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02-30069-13

June 22, 2013
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SUMMARY OF: A Special Report on the Department of Administration (DOA), Office of Public Advocacy (OPA), Select Procurement Issues, October 19, 2012

Purpose of the Report

In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit of OPA. The audit objectives were to:

    1. Evaluate OPA’s compliance with state law when procuring professional services;
    2. Evaluate whether OPA’s professional service contracts were prudently administered; and
    3. Identify whether OPA’s professional service contactors were appropriately classified as contractors rather than as employees.

Report Conclusions

OPA has not complied with the State Procurement Code. From FY 06 through FY 12, over $17.8 million in state funds were paid for improperly obtained professional services.

Additionally, OPA has not prudently administered its contracts. An evaluation of OPA’s contracts and invoices identified administrative deficiencies including: contract amendments that were not supported; contract prepayments that were not made in accordance with state rules; novations used incorrectly to increase contract amounts; and contract invoices that were not adequately supported. Additionally, OPA did not use the compensation requirements established in regulations.

The deficiencies were caused by a number of factors including insufficient understanding of state laws by OPA personnel and inadequate oversight by DOA’s Division of Administrative Services (DAS) management. The deficiencies limited fair and open competition, led to overspending state resources, and increased the potential for fraud, waste, and abuse.

OPA’s professional service contractors were appropriately classified as contractors rather than as employees.

Findings & Recommendations

    1. DAS’ director should ensure that OPA professional services are obtained in accordance with state law. As a part of improvements, OPA management should not procure large contracts as they do not have large procurement authority.
    2. DAS’ director should ensure that OPA complies with small procurement rules. As a part of improvement, DAS’ director should consider limiting OPA’s small procurement authority until OPA personnel is sufficiently trained.
    3. DAS’ director should improve oversight of OPA’s contract administration to ensure compliance with the State Procurement Code and the Alaska Administrative Manual.
DOA Office Public Advocacy Select Procurement Issues
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