City audit reveals critical flaws in vendor management system

In a recent government meeting, officials presented findings from an audit of the city's vendor management activities, revealing significant insights into the procurement process and areas for improvement. The audit, which evaluated vendor due diligence, contract management, and vendor information administration, highlighted that the city authorized approximately $965 million in vendor contracts during fiscal years 2022 and 2023.

The audit outlined three key phases of vendor management: solicitation, contracting, and contract management. It emphasized the importance of due diligence in ensuring vendors are reputable and capable of fulfilling their obligations. While the city’s solicitation processes were found to comply with Texas state procurement regulations, the audit recommended the development of written guidance for enhanced due diligence, particularly concerning cybersecurity risks.

Additionally, the city has initiated a commitment to inclusion policy aimed at increasing procurement from historically underutilized businesses. The audit suggested that procurement transparency could be improved by capturing more detailed information on hub eligibility and reporting utilization to the public annually.

The report also pointed out inefficiencies in the solicitation and contract execution processes, which often took longer than expected due to departmental delays. To address this, the audit recommended that procurement update timeliness expectations to assist departments in planning.

Contract management emerged as another critical area needing attention. The audit found limited resources and training for staff, leading to inconsistencies in contract execution and payment processes. Recommendations included creating a formal contract management program and providing periodic training to enhance staff capabilities.

Furthermore, the audit raised concerns about the accuracy of vendor information in the city’s financial system, noting that access to update vendor information was not adequately restricted. It recommended establishing separate security roles to prevent conflicts of interest and ensure the integrity of vendor data.

In total, the audit issued 14 recommendations, all of which were agreed upon or partially agreed to by the departments involved. A follow-up review is planned for fiscal year 2028, coinciding with the implementation of a new enterprise resource planning system. The findings underscore the city's commitment to improving vendor management practices and ensuring accountability in its procurement processes.