YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

February 6, 2002

Report No. 2002-10

Most state contracts with outside consultants and other service providers met requirements and filled needs; however, some weaknesses were noted 

Auditors reviewed various contracts with outside consultants and other service providers to determine if state agencies sought necessary services, received completed work, used the products and properly procured the contracts.  Audit tests included reviewing 63 judgmentally selected contracts from 31 state agencies. Test results showed no problems with 53 contracts, but weaknesses in 10 contracts.  The following highlights some of the weaknesses noted by auditors: 

Intended outcome did not materialize - Two contracts reviewed did not produce the results intended, causing the state to pay for some services not received or used.  One contractor developed a bench guide for circuit court judges.  The agency spent $8,295 on the guide, which went undistributed and unused.  (See page 4) 

Competitive bids not sought - Agencies involved in two of the contracts tested did not solicit competitive bids or proposals for the services.  In one $103,176 contract to create a training program for local court officials, the agency did not solicit bids, despite an internal policy requiring bids for purchases above $3,000. (See page 5) 

Payments to contractors not tied to work performed - In four contracts tested, the contract payment provisions authorized the contractors to receive 50 percent of the contract price when the contracts were signed, rather than tying payments to work performed.  The initial payments ranged from $6,865 to $4.1 million.  In addition, the contractors started their work and incurred costs before the contracts were signed.  (See page 5) 

Conflicting pricing provisions - One contract had conflicting pricing provisions. The contract stated the price would stay the same upon renewal, but the contract also included a pricing page allowing an increase during the first renewal period.  As a result, when the contract was renewed, the contractor increased the price by $12,245, as noted on the pricing page.  (See page 6) 

These weaknesses indicate not all contracts complied with established policies and procedures.  Improving awareness of these policies and procedures would help prevent future problems.

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