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An audit of the contract between the City of Houston
and the Texas Procurement Center, L.L.P. (TPC) has
uncovered advance payments that may have been made
in violation of state law.
TPC is under contract to assist the City with the
purchase of computer services and products. The audit
was conducted to determine whether TPC is abiding
by the contract terms and whether the payments made
by the City complied with policies and procedures.
Working under the direction of the Houston City
Controller's Office, auditors from Jefferson Wells
International reviewed purchase orders and invoices
for purchases totaling more than $8.8 million of purchases
made by the Municipal Courts, Library, Finance and
Administration and Public Works and Engineering departments.
The contract mandates payment at the time the products
and services are delivered to the City. Despite this
requirement, TPC received more than $383 thousand
in advance payments. This may have constituted a violation
of not only the terms of the contract, but also city
policy and state law. For that reason, the Controller's
Office has referred the findings to the Office of
Inspector General.
"The City must strengthen its controls in this area.
We can't have taxpayer dollars being spent when there
is no evidence to support the expenditures," said
Judy Gray Johnson, Houston City Controller. "The City
should consider requiring TPC to pay the interest
the City would have earned on the money had it been
kept until the proper time for payment," said Johnson.
Auditors also noted an overcharge of $5,486, incomplete
and missing purchase orders and invoices, and nearly
$27 thousand for items outside the scope of the agreement.
These findings follow the release of another audit
that identified $160 thousand dollars of overpayments
to the Texas Department of Information Resources (TDIR).
The City is attempting to obtain a refund for this
amount. So far, approximately $80 thousand dollars
has been recovered. The Strategic Purchasing Division
is implementing similar corrective action for the
other problems identified by these two audits. City
personnel, TPC, and TDIR have been instructed to strictly
adhere to purchasing policies. In addition, the City's
Purchasing Agent has directed all purchasing and accounts
payable staff not to approve payments prior to the
receipt of goods and services.
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