City of Houston Office of the City Controller

Divider

Press / News  


CONTROLLER'S AUDIT OF AIRPORT CONSTRUCTION PROJECT IDs $1.4 M IN POTENTIAL RECOVERIES

May 4, 2011 -- A newly released report for a construction audit performed jointly by the Office of the City Controller's Audit Division along with Jefferson Wells, Inc. (now Experis Finance) has found $1.4 million in potential recoverable overcharges and/or unsupported costs. The scope of the Audit involved the $68.5 million Phase 1 portion of the expansion project at William P. Hobby Airport, which included a main terminal expansion, new office building and the new East Concourse. The Houston Airport System (HAS) is the contract owner, with Clark Construction being the prime contractor. The original agreement was drawn up and approved by City Council in 2005.

The audit objectives were to determine that costs charged are in accordance with the original agreement terms; that work performed was in accordance with contract stipulations; that change orders are properly supported and approved; and that competitive bidding was utilized in all sub-contracting.

While the work associated with the underlying phase of the project has been satisfactorily and successfully completed, some key points from the audit include:

  • Control weaknesses related to compliance with the Agreement that resulted in labor overcharges, potential recoverable unsupported costs, and related-party transactions that totaled $1,442,655 for invoices received from Clark and paid by HAS.
  • HAS concurred with $748,367 of potential recoveries.
  • At the time of identifying the potential recoveries, there was $566,636 in retainage, which represents hold-backs by HAS to allow negotiated discrepancies as noted above.

"This was a complex project that provided an opportunity to increase efficiencies for HAS, identify savings for the City and allow our professional audit staff to expand our scope of services, which all have a synergetic effect," says City Controller Ronald Green. "We are satisfied that the conclusions and recommendations were fair, practical and realistic to implement. We're also pleased that as a result of the audit, we have the opportunity to realize a substantial portion of the refundable amounts identified."

NOTE: The full report can be accessed through the Controller's Audit Division website located at the following address: http://www.houstontx.gov/controller/audit/2011-04.pdf.