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An Audit Report on The Vendor Performance Tracking System at the Office of the Comptroller of Public Accounts and Its Use by the Texas Workforce Commission and the Parks and Wildlife Department

July 2019

Summary Analysis

Due to noncompliance with reporting requirements, the State’s Vendor Performance Tracking System (VPTS) cannot fulfill its goals of helping state entities evaluate vendor performance and reduce risk in the contract awarding process. The 84th Legislature, in Senate Bill 20, directed the Office of the Comptroller of Public Accounts (Comptroller’s Office) to establish a process in VPTS for state agencies to rate vendor performance using an A through F scale. It also required state agencies to use VPTS to determine whether to award a contract to a vendor. Among the purposes of VPTS are to identify vendors that have exceptional performance and protect the State from vendors with unethical business practices. However, auditors identified weaknesses in the Comptroller’s Office’s administration of VPTS. In addition, auditors reviewed two state agencies’ compliance with VPTS reporting requirements and determined that both state agencies had not reported vendor performance for a significant number of contracts and purchase orders. If state agencies do not report vendor performance as required, the usefulness of VPTS will be limited, increasing the risk that vendors with a history of poor performance will continue to receive state contracting funds.

 Jump to Overall Conclusion

The Comptroller’s Office should improve controls related to key fields in VPTS. Auditors analyzed vendor performance reports submitted to VPTS from September 1, 2017, through December 31, 2018, and determined that 9 of 12 key data fields contained unexpected or unreasonable entries. Examples of those entries include blank vendor performance report grades and contract amount entries and unreasonable date and dollar amount entries. Errors in key VPTS fields increase the risk that state agencies will use inaccurate, inconsistent, or incomplete information to make vendor selection decisions.

The Comptroller’s Office should improve its controls to ensure that access to VPTS is appropriate. Unauthorized access to VPTS increases the risk of unauthorized or inaccurate information being reported in VPTS.

Jump to Chapter 1-A 

The Comptroller’s Office conducts VPTS outreach and training to state agencies, and it reviews some vendor performance reports that state agencies submit to VPTS. However, there are opportunities for the Comptroller’s Office to improve its review processes.

The Comptroller’s Office should improve its processes for reviewing reports submitted to VPTS to help improve the accuracy and consistency of the information in VPTS that state agencies use to make vendor selection decisions.

As of May 2019, the Comptroller’s Office did not review vendor performance reports that state agencies submitted with an A or B performance grade. Instead, VPTS automatically publishes those reports. However, automatically publishing vendor performance reports with A or B report grades without review creates a risk that inaccurate or inconsistent vendor performance report grades are published in VPTS.

The Comptroller’s Office reviews submitted vendor performance reports with performance grades of C through F. However, those reviews did not always identify instances in which the assigned report grades did not align with the criteria.

Jump to Chapter 1-B 

The Commission did not report all contracts to VPTS required by statute. Specifically, from September 1, 2017, through December 31, 2018, the Commission reported vendor performance for 1 contract and 6 purchase orders. However, the Commission should have reported vendor performance for a total of 29 contracts and 1,020 purchase orders valued at $25,000 or more that were completed or terminated during that same time period. Statute requires state agencies to submit reports on vendors’ performance to VPTS.

The Commission reported incorrect grades for 4 (27 percent) of 15 vendor performance reports it submitted to VPTS from September 1, 2017, through December 31, 2018.

For 3 (43 percent) of the 7 required vendor performance it submitted from September 1, 2017, through December 31, 2018, the Commission did not submit the reports within 30 days after the completion or termination of a purchase order or contract as required. Those reports were submitted from 96 days to more than 1 year late.

The Commission did not retain support for 14 (93 percent) of 15 vendor performance reports submitted from September 1, 2017, through December 31, 2018. As a result, the Commission could not demonstrate that the reported performance was accurate.

Jump to Chapter 2-A 

For 21 (78 percent) of 27 contracts and purchase orders tested that started between September 1, 2017, through December 31, 2018, the Commission did not have documentation showing that it reviewed VPTS information prior to vendor selection as required.

Jump to Chapter 2-B 

The Department did not consistently report all contracts to VPTS required by statute. Specifically, from September 1, 2017, through December 31, 2018, the Department reported vendor performance to VPTS for 75 contracts. However, it should have reported vendor performance for a total of 573 contracts valued at $25,000 or more that were completed or terminated during that same time period.

The Department followed the Comptroller’s Office’s VPTS reporting procedures for the 20 vendor performance reports tested with a grade from A to D; however, the Department did not follow those procedures for the two reports it submitted with an F grade.

The Department submitted 36 (48 percent) of 75 vendor performance reports from September 1, 2017, through December 31, 2018, more than 30 days after completion or termination of the contract. Those reports were submitted from 1 day to more than 2 years late.

The Department did not retain adequate support for 4 (18 percent) of 22 vendor performance reports tested. As a result, the Department could not demonstrate that the report grades assigned to the vendors were accurate.

Jump to Chapter 3-A 

The Department could not provide documentation showing that it reviewed VPTS information prior to selecting vendors for any contracts and purchase orders that started between September 1, 2017, through December 31, 2018. Both the Texas Government Code and Department policy require vendor performance information in VPTS to be considered when determining whether to award a contract; and the Department asserted that it consistently complied with that policy.

Jump to Chapter 3-B 

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