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The audit of Selected Job Order Contract Construction Contracts was performed to review compliance with contract terms and evaluate the effectiveness of contract administration. Job order contracting (JOC), which uses individual job orders written against a “master” contract, is one method the City’s Capital Project Management (CPM) staff uses to procure construction services.
Auditors selected three JOC contracts and reviewed one construction project for each contract. Payments for these three JOC contracts totaled about $9.5 million in FY2016/17 and are estimated to total about $9.1 million in FY2017/18.
Negotiating the cost for individual projects is critical to ensuring the City receives quality work at a fair and reasonable price. The audit found that cost controls should be improved in the proposal evaluation phase. Guidelines have not been established for evaluating and negotiating JOC proposals, and subcontractor selection requirements were not enforced. Further, some required project approvals were not obtained, and one reviewed project appeared to have been split to bypass the individual job order limit.
More effective cost controls are also needed during the project delivery phase. CPM staff did not compare the subcontractors used to those submitted in the proposal, and did not always ensure required reviews and approvals were obtained for contractor pay requests. Further, CPM did not effectively ensure the required performance and payment bonds were provided.
As well, improved records retention practices and contract documentation can improve efficiency and consistency of contract administration.