Education
An Audit Report on University Contract Administration
March 2002
Report Number 02-026
Overall Conclusion
The results of our statewide survey of higher education institutions (excluding community colleges), as well as our audits at the University of Houston and The University of Texas Medical Branch at Galveston, highlight the need for institutions to establish good contracting processes and enforce them through proper oversight.
Not having or following adequate contracting policies and procedures increases
both financial and service risk at these institutions. As a result, universities
risk not hiring quality contractors, paying more than is necessary for goods
or services, not receiving needed services, and losing and wasting state funds.
The weaknesses in contract administration we identified at higher education institutions mirror the weaknesses we have identified in previous audits of contracting at state agencie
Key Facts and Findings
- Seven of the 61 (11 percent) institutions we surveyed did not have contracting
policies and procedures.
- The two institutions we audited had contracting policies and procedures,
but they did not consistently follow their procurement procedures. At these
institutions, we found contracts that were not reviewed by the central contracting
office prior to execution; contracts for which sole source justifications
were prepared after contract execution; and contracts with signatures that
were not properly authorized, were not recorded after the contract was executed,
or were missing.
- Neither institution we audited had established detailed guidance on how
to monitor contracts.
- The University of Texas Medical Branch at Galveston had not consistently
established contract provisions to ensure that it could impose adequate sanctioning
and spending restrictions on the contractors.
- Higher education institutions are typically decentralized, which can complicate the establishment, communication, and enforcement of contracting policies and procedures.
- Higher education institutions are not required to follow the same requirements
for purchasing and contracting that state agencies must follow. Before September
1, 2001, most health-related institutions were exempt from some of the state
purchasing and contracting laws that apply to state agencies. Effective September
1, 2001, all higher education institutions became exempt from the same requirements
from which health-related institutions were exempt.
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