, when necessary,prevent those contractors from selling items through TXMAS contracts.
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