Report on Tasks Performed at the Request of the County Attorney s Office Regarding Broward County s Disadvantaged Business Enterprise (DBE) Program

Transcription

1 Report on Tasks Performed at the Request of the County Attorney s Office Regarding Broward County s Disadvantaged Business Enterprise (DBE) Program July 10, 2008 Report No Office of the County Auditor Evan A. Lukic, CPA County Auditor

2 Table of Contents Topic Page Executive Summary... 3 Objectives... 5 Methodology... 5 Background... 6 Finding... 7 Recommendations Appendices Office of the County Auditor 2

3 Executive Summary This report presents the results of our efforts to assist the County Attorney s Office in obtaining, summarizing and reconciling certain information regarding Broward County s Disadvantaged Business Enterprise (DBE) Program administered by the Office of Equal Opportunity (OEO). The scope of this project was limited to tasks specifically requested by the County Attorney as identified in Table 1 below. Table 1 Status of Tasks Requested by County Attorney. Task Task Description Status Comments A. Obtain a Comprehensive List of all projects with Federal funding and/or DBE goals initiated during fiscal years 2005, 2006, 2007 and eight months ending May 31, 2008 from OEO. Completed See Appendix 1 for BCAD projects and Appendix 2 for OT projects 1. Request that Broward County Aviation Department (BCAD) and Office of Transportation (OT) review the List supplied by OEO for completeness against their internal records 2. Update the List with any additional projects identified by BCAD or OT. Total all contract amounts separately for BCAD and OT B. Identify all projects on the Comprehensive List with DBE Goals assigned C. Identify all projects on the Comprehensive List with no DBE Goals assigned D. Ascertain the Methodology used by OEO to determine whether DBE goals should be set. E. Ascertain how DBE contract goals are determined by OEO. 1. Determine if there is written criteria Completed Identified in Appendices 1 & 2 Completed Identified in Appendices 1 & 2 Unable to Complete Unable to Complete The list provided by OEO indicated 28 DBE projects. 1. In addition to the reviews by BCAD and OT, we reviewed Commission agendas to ensure completeness of the List supplied by OEO. 2. An additional 131 projects were identified and included on the list as a result of the reviews. 3. Projects were included in two separate lists, one for BCAD (Appendix 1) and one for OT (Appendix 2). See Comments in A above See Comments in A above OEO does not have sufficient written criteria or other documentation to enable verification of the methodology used. OEO has not consistently maintained documentation supporting the determination of goals. Office of the County Auditor 3

4 Task Task Description Status Comments 2. Determine if the criteria was followed 3. Determine if the goal setting analyses are documented F. Reconcile the List of projects with: 1. The Overall Annual DBE Methodology Goal Reports and 2. The Uniform Reports of DBE Commitments/Awards and Payments (Uniform Reports). G. Test the mathematical accuracy of the Overall Goal Methodology Reports and recalculate the overall goals based solely on the amount of federal funds H. Ascertain the Methodology used by OEO for setting race neutral/race conscious goals as reported in Overall Annual DBE Goal Methodology Reports Incomplete Unable to Complete Unable to Complete 1. We identified projects within the List and not included in the Overall Annual DBE Methodology Goal Reports for BCAD. We did not reconcile the OT List to the DBE Methodology Goal Reports due to time constraints. 2. We were unable to reconcile the List to the Uniform Reports for BCAD and OT, due to time constraints and delays in obtaining information; however, we identified the following differences: o o o One federally funded project on the List was not reported on the Uniform Reports. (Appendix 1 # 6) Certain non-federally funded projects with assigned goals were included on the List but not on the Uniform Reports. (Appendix 1, # 1,3,5,8,10,11,12,13,14,and 18) Some projects were reported using total project dollars (Appendix 3), while other projects were reported using only federal funding. (Appendix 4 & 5) o Projects reported in different fiscal years on the List than on the Uniform Reports. (Appendix 5) The calculations for the overall annual goals are mathematically accurate based on the information provided in the Overall Annual DBE Methodology Goal Reports; however due to the absence of complete information (e.g., federal dollars awarded), we cannot recalculate the overall goal based solely on the amount of federal funds. We were unable to ascertain the methodology used because OEO does not have sufficient written procedures to re-perform the methodology or other documentation used in the Overall Annual DBE Goal Methodology Reports. Office of the County Auditor 4

5 We were not requested to, nor did we, perform an evaluation of OEO s activities, policies and procedures for compliance with relevant federal regulations. Likewise we were not requested to, nor did we, evaluate the sufficiency of the requested tasks in light of the legal challenges to the DBE program. Throughout the completion of our work we relied upon the County Attorney s guidance in relation to the aforementioned matters. However in completing the requested tasks, we noted serious deficiencies in the administration of the DBE Program including: Inadequate documentation to support the calculation of DBE contract goals. Documentation to support the calculation of Overall DBE Methodology Goals was not maintained. Inaccurate and untimely submission of reports required by federal regulatory agencies. Procedures and controls to ensure consistent and compliant DBE program administration are lacking. We conclude that program administration is inadequate to ensure program accountability and compliance with federal requirements. Objectives As indicated above, the nature and scope of our efforts were limited by the Office of the County Attorney to obtain, to summarize and reconcile information related to the County s DBE program for fiscal years 2005, 2006, 2007 and for the eight months ended May 31, Our objectives were to provide the requested information and complete the summary and reconciliation in a timely manner. Methodology To accomplish our objectives we: Interviewed staff from the OEO, OT, BCAD and County Attorney Staff. Obtained list of projects from OEO. Obtained a copy of the DBE project database maintained by OEO. Compiled the two Comprehensive Lists of projects, one for BCAD (Appendix 1) and one for OT (Appendix 2). Reviewed a sample of project files to determine how goals were assigned. Office of the County Auditor 5

6 Reviewed Commission agenda items to identify any additional OT or BCAD construction projects 1. Obtained OT and BCAD Overall Methodology Goal Reports for the fiscal years 2005, 2006, 2007 and eight months ending May 31, Obtained the OT and BCAD Uniform Report of DBE Commitments/Awards and Payments (Uniform Report) submitted to the Federal Agencies for 2005, 2006 and Obtained OT Amended Uniform Reports for 2005 and As of the date of our report, these Uniform Reports were not submitted to the FTA. Obtained OT Uniform Reports for 2007 provided to OEO Compared Comprehensive List to Uniform Reports. Compared Comprehensive List to Overall Annual DBE Methodology Goal Reports. Traced all information in Appendices 1 & 2 for projects with goals to supporting documentation. Background Overview of the Federal DBE Program The United States Department of Transportation (DOT) first created its Disadvantaged Business Enterprise program in 1998 as part of the Transportation Equity Act for the 21 st Century (TEA-21). The general goals of the program are to prevent discrimination against disadvantaged business enterprises (DBE) through the creation of a level playing field in which DBE s can compete fairly for DOT assisted contracts. To accomplish these objectives, DOT s program requires that a portion of the funding distributed for transportation related construction projects be expended with small business concerns owned and controlled by socially and economically disadvantaged individuals. 2, 3 Each year, recipient agencies establish an overall DBE program goal and submit a report to the DOT outlining the methodology used to develop the goal. The report is to include a discussion of any calculations that were made in establishing the goal and the evidence that was considered. In general, the annual overall DBE program goal is to be developed based upon factors including the amount of DOT funding to be 1 Broward County Administrative Code requires that all construction contracts in excess of $250,000 be approved by action of the Board of County Commissioners. Therefore, a review of agenda items was determined to be a reasonable method of identifying larger construction projects initiated by BCAD or OT. 2 Source: DOT webpage; DBE Background; CFR Part 26.5 defines the term Socially and Economically Disadvantaged Individual to mean any individual who is a United States citizen and who is a member of any of the following groups who are rebuttably presumed to be socially and economically disadvantaged: Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans, Subcontinent Asian Americans, Women or individuals or groups who may also be found to be disadvantaged. Office of the County Auditor 6

7 received, the type of projects anticipated for the upcoming year, the availability of ready, willing and able DBE relative to all businesses, and the levels of prior DBE participation in recent years. Individual project goals are established in support of the overall DBE goal. While it is not necessary for all projects to have goals, the cumulative result of all DBE participation should meet the agency s overall goal. The DOT requires recipient agencies to report DBE participation for both awarded and completed contracts using the Uniform Report of DBE Awards or Commitments and Payments form. FTA funded programs are required to report semi-annually and FAA funded programs are required to report annually. Broward County DBE Program Administration In Broward County, the Office of Equal Opportunity (OEO) is responsible for the coordination of the DBE programs for DOT funding received by BCAD and OT. According to Broward County Administrative Code, Chapter 13.4.b, specific responsibilities of the Small-Minority Business Affairs Section of OEO in relation to the DOT DBE program include: Establish and maintain communications with federal and state funding agencies which require minority, women or disadvantaged business participation program plans; and act as the County liaison with such agencies to ensure that the County meets or exceeds requirements for federal and state aid. Monitor compliance with federal, state, and local laws, or regulations regarding minority or small disadvantaged business enterprise participation. 4 OEO develops the participation methodology used to establish overall County goals, certifies DBE vendors, sets individual contract goals and completes and submits required reports to the FAA and FTA. BCAD and OT work with OEO staff providing information regarding planned projects, estimated contract amounts, federal funding, and once contracts are executed, DBE commitment levels and actual payments made to DBE. Finding Administration of the DBE Program is inadequate to ensure program accountability and compliance with federal requirements OEO does not have adequate controls in place to ensure consistent and reliable administration of the County s DBE program. This has been evidenced by the following deficiencies: 4 Locally, the Broward County Business Opportunity Act of Office of the County Auditor 7

8 Project files lack sufficient documentation to support the calculation of DBE contract goals. Documentation to support the recalculation of Overall DBE Methodology Goals is not maintained. Inaccurate and untimely submission of reports required by federal regulatory agencies. Procedures and controls to ensure consistent and compliant DBE program administration are lacking. Project files lack sufficient documentation to support the calculation of DBE contract goals OEO s project files were not consistently maintained and were missing important elements necessary to support the goal setting methodology employed for each project. Files should contain sufficient information to 1) support the judgments and conclusions made in identifying the goals and 2) enable recalculation of the goals. We reviewed 55 DBE project files maintained by OEO for fiscal years 2005 through May 30, Of these files, 27 projects were assigned DBE goals. Individual project goals were not supported by adequate documentation. All 27 files were missing one or more supporting elements as noted in Exhibit 1 below. As a result of the missing documentation, we were not able to verify the methodology used to set goals or recalculate the goals assigned. Exhibit 1: Summary of DBE program files with missing or insufficient documentation to support goal setting methodologies Supporting Documentation Documentation Not in File Documentation in File Goal setting methodology or calculation 3 24 Rationale for selecting scope of work 25 2 Explanation for NAICS codes assigned to selected scopes of 22 5 work DBE Availability calculation 3 24 Documentation to support DBE availability calculation 27 0 Some indication that DBE directory is updated to remove decertified DBEs or add DBEs from other supplementary sources 26 1 Base goal matches the percentage of DBE eligible firms 27 0 Documentation to support adjustment to base goal (Step 2) Source: Office of the County Auditor analysis of OEO project files Office of the County Auditor 8

9 Documentation to support the recalculation of Overall DBE Methodology Goals was not maintained OEO has not maintained supporting documentation for the Overall Annual DBE Methodology Goal Reports for BCAD and OT, including: Available DBE Firms All Firms, and Past DBE Participation In the absence of these items, OEO cannot demonstrate that the established goals were calculated in accordance with federal guidelines. Inaccurate and untimely submission of reports required by federal regulatory agencies OEO reports Broward County s attainment of established DBE goals by submitting a Uniform Report of DBE Awards/Commitments and Payments to the FAA and FTA. In reviewing these reports, we noted that OT prepared amended Uniform Reports for 2005 and 2006 and all Uniform Reports were filed late to the FAA and FTA. Subsequent to OEO filing the 2005 and 2006 OT Uniform Reports with the FTA, OT prepared amended reports (Appendix 6A, 7A, 8A, 9A) that were substantially different. OT management stated that these amended reports were based on the federal funded portion of the project and not the total project amount. We noted that the Uniform Reports were not consistently prepared. Some were based on total project funding; others were based on federal funding only. In an effort to determine if the Uniform Reports were submitted to DOT regulatory agencies in a timely manner, we requested that OEO provide us with documentation to support the submission dates of each report. In a June 26, 2008 memorandum to our office, OEO identified report submission dates. Exhibit 2 on page 10 compares the due dates for each Uniform Report with OEO s stated submission date. Office of the County Auditor 9

10 Exhibit 2: Comparison of Uniform Reports Submission Dates to Due Dates Report Regulatory Agency** Reporting Time Period** Report Due Date** Submission Date** # of Days Late Appendix # FAA FTA 10/1/04-9/30/05 12/1/ /12/ /1/05-9/30/06 12/1/2006 3/21/ /1/06-9/30/07 12/1/2007 6/10/ /1/04-3/31/05 6/1/2005 Not provided Unknown* N/A 4/1/05-9/30/05 12/1/2005 January 2006* at least /1/05-3/31/06 6/1/2006 Not Dated Unknown* 8 4/1/06-9/30/06 12/1/2006 June 2006* Unknown*** 9 10/1/06-3/31/07 6/1/2007 6/5/ /1/07-9/30/07 12/1/2007 6/5/ /1/07-3/31/07 6/1/2008 Not Submitted 30 N/A (as of July 1) * Specific report submission date not provided ** Source: Uniform Reports provided by OEO *** Report submission date occurs before period end date Procedures and controls to ensure consistent and compliant DBE program administration are lacking We requested all applicable procedures and/or written criteria and guidelines developed by OEO staff. OEO managers stated that their staff use Federal Regulations and Broward County s Administrative Order #862 (AO 862) to assist them in program administration and oversight. While AO 862 and the Federal Regulations may provide useful information outlining the overall goals and objectives of the program and OEO s general responsibilities in their administration, they are not sufficiently detailed to guide OEO staff in: Establishment of overall program goals, Assignment of individual project goals, Tracking, monitoring and reporting of program participation, Documenting the calculation of overall goals and project specific goals, and Performing monitoring and supervisory reviews of staff activities. Maintenance of detailed procedures mitigates disruption from staff turnover and provides for improved consistency in application of policy and program requirements. We noted controls to ensure that all projects subject to DBE participation goals are reported to OEO are lacking. And, a comprehensive listing of all projects with federal funding and/or DBE goals is not maintained. Without a complete list, management Office of the County Auditor 10

11 cannot be assured that DBE participation goals will be appropriately assigned or achieved; or if the information contained in the Uniform Reports is complete and accurate. Recommendations We recommend the Board of County Commissioners direct the County Administrator to: 1. Establish adequate controls to ensure the accurate and complete tracking and reporting of all projects subject to DBE participation goals and attainment levels. 2. Take immediate action to submit the Uniform Report that was due to the FTA June 1, Take steps to ensure all future Uniform Reports are submitted by required due dates. 4. Develop, with the assistance from the County Attorney s Office, comprehensive operating procedures to ensure that the DBE program is consistently administered in compliance with federal guidelines to include: A. Sufficiently detailed procedures to guide staff in all aspects of program operations (e.g., goal setting and program reporting) B. Mandatory training of staff in the application of federal program requirements C. Adequate supervisory review and oversight of program activities and staff D. Minimum documentation requirements and retention standards Office of the County Auditor 11

12 Appendices Description Comprehensive List of BCAD DBE Projects Eligible DBE Projects and Projects Assigned DBE Goals Initiated during Fiscal Years 2005 through Comprehensive List of OT DBE Projects Eligible DBE Projects and Projects Assigned DBE Goals Initiated during Fiscal Years 2005 through Copies of BCAD Uniform Reports OF DBE COMMITMENTS/ AWARDS AND PAYMENTS submitted to the FAA for fiscal years 2005, 2006 and 2007, respectively. Copies of OT Uniform Reports OF DBE COMMITMENTS/ AWARDS AND PAYMENTS submitted to the FTA for fiscal years Copies of OT Amended Uniform Reports OF DBE COMMITMENTS/ AWARDS AND PAYMENTS that were not submitted to the FTA for fiscal years 2005 and Copies of OT Uniform Reports OF DBE COMMITMENTS/ AWARDS AND PAYMENTS that were submitted to OEO but not submitted to the FTA for fiscal years Appendix No A, 7A, 8A, 9A 10A, 11A Office of the County Auditor 12

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