Audit Release: Significant Cost Savings Can Be Achieved by Modernizing Oregon’s Procurement Systems and Practices


Report Highlights

The Department of Administrative Services (DAS) has taken steps to develop a strategic approach for procuring goods and services more efficiently and at lower costs. However, a lack of detailed purchase data inhibits the agency’s ability to analyze its spending, resulting in missed opportunities for potentially millions of dollars in cost savings. Additionally, although the Office of the State Chief Information Officer (OSCIO) has made some improvements in project oversight processes for major information technology (IT) procurements, those processes remain immature, resulting in inefficiencies and confusion for state agencies.

Background

DAS has the authority and responsibility to oversee procurements for state agencies. The OSCIO, a component of DAS, is responsible for overseeing major IT procurements conducted by the state. The OSCIO also has authority to require agencies to obtain independent quality assurance (QA) for IT projects.

Purpose

The purpose of this audit was to determine whether DAS has implemented effective processes to reduce risk and minimize costs associated with IT procurements. Furthermore, we sought to determine whether costs for QA services for major IT investments align with best practices and are appropriately independent.

Key Findings

  1. Due to reliance on legacy systems and outdated procurement processes, DAS Procurement Services does not adequately analyze state spending data. As a result, during the 2015-17 biennium, the state missed the opportunity to potentially reduce costs between $400 million and $1.6 billion based on DAS Procurement Services’ estimate of $8 billion in procurements during that time.
  2. Although efforts to improve procurement efficiencies and reduce costs through Oregon’s new Basecamp program generally align with best practices, the effectiveness of these efforts is limited due to a lack of detailed purchase data.
  3. The OSCIO has made progress in establishing oversight processes to mitigate significant procurement risks associated with major IT projects. However, some processes remain immature, and lack of training and guidance have contributed to confusion and frustration for agencies with projects subject to OSCIO oversight.
  4. The cost for QA services is below industry norms, averaging 3.5% of total project costs, with a median of 5.1%. Additionally, controls are appropriate to ensure QA remains independent, but report tracking should be strengthened.

Recommendations

Our report includes one recommendation to DAS to modernize strategic sourcing efforts and four recommendations to the OSCIO to strengthen IT investment oversight processes. DAS and the OSCIO agreed with all of our recommendations. The agency’s response can be found at the end of the report.

Read full report here.

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Audit Release: Higher Education Coordinating Commission Needs to Address Weaknesses in Procurement Practices

Report Highlights


The Secretary of State’s Audits Division found that the Higher Education Coordinating Commission state agency’s (HECC) current procurement practices are exposing the agency to legal, security, and public perception risks. Overall, HECC lacks an effective procurement system to ensure services and goods are procured in compliance with state laws.

Background

HECC is responsible for funding and coordinating public higher education in Oregon. It was established in 2011 as a volunteer commission to focus on strategic planning for public postsecondary education in the state. HECC’s structure has expanded and now consists of an established state agency with 115 budgeted full time equivalent positions in eight offices.

Purpose

The purpose of this audit was to review procurement practices at HECC and identify opportunities to improve current practices.

Key Findings

Within the context that state procurement rules are complex and intended to benefit the state as a whole, we found that:

  1. HECC leadership has not implemented a governance structure to ensure procurements are made in compliance with state laws and rules.
  2. Of the 748 HECC contracts and agreements open from November 2016 to March 2017, 65% were executed after their effective date and 53 or 7% were considered backlogged.
  3. A lack of clearly defined procurement roles and responsibilities and insufficient training has created confusion and inconsistent procurement processes and practices across the agency.
  4. HECC current practices are noncompliant with state procurement laws and rules, exposing the agency to legal, security, and public perception risks.
  5. To reach our findings we conducted interviews and reviewed agency documents, state procurement laws and rules, contract files and agreements, accounting records, and other accounting supporting documentation.

Recommendations

To establish and maintain a robust procurement process, we recommend HECC create a governance structure that clearly defines procurement roles and responsibilities and fully develops, implements, and trains staff on procurement roles, policies, processes, and procedures. We also recommend HECC management ensures consistent adherence to state procurement law and rules.

The Commission generally agrees with our findings and recommendations. Their response can be found at the end of the report.

Read the full report here.

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Governing Repost: Lessons from Georgia, the No. 1 Procurement State

In February, Governing released a report ranking 39 states based on their procurement policies. They were ranked in 10 categories, including their use of technology, how they engage with vendors and how effectively central procurement offices work with agencies.

Six states stood out as top performers: Georgia in the lead, followed by Virginia, Minnesota, Utah, and, tied for 5th place, Massachusetts and Ohio.

Why did Georgia stand out when it came to implementing effective procurement policies? Read more here in Katherine Barrett and Richard Greene’s interview with the deputy commissioner of the Georgia procurement office, Lisa Eason.

Where did Oregon rank, and what are its strengths? Read the original report by Liz Farmer here, or consult the graphic below:

 

GOV03_Procurement-infographic-web

 

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