Summary of Report 97-006

October 1996

Report Number 97-006

Overall Conclusion

Deficiencies in the design and implementation of controls over the Texas Department of Criminal Justice's (TDCJ) purchasing and contracting functions have prevented TDCJ from ensuring that it spends funds according to state law or on the most effective, efficient services. In fiscal year 1995, TDCJ purchased $602.5 million of goods and services, and contracted for at least an additional $300 million of purchased services. While TDCJ has recently begun to address many of the weaknesses noted, the historic lack of sound controls over purchasing and some divisions' contract administration increases the risk that these funds could be misused or spent on ineffective programs.

Key Points of Report

TDCJ's purchasing process is missing many of the basic controls needed to ensure that the proper method of purchasing is used, that all eligible bidders have an opportunity to participate, or that the best price is obtained. A sample of fiscal year 1995 purchases revealed that almost 19 percent of purchases made during the year did not comply with one or more of the tested requirements.

The effectiveness of TDCJ's contract administration varies among divisions and programs. Administration of some programs, such as the new substance abuse programs administered by the Programs and Services Division and the Pardons and Parole Division, includes fairly strong controls over contractor selection, contractor reimbursement, contract development, and contractor oversight. However, some divisions have weaknesses in their systems of contract administration:

• The Community Justice Assistance Division annually allocates $230 million to Community Supervision and Corrections Departments for probation services and, beginning in fiscal year 1996, also distributes another $10 million for the Treatment Alternatives to Incarceration Program (TAIP). Management of these funds is impaired by poor allocation methods and data, the absence of contractual provisions needed to ensure accountability, and a general lack of oversight.

• The process used by TDCJ to develop the seven privately operated state jails (known as the Mode II state jails) did not ensure that the State selected the best proposal for jail construction and operation or negotiated the best rate. Weaknesses in the following areas increased the risk that TDCJ did not spend contracting dollars in the most effective and efficient way:
  • Site and vendor selection did not ensure that the best proposal was objectively selected.

  • Per diem rate negotiations did not include sufficient analysis of proposed costs.

  • Contracts are inconsistent and some do not include key provisions necessary to ensure accountability.

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