An Audit Report on the Information and Communications Technology Cooperative Contracts Program at the Department of Information Resources
Report Number 12-004
From September 2007 through February 2011, the Department of Information Resources (Department) reported collecting approximately $42.6 million in fees on purchases that customers made through its Information and Communications Technology Cooperative Contracts Program (Program).
The Department should ensure that the amount of Program fees it collects is accurate and that it collects all fees that vendors owe. While the Department had policies and procedures to help ensure the accuracy, completeness, and timeliness of the Program fees it collects, it did not follow those policies and procedures.
The Department is statutorily required to recover its costs for operating the Program through the fees that customers pay vendors and that the vendors then pay the Department. Therefore, it is important for the Department to establish reasonable assurances regarding those fees to help ensure that it can recover its costs and that vendors comply with contract requirements.
The Department should address additional issues regarding Program fees. Specifically:
- The calculation that determines a customer's price for making a purchase through the Program may have resulted in customers paying fees that exceeded the fees that vendors were contractually required to pay the Department. Limitations associated with the Department's data prevented auditors from determining how much the customer fees may have exceeded the fees that vendors paid the Department.
- The fee set in the Department's Program contracts with vendors did not reflect the Department's costs to operate the Program, as required by the Texas Government Code. Instead, the Department (1) set the fees based on management's judgment or (2) reduced the fees as part of its contract negotiations with vendors to obtain higher customer discounts.
- As a result of its Program contract negotiations with vendors and its inconsistency in amending contracts in a timely manner, the Department did not set one standard fee. Instead, the fees ranged from 0 percent to 2 percent of a customer's purchase price.
Since the end of the audit period (September 2007 through February 2011), the Department asserts that it has taken certain actions to improve its management of Program fees. The Department asserts that it has:
- Implemented processes to verify the accuracy, completeness, and timeliness of the Program fees it collects.
- Amended its Program contracts to ensure that the calculation of customer price does not result in customers paying fees that exceed the fees vendors pay to the Department.
- Reviewed how Program costs are captured in its fee-setting methodology.
- Strengthened its accounting processes to ensure compliance with General Appropriations Act requirements.
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