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A Special Investigations Unit Report on Contracting at the Texas Education Agency and Education Service Centers

November 2007

Report Number 08-011

Overall Conclusion

In June 2007, the State Auditor's Office received a June 15, 2007, report by the Texas Education Agency's (TEA) Office of Inspector General entitled Final Report: Complaints Related to the Contracts and Procurement System of the Texas Education Agency. That report alleged that TEA's Educational Initiatives Division regularly and systematically manipulated the contract and grant processes, identified incidents wherein procedures were not followed or practices were vulnerable to manipulation, and specified that subcontracts were awarded with ties to TEA senior staff.

After reviewing the report, the State Auditor's Office's Special Investigations Unit initiated an investigation. The purpose of our investigation was to determine whether the allegations in the Office of Inspector General report were the result of fraudulent activity and, if so, present a case for prosecution.

Based on witness interviews and document reviews conducted for this investigation, there is insufficient evidence to present this case to a prosecuting authority at this time. However, our investigation identified a number of instances in which it was a practice for regional education service centers (ESCs) to hire subcontractors on TEA projects based on recommendations by TEA staff and outside parties without conducting a competitive bidding process. This practice resulted in the appearance of less than arm's-length transactions. If any additional information on these contracts becomes available that, in our judgment, warrants further action, the State Auditor's Office will continue this investigation.

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