A Performance Audit
An Audit Report on Selected Contracts at Stephen F. Austin State University
July 2017
Summary Analysis
Stephen F. Austin State University (University) should strengthen certain contract formation and monitoring processes for the two construction-related contracts audited to ensure that it complies with applicable statutes and contract requirements. Specifically:
• During the contract formation phase, the University should ensure that it executes contracts and applicable amendments (1) prior to their effective dates and (2) prior to allowing the contractors to begin work.
• To effectively monitor the contracts in a timely manner, it should ensure that it receives documentation that the contracts require.
In addition, while the University planned and procured the two contracts audited in accordance with most applicable statutes and University policies and procedures, it should ensure that it includes all applicable required terms in its solicitations.
The University complied with the applicable requirements of Texas Education Code, Section 51.9337, which became effective on September 1, 2015, as a result of Senate Bill 20 (84th Legislature). However, it should maintain documentation to support that members of its board of regents have attended required training related to executing contracts or awarding contracts, including training in ethics, selection of appropriate procurement methods, and information resources purchasing technologies.
Although the University performed contract formation processes for the two contracts audited, it should strengthen some of those processes to ensure that it complies with applicable statutes and contract requirements.
The only date documented in the construction services contract was the effective date of February 22, 2016. However, the University asserted that the contract had an execution date of May 23, 2016, which was three months after that contract’s effective date. In addition, the University asserted that the contract amendment that finalized the guaranteed maximum price and date of substantial completion for the STEM Building was effective and executed on December 16, 2016. That was approximately one month after construction began on November 8, 2016 (according to the University’s assertion).
The construction services contract included all 21 terms that the University’s policies and procedures required. The architectural services contract included 22 (96 percent) of the 23 terms that the University’s policies and procedures required.
Although the University performed contract monitoring processes, it should strengthen some of those processes to ensure that it complies with applicable statutes, rules, and contract requirements.
For the construction services contract, the University conducted contractually required weekly meetings to discuss and update the status of the work after construction had begun. However, the University did not ensure that the construction services contractor submitted all contractually required documentation in a timely manner or as specified in the contract.
For the architectural services contract, the University conducted contractually required regular meetings to discuss and update the status of the work as the plans progressed through the various phases of the project. In addition, it reviewed the contractor’s proposed and completed designs throughout the project.
The University did not comply with requirements in Title 34, Texas Administrative Code, Section 20.285, to obtain updated HUB subcontracting plans when the contractors added new subcontractors to the projects.
The University planned and procured the two contracts audited in accordance with most applicable statutes and University policies and procedures. However, it should ensure that it includes all applicable required terms in its solicitations. In addition, it should implement a procedure to assess the risk of fraud, abuse, or waste in the contractor selection process, contract provisions, and payment and reimbursement rates and methods.
The University complied with Texas Education Code, Section 51.9337, which included requirements to implement a code of ethics, policies for internal investigations, a contract management handbook, contract delegation guidelines, training for officers and employees involved in the contracting process, and internal audit protocols.
The University also implemented policies to address the training requirements in Texas Education Code, Section 51.9337(b)(5). However, the University did not provide documentation to support that all members of its board of regents had attended required training related to executing contracts or awarding contracts, including training in ethics, selection of appropriate procurement methods, and information resources purchasing technologies (as the University’s policies required).
Graphics, Media, Supporting documents