A Performance Audit
An Audit Report on The University of Texas Southwestern Medical Center's Compliance with Requirements Related to the Historically Underutilized Business and State Use Programs
April 2018
Summary Analysis
Compliance with Historically Underutilized Business (HUB) Program Requirements
The University of Texas Southwestern Medical Center (Medical Center) should strengthen its HUB reporting processes and report complete and accurate data to the Office of the Comptroller of Public Accounts (Comptroller's Office).
The Medical Center complied with statutes, rules, and Comptroller's Office requirements related to HUB planning and outreach.
Compliance with State Use Program Requirements
The Medical Center is also subject to the requirements of the Purchasing from People with Disabilities (State Use) Program. The Medical Center did not make any purchases or report any exceptions from the State Use Program in fiscal year 2017.
The Medical Center did not report all required information for its HUB Program in its Fiscal 2017 Annual Report for the Statewide Historically Underutilized Business (HUB) Program submitted to the Comptroller's Office.
Additionally, there were weaknesses in the Medical Center's processes for reporting its fiscal year 2017 HUB expenditures in its annual report to the Comptroller's Office. Auditors identified a net error amount of $27.0 million (3.2 percent) that was not included or supported in the $845.0 million in HUB-eligible expenditures the Medical Center reported.
The Medical Center did not have effective processes to help ensure that prime contractors reported their payments to all of their subcontractors on a monthly basis, as Title 34, Texas Administrative Code, Section 20.287(b) requires. Monitoring those payments is necessary for the Medical Center to monitor prime contractors' compliance with their HUB subcontracting plans, as required by Texas Government Code, Section 2161.253 (c).
The Medical Center did not enter accurate or complete data from prime contractors' monthly HUB Progress Assessment Reports (monitoring reports) into the Medical Center's accounting system because it did not ensure that the department responsible for entering that data — its Office of Diversity and Inclusion and Equal Opportunity (HUB Office) — all finalized HUB subcontracting plans. Without those plans, the HUB Office could not create a master list of subcontractors against which it could compare the monitoring reports it received to verify that it received all monitoring reports.
Auditors identified additional weaknesses or inaccuracies in the Medical Center's data.
To ensure that it had effective controls over the automated systems that produced HUB data, the Medical Center appropriately restricted access to its contract and accounting systems and related hardware to authorized individuals. Individuals' access to those systems and hardware was consistent with their job duties.
In addition, the Medical Center's accounting system processed purchasing authorization documents in a manner that ensured that the Medical Center had proper authorization for purchases.
The Medical Center complied with two of the three HUB planning requirements during fiscal year 2017. Specifically, it:
- Adopted HUB rules required by Texas Government Code, Section 2161.123(d)(1).
- Created a HUB strategic plan that met all the requirements of Texas Government Code, Section 2161.123(b).
However, the Medical Center did not establish annual procurement utilization goals (HUB goals) that were specific to the Medical Center. The Medical Center adopted the statewide HUB goals as its entity-specific HUB goals without considering the required factors
The Medical Center complied with all four HUB outreach requirements in fiscal year 2017. Specifically, it:
- Participated in HUB forums.
- Received in-house marketing presentations from HUBs.
- Established a mentor protégé program.
- Substantially complied with the HUB coordinator requirements.
The Medical Center did not have consistent HUB contracting policies and procedures. It also did not consistently maintain documentation of its contracts and subcontracts. The Medical Center asserted that those issues occurred because the Medical Center was updating and consolidating its procurement processes and reorganizing its procurement function.
The Medical Center did not make any purchases or report any exceptions from the State Use Program in fiscal year 2017. None of the Medical Center's purchases tested that were subject to the State Use Program were for items available through the State Use Program.
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