Procurement: Company Can Significantly Improve Its Oversight of a Technology Services Contract

Our objective for this report was to assess the company’s oversight of the cost, schedule, and performance of a technology services contract.

We found that the company can significantly improve its oversight of this contract to effectively manage its cost, schedule, and performance. Specifically, company personnel did not ensure supplier invoices were fully supported, calling into question approximately $7.8 million in costs. We also found that weak controls resulted in the company paying at least $201,000 for work that may have been performed offshore without proper approvals. This includes at least $135,000 that we questioned because the company paid for this work at higher onshore rates. In addition, the company chose contract terms associated with a firm-fixed price contract for services that were better suited to a time-and-materials contract, which limited the company’s ability to oversee the supplier’s costs, adherence to schedule, and performance.

Given there are time and funds remaining on this contract, and because the company may extend it, we made recommendations to improve invoice review and reconciliation practices, evaluate and recover any disallowed costs, strengthen controls over offshore work, and assess whether the contract should be amended to better hold the supplier accountable.