This Job Order Contract Audit Report dated 10/31/2016 is a follow up the an early JOC Audit conducted by City of Long Beach Auditor Laura Dowd.
The firm of Vicenti, Lloyd, & Sutzman (VLS) was retained to provide a construction consultant to further review certain JOC projects. The Job Order Contract Audit Report can be downloaded here. Vicenti, Lloyd & Stutzman LLP (VLS) was retained by the Office of the City Auditor for the City of Long Beach (City Auditor) to provide certain forensic and investigative consulting services related to the Job Order Contracting (JOC) program. The work performed by VLS was pursuant to the Request for Proposal (RFP) for Fraud Investigation Services dated 8/26/15 issued by the City Auditor, the proposal submitted by VLS on 9/18/15, and the Phase 1 and Phase 2 contracts between VLS and the City Auditor.
The following outlines general findings…
- JOC Contractors inflated JOC proposal pricing/costs by including incorrect items or overstated quantities.
- Extensive use of non-prepriced items was not necessary (items not derived from the JOC Unit Price Book)
- Contractor bid extremely low JOC co-efficients (0.50 to 0.71)
List of Findings (direct quote from report)…
“1) JOC contractors prepared and submitted inaccurate and inflated proposals: Several individuals interviewed indicated that the proposals submitted by JOC contractors included inflated quantities and/or incorrect line items in order increase the proposal estimate. This “padding” of proposals was done to offset the low adjustment factors bid by the JOC contractors. This was an understood practice within the JOC program. According to the interviewees, if the JOC contractors were to use the adjustment factors that were bid to the City, and included only the needed line items from the CTC to complete the project, the contractors would not be able to cover their costs of performing the work and make a reasonable profit.
2) Project managers did not have time to adequately review proposals: Due to the workload of project managers, there often was not adequate time to thoroughly review project proposals to ensure accuracy. Additionally, it was difficult for project managers to enforce the use of the CTC, which allowed increased use of Non-Pre Priced (NPP) items.
3) Project managers used their experience to determine whether proposal costs were reasonable: Because the “padding” of proposals was an accepted practice, project managers used their judgment, experience, and/or the department budget to determine what was a reasonable price quoted by the JOC contractor in their proposal. This essentially resulted in the City paying negotiated prices to the JOC contractors for work performed.
4) The scope of work was prepared by copying the JOC proposal: In some instances, the project managers used the proposals submitted by the JOC contractors to prepare the scope of work rather than defining the scope of work prior to the contractor preparing the proposal. This allowed the two documents to match; however, the scope of work would not accurately reflect the work performed.
5) Some projects were done as “pass-throughs”: Certain projects were performed as pass-throughs, which was not the intention of the program. This was generally the result of a City department having a preferred vendor, product, or material. The JOC contractor was asked to use the preferred vendor, product, or material in performing the work.”
The Job Order Contract Audit Report demonstrates a need for better training, implementation of best management practices, and continuous monitoring.
via Four BT, LLC – Independent, Transparent, and Best Value Job Order Contracting Solutions
Any trademarks maintain rights reserved to their respective owners.