By Len Lazarick and Diane Rey
In four reports released in the past week, state auditors found:
- potential shady contract deals at the Maryland Transit Administration that they referred for prosecution,
- persisting problems at local social services agencies,
- problems in verifying that Marylanders with developmental disabilities are getting the help they need.
- and failure to follow state procurement regulations and check residency requirements at a state university,
Mass Transit Administration contracts
In response to a call to its waste, fraud and abuse hotline, the Office of Legislative Audits investigated complaints about contracting at the Maryland Transit Administration, which runs the buses, subway and light rail line in the Baltimore region.
“Our review disclosed that MTA included language in certain contracts that allowed its employees to circumvent State procurement regulations by directing the contractors to use specific vendors as subcontractors,” chief legislative auditor Gregory Hook said in a letter to lawmakers. “The MTA management employee used this capability to direct work to specific vendors as subcontractors including one vendor with which the management employee had less than an arm’s-length relationship (related vendor). The related vendor was paid $3 million for the subcontracted work. Due to the questionable nature of certain of this activity, we referred this matter to the Office of the Attorney General – Criminal Division. We also identified possible violations of State ethics law that may require referral to the State Ethics Commission.”
“Our review also identified questionable procurement and contract monitoring practices, which may have limited competition and precluded effective monitoring of contracts and related payments,” Hook said. Contracts were issued without proper approval, and payments were made without invoices to back up the work.
Four contracts for snow and ice removal totaling $6.2 were issued to a contractor that the project manager had a relationship with.
It is standard practice in the public audit reports not to name specific individuals.
In response to the audit, Secretary of Transportation Pete Rahn said, “We take the audit findings very seriously. We have resolved many areas of concern and are actively working towards compliance with the remaining report recommendations in a manner outlined in the responses.”
The agency said the unnamed management employee was removed as project manager on the contracts and is under investigation by the Attorney General’s Office. MTA also took a number of other actions to clean up its contracting, as recommended by the auditors.
Social Services Administration audit
In a report on the Social Services Administration, state auditors followed up on fairly negative 2017 review of the practices by the local social service agencies that administer a wide range of programs on child welfare, foster care, child protective services, adoption and the federal payments that go along with these services. The auditors made 14 recommendations to improve the programs. Last summer, they re-examined the progress made on 6 of them.
“SSA had made some progress, although not necessarily consistent with its stated corrective action plan but, nevertheless, had not resolved these 6 findings,” Hook said in his letter sending the report to the legislature’s Joint Audit Committee. “We have concluded that, for certain recommendations, the implementation of more comprehensive policies and procedures than we found to exist at the time of our review would be beneficial in the delivery of services and safeguarding of State assets.”
Developmental Disabilities Administration
An audit of Developmental Disabilities Administration under the Maryland Department of Health revealed problems in verifying that Marylanders with developmental disabilities are getting the help they need.
The report uncovered deficiencies in how the DDA monitors agencies charged with ensuring consumers are receiving required services from providers.
According to the report, over a two-year period, DDA’s Coordination of Community Services agencies failed to provide paperwork verifying in-person visits “for 97 percent of the approximately 15,000 applicable consumers.” It noted that less than half of the 8 required quarterly monitoring forms were filed for more than 50% of those consumers.
The report pointed to insufficient training and instruction as a contributing factor. In response, the DDA has set a February deadline to complete a webinar training module for CCS agencies to use.
The audit also found that CCS agencies’ documentation failed to make clear that those with developmental disabilities had received required services or were making progress toward the goals of their individual plans as filed with the DDA.
Maryland Department of Health Secretary Robert Neall said he welcomed the audit’s checks and balances of a large and complex program as a way to “create and maintain a good government.”
“You’ve got all sorts of federal and state regulations that have to be complied with. It’s a complicated business. We strive to comply but if we’re found in error, we strive to correct it,” he said.
The DDA funds services to consumers through a combination of private licensed Medicaid providers, not-for-profit licensed Medicaid providers, local health departments and other agencies. Services include residential living arrangements — the largest expenditure — supported employment, and habilitative services.
According to the report, DDA’s payments to service providers totaled $1 billion during fiscal year 2017. As of Dec. 31, 2017, 22,557 people were receiving services from DDA, with 5,955 people on a waiting list.
DDA had contracts with 17 CCS agencies around the state – 12 local health departments and 5 private companies. The private companies handled 85% of the caseload. DDA paid the CCS agencies $48 million in 2017.
University of Maryland Eastern Shore
In a routine financial audit of the University of Maryland Eastern Shore, Hook told legislators:
“Our audit disclosed that UMES needs better oversight of its contract monitoring and procurement practices. UMES improperly deposited $1.3 million in income received from its food service vendor with the USM Foundation rather than with the State Treasurer as required by USM [University System of Maryland] policies. UMES management advised us that most of these funds had been spent by the Foundation and were not subject to various USM procurement policies and procedures.
“We also noted that UMES did not comply with USM policies for procurement transactions totaling $1.5 million. For example, architectural and engineering services were procured directly and were not managed by USM’s applicable service center, as required. In addition, UMES did not adequately monitor its food service vendor to ensure required operational investments were made and proper commissions were received.
“Our audit also disclosed several internal control deficiencies relating to student accounts receivable, cash receipts, and employee access to UMES’ financial systems. For example, UMES lacked proper controls over student residency determinations and changes, certain non-cash credits, and financial aid awards recorded in student accounts,” Hook said.
Overall most of the findings from the previous audit of UMES three years ago have been corrected, and the university is working on the others.
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