Audit Reports Affecting Multiple Agencies
An Audit on Administration of Contracts for Information System Purchases
Report Number 95-090
Overall, agency procedures provide reasonable assurance that the best contractor was objectively selected and held accountable for delivering information system goods and services in accordance with the terms of the contract. The agencies included in our review spent over $57 million on information system related purchases during fiscal year 1993.
Our review was limited to reviewing the selection and monitoring of contractors. Successful implementation of information system projects depends on a variety of factors in addition to effective contract administration. The risks to successful implementation of information system projects have been recently reported on by both the State Auditor's Office and the multi-agency Quality Assurance Team.
The scope and cost of the initial contract for the development of automated systems often increased significantly over the life of the contract. Contract provisions explicitly allowed the scope and cost of the contract to be changed, contingent upon certain events such as the completion of the system detailed design.
Contract amendments appeared reasonable and were made in accordance with requirements established in the initial contracts. Project management actively reviewed and approved all of the amendments and refused to increase costs for changes to agency project team felt were within the scope of the initial contract.
Although agency management has the final approval over the acceptance of contract amendments, agencies primarily relied on the contractors to estimate the costs and work hours associated with each of the changes. In order to ensure that contract amendments are necessary, cost-effective, and in the best interest of the State, agencies should consider using an outside consultant with expertise in information system development to independently analyze contract amendments if the expertise is not available within the agency.
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