Metro may be overpaying contractors for frequently purchased goods and services because the transit agency’s purchase order accounting is rife with errors and is missing documents, according to an audit from Metro’s Office of Inspector General (OIG).
The OIG audited a sample $1.9 million that Metro’s Office of Procurement and Materials spent last year on blanket purchase agreements (BPAs), a type of repeating order agencies use for frequent purchases.
All but one of the 45 BPAs inspected were missing documents such as cost estimates and management verification, or had incomplete documents, the OIG reported Thursday to the Metro Board of Directors.
Auditors found that Metro employees failed to record $845,000 as BPAs in their accounting software, a problem the inspector general attributed to poor controls and lack of staff training.
“As a result, $1.8 million of the $1.9 million sampled contained internal control issues,” the audit states.
The OIG extrapolated its findings for the total $5.4 million the procurement office spent on 137 BPAs for items like fuel and office supplies and for services like bus washing and radiator repairs last year.
“As a result of these issues, $5.3 million of the $5.4 million in BPAs had ineffective controls,” the audit states. “Consequently, [Metro] risks overspending for repetitive supplies and services that are ordered authority-wide.”
Organizations need “due diligence” to avoid these kinds of issues, Clarence C. Crawford, the new first vice chairman of the Metro Board, told The Washington Times.
“Most people are good but not everyone is,” said Mr. Crawford, who is senior vice president for corporate solutions for the consulting firm Addx Corp.
“There’s not a lot of oversight over who is doing what,” board Chairman Jack Evans said of Metro’s procurement department, calling the audit “great news.”
Metro General Manager Paul Wiedefeld said the audit shows the OIG doing its job, adding “that there will always be things you can improve” when it comes to “a big complex organization” like the regional transit system.
The OIG audit, dated Sept. 27, recommended that Metro officials:
• Train employees in BPA procedures.
• Include a BPA indicator in the accounting software.
• Move to a centralized BPA process.
• Update BPA procedures and policies that limit “increases of funding to an acceptable percentage.”
Metro Inspector General Geoffrey Cherrington told The Times that his new “special projects” department will explore potential fraud that may have occurred due to lax accounting controls, such as contractors being paid for BPAs they never fulfilled or companies secretly run by Metro employees who award themselves BPAs.
Rene Febles supervises two special agents and an auditor for the OIG Office of Inspections, Evaluations and Special Projects and attended Thursday’s board meeting. He explained to The Times that his department chases down leads that aren’t quite audits or investigation.
“Say Sally in procurement is driving a 7 Series BMW she can’t afford,” Mr. Febles said. “Someone calls the hotline. Turns out she is working a $50 million contract, and we hear she and [the] president of that company met on vacation.”
Mr. Cherrington also has hired 13 investigators over the past 18 months in preparation for more oversight of Metro.
• Julia Airey can be reached at jairey@washingtontimes.com.
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