A hard-hitting investigation into public contracting in the US state of Virginia has identified numerous shortcomings, including administration of high-value contracts by inexperienced staff.
The probe by the state’s Joint Legislative Audit and Review Commission (JLARC) found that 12 contracts, with a value of $1.8bn, fell “significantly short of meeting expectations”.
Almost two-thirds of the contracts investigated were “at least slightly behind schedule, over budget, or did not meet agencies’ needs”, a JLARC report found. It also said in some cases the public was “negatively impacted” by the failures.
However, the review found that the bulk of performance problems could be preventable through more robust contracting processes.
Certain procurement policies were accused of failing to maximise contract value “because they do not factor in both cost and quality, or do not provide sufficient guidance on how to use the policies effectively”.
This meant state agencies may not receive value for money or may receive poor quality goods and services from some contracts.
“In some cases, agencies have awarded contracts even when they knew the vendor would be unable to provide high-quality goods or services,” it said.
Agencies may spend more than necessary because state policies do not provide sufficient guidance on how agencies should evaluate cost when making contract awards.
When agencies had to purchase from a mandatory source they may overpay as these sources may be overpriced or uncompetitive, staff told investigators.
JLARC also found limited competition for some state contracts, which could increase cost or reduce quality.
“Without competition, businesses have less incentive to maximise quality and minimise price,” said the report.
It criticised inadequate risk management and lack of state training courses on risk management.
Contract administrators reported that many of the state’s highest-value contracts lacked penalties and incentives to enforce contract provisions.
In a survey of 117 contracts worth $8.1bn, agency staff said 91% did not contain incentives, 74% did not contain penalties and 38% had no termination clause. More than a fifth contained none of these.
Agency staff were found to be failing to monitor contract performance and enforce contract provisions effectively or consistently or hold vendors accountable for poor performance.
“Some complex, high-dollar contracts are administered by inexperienced and unprepared staff,” said the report.
“The amount of time dedicated to contract administration varies widely and is often only a small percentage of a workweek, even for high-value contracts.
“Many agencies lack standard procedures for raising awareness about contract-related problems and do not have a clear sense for how their contracts are performing.”
The report called for more centralised oversight of state agency contracting and more comprehensive information on contract performance, as well as training and new contracting guidelines.
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