NEWS RELEASE - OFFICE OF CITY CONTROLLER

FOR IMMEDIATE RELEASE

July 07, 1998

Contact: Sharon Adams or Lorie Arnett at (713) 247-3152

City Controller Sylvia R. Garcia and the accounting firm of Mir Fox & Rodriguez, P.C. have completed a special review of engineering testing services in the Public Works & Engineering Department.

The review revealed a disturbing lack of internal controls and made recommendations for improvements in the quality of engineering construction tests. Moreover, in many cases, the documentation of payments was incomplete or missing. It also appears that many payments were charged to the wrong accounts and may have come from inappropriate funding sources.

One of the most significant findings was that the city had a contract with an engineering testing service contractor for $240,000 to provide testing services at the Houston Police headquarters building at 1200 Travis. The auditors determined that the city instead paid this contractor approximately $198,000 for management studies and emergency cleanup work for asbestos abatement. This work was performed outside the scope of the original contract without an appropriate change order or a new contract, as required by city policy. The Controller's office is continuing to investigate this and other questionable payments related to building renovations at City Hall, the City Hall Annex, the Public Works & Engineering Department headquarters (611 Walker) and the Police Department headquarters.

The special review was initiated to determine if the engineering testing services were performed as required according to the construction contracts. The review was conducted as a result of shortcomings found during recently completed audits of the Greater Houston Wastewater Program (GHWP).

Controller Garcia says, "The findings in this compliance audit reinforce the importance of having an independent agent review the performance of companies doing business with the city. It also ensures that city departments comply with guidelines mandated by City Council."

Public Works officials generally agreed with the findings and recommendations. Certain recommendations will be immediately implemented as pilot projects within the GHWP.

Over the past several months, many of these findings have been forwarded to the Office of the Inspector General.