10-28-2015 - 15-101 - Vendor Performance Audit - Citywide – B&D Industries, Inc.
B&D should repay the City for overcharges identified by the audit as follows:
|Overcharges due to quoted work||$7,900|
|Overcharges for Project Management||3,593|
|Costs for Unapproved Sub-Contractors||12,443|
B&D must perform a thorough review of both the Electrical and HVAC On-Call Service Contracts and the associated Request for Proposal and Request for Bid documentation to ensure that required information and documentation is provided with invoices submitted to the City. Preparing cost estimates and obtaining Contract Release Order numbers are mandatory requirements prior to B&D performing Electrical or HVAC work for the City.
The City paid B&D Industries, Inc. (B&D) more than $16.4 million for work performed on all of its contracts during the 5-year period from July 1, 2010 to June 30, 2015. Although B&D has various contracts with the City, the audit was limited to Electrical and HVAC On-Call Service contracts.
Numerous contract requirements were not met by B&D for both of the On-Call Service contracts. As a result, the City was overcharged on some invoices, formal authorization to start work was not obtained by B&D, cost estimates were not provided prior to the performance of services, and subcontractors performed work on City facilities without City approval. One hundred percent of the invoices sampled were missing at least one item required by the contracts. B&D and the City should work together to increase compliance with contract terms. B&D overcharged the City $23,936 on the invoices sampled and should refund the overcharges to the City.
Recommendations & Benefits
By completing a thorough review of the HVAC Request for Bid and Electrical Request for Proposal documentation, along with the resulting contracts B&D can increase compliance by:
- Providing cost estimates for all projects, (and quotes only when required by the contract),
- Obtaining a CRO from the City prior to performing work,
- Identifying additional information required to be included on, or with, invoices submitted for payment,
- Providing support for labor and material costs when invoicing the City,
- Updating internal forms to present required information for City invoices, and
- Ensuring subcontractors have been approved by the City.
By providing all required documentation to support invoices, B&D will help the City process payments quickly.
B&D agrees that additional improvements are needed to ensure that requested invoice information is available to the City. B&D has taken steps to incorporate many of the recommendations into current procedures.