NEWS RELEASE OFFICE OF CITY CONTROLLER CITY OF HOUSTON

FOR IMMEDIATE RELEASE

July 08, 1999

Contact: Sharon Adams
(713) 247-3152

CITY CONTROLLER'S AUDIT OF PUBLIC WORKS DEPARTMENT REVEALS $1.5 MILLION MISSPENT

Public Works & Engineering (PW&E) employees misspent nearly $1.5 million in taxpayers' dollars while renovating four City-owned buildings, according to a draft audit released today by City Controller Sylvia R. Garcia.

The audit evaluated construction and renovations totaling approximately $90 million conducted between 1995 and 1998 on City Hall, the City Hall Annex, the Public Works Building at 611 Walker and the Police Headquarters Building at 1200 Travis.

Auditors found that:

 

• The City made payments for items that were unrelated to the scope of services as defined in the contracts

   

• City personnel lacked accountability for managing the construction projects

   

• Controls relating to the procurement of materials and services were inadequate.
  

"Apparently the rush to get the job done quickly obscured any sense of accountability to the taxpayer," Controller Garcia said.

More than $750,000 was spent for work that was unrelated to the scope of services as defined in the contracts, such as $8,000 paid to an HPD sketch artist for a portrait of a former Mayor. Other funds totaling approximately $337,000 were paid to engineering and testing contractors for services performed outside of the scope of their contracts. This included payments for asbestos testing and abatement, air monitoring, and management services. About $314,000 was spent on items such as video monitors for City Council chambers and glass tops for furniture in the Mayor's office, utilizing cash allowance provisions from various constructions contracts.

The construction provisions did not contain any requirements for city engineers to formally report results, on a regular basis, to responsible City officials. This minimized essential project oversight.

To avoid the City's change order review process and required approvals, PW&E significantly increased cash allowance amounts of the construction contracts to process construction-related itesm. This effectively circumvented oversight by the City Council. Cash allowances normally include itemized fees for routine permitting and inspections. However, these allowances were not itemized and funds were used for major purchases of furnishings, computers and building equipment.

Based on these findings, the Office of the Controller made the follwing recommendations for the management of future construction projects:

 

• PW&E should define the rules relating to cash allowances

   

• They should define each level of managerial responsibility and accountability for every project

   

• They should reevaluate and, if necessary, revise the procurement processes for materials and services, so that the respective responsibilities of the City and the contractors are clearly defined.
  

Sections of the draft audit report are under review by the Harris County District Attorney’s Office and the Office of the Inspector General. The Office of the Controller continues to cooperate fully with the criminal investigation. The Controller has also provided the report to the Administration and PW&E for review and written responses.

Controller Garcia said, "While these findings are certainly very serious, the report provides Public Works with an opportunity to correct its processes and become more accountable to the taxpayers in the future."