Audit  Audit of the Executive Office of Housing and Livable Communities—Emergency Shelter

1. In cases where increasing demand or foreseeable circumstances are identified, EOHLC should use appropriate procurement processes, such as competitive bidding, to ensure transparency, fairness, and cost-effectiveness.
2. EOHLC should review and adjust its procurement practices to ensure that it complies with Section 22 of Chapter 7 of the General Laws and regulations for emergency contracts, ensuring that all emergency contracts are justified based on unforeseeable events. Emergency contracts should be replaced by properly procured contracts as soon as practicable.
3. EOHLC should limit emergency contracts to no longer than a period of time required to conduct the appropriate procurement processes, including competitive bidding, to ensure transparency, fairness, and cost-effectiveness. In most cases, we would expect emergency contracts to last weeks, not several months.
4. EOHLC should ensure that, before not complying with Section 22 of Chapter 7 of the General Laws, the orders to do so are legal and valid under Chapter 639 of the Acts of 1950.

By not exploring the vendor’s flat-rate delivery offer, EOHLC may have missed an opportunity to lower delivery charges, potentially resulting in higher costs throughout the duration of the emergency contract. Because of EOHLC’s failure to perform its due diligence, we were unable to determine the cost and terms of the flat-rate offer. Therefore, we could not determine the cost savings that EOHLC may have received from accepting a flat-rate delivery offer because EOHLC never responded to Spinelli’s offer or considered this option.

Because EOHLC did not maintain a sufficient procurement file, as required by 801 CMR 21.05(3), it cannot be determined whether the vendor it chose was the best option for EOHLC, the people who were being served, or the taxpayers. Without a complete procurement file, the public cannot examine the processes used, which erodes public trust and undermines faith in EOHLC, its procurement process, and the government in general.

1. During an emergency, EOHLC may be forced to use no-bid procurement, but it has an obligation to use the normal procurement processes as quickly as possible to address longer-term procurement needs.
2. EOHLC should follow state regulations by creating and maintaining a procurement file with sufficient evidence and should establish a formal process for documenting and considering cost-saving opportunities to avoid wasting taxpayer resources.
3. EOHLC should ensure that all vendor proposals, including alternate pricing structures like flat rates, are thoroughly evaluated in all contracts, including no-bid or emergency contracts, and are documented in a procurement file.

1. EOHLC should implement a formal process for verifying that vendor invoices, specifically delivery charges, align with contracted rate sheets. This should include regular internal audits of vendor charges to ensure accuracy and prevent future discrepancies. EOHLC should review all invoices before submitting payments. If discrepancies in the invoices are identified, EOHLC has an obligation to resolve these discrepancies before submitting payment.
2. EOHLC should address these discrepancies with Spinelli and seek clarification or adjustments for the incorrect charges.

1. EOHLC should review and approve all subcontractors in accordance with the terms and conditions of its contracts.
2. Because of the violation of the contracts’ terms and conditions by SKS, regarding the use of unapproved subcontractors, EOHLC should pursue repayment from SKS for unapproved expenses charged to EOHLC.

The financial impact of these high fees could limit the agency’s ability to provide sufficient transportation services or exacerbate financial strain on shelter programs. Additionally, the lack of competitive bidding for this contract raises concerns about inflated pricing and a lack of market comparison, further limiting the effectiveness of this arrangement in terms of cost-efficiency and transparency.

The billing inconsistency could result in excessive costs for transportation services under the EA Family Shelter Program. Furthermore, the charge for an intra-parking lot trip may undermine the integrity of the contracting process, as it calls into question the appropriate use of emergency funds for services that do not appear to meet the criteria for emergency transportation.

The substantial charges resulting from no-shows and cancelations represent a significant financial burden on the program. Without a structured process to monitor and address these issues, the potential for continued or increased costs remains, reducing the overall efficiency of the EA Family Shelter program.

The overall lack of internal controls in these transportation services erodes public trust and undermines faith in the validity and accuracy of these services and their costs. It also undermines the public’s faith in government, as there is no reasonable assurance that trips that were charged for were actually appropriate or accurate.

1. EOHLC should initiate a competitive bidding process whenever possible to ensure the best value for taxpayers, including more cost-effective contracts based on regional demands for transportation services. While EOHLC argued that there was an emergency and that it needed to provide transportation services to solve a short-term problem, EOHLC should use the normal procurement processes as soon as possible. EOHLC has a fiduciary duty to ensure that no-bid contracts are used sparingly and only when appropriate.
2. EOHLC should create and maintain a sufficient procurement file and should establish a formal process for documenting and considering cost-saving opportunities to avoid wasting taxpayer resources.
3. EOHLC should evaluate the reasonableness of the fare structure in comparison to industry standards and adjust as necessary to ensure that transportation costs do not exceed reasonable limits.
4. EOHLC should review the specific circumstances surrounding the charge for the 223-foot trip with Mercedes Cab Company / Pilgrim Transit to ensure that such charges are reasonable and consistent with the contractual terms.
5. EOHLC should review the ride to a health care facility that 55 individuals took in one trip, costing $4,651.30. We recommend establishing a policy to require a review and prior approval for large-scale transportation requests, particularly in cases where the request appears disproportionate to the nature of the event or need.
6. EOHLC should first consider using public transportation options to reinvest in the Massachusetts Bay Transportation Authority and regional transit authorities before entering into a no-bid contract with a more costly, private transportation company.
7. EOHLC should establish clear guidelines to increase accountability regarding the minimum acceptable distance for rides and review the process for approving and billing transportation requests to prevent similar issues from arising in the future.
8. EOHLC should implement enhanced oversight procedures to verify that charges are justified and in line with the stated objectives of the EA Family Shelter program.
9. EOHLC should implement stronger controls and monitoring mechanisms (a) to minimize the occurrence of no-shows and cancelations and (b) for when a ride can be requested, canceled, or classified as a no-show.
10. EOHLC should regularly review cancelation and no-show patterns and work with Mercedes Cab Company / Pilgrim Transit to address any underlying issues contributing to the high volume of cancelations. Implementing these measures could help mitigate unnecessary costs and improve the overall efficiency of transportation services provided under the EA Family Shelter program.

Noncompliance with contractual payment terms constitutes a serious risk of financial mismanagement, which not only compromises accountability but also can erode the trust that is essential between EOHLC and shelter providers. Moreover, inaccuracies in payment processing can have negative impacts for shelter providers, leading to substantial financial strain. Such adverse financial conditions may severely impair EOHLC’s ability to deliver vital services, ultimately jeopardizing the welfare of the people and communities it serves.

Additionally, EOHLC has a fiduciary duty to ensure the accuracy and integrity of invoices for contracted services. Regardless of whether this occurred during an emergency or not, EOHLC at all times must perform reviews so that it is only paying for services that were actually performed and that comply with the requirements of contracts.

Recommendations

1. EOHLC should implement stronger monitoring procedures to verify that all payments to shelter providers align with the negotiated terms in their contracts. EOHLC may have required services not anticipated or included in its contracts with the different types of shelter providers. However, EOHLC should amend the contracts or draft new contracts to cover these services in order to provide full transparency in government.
2. EOHLC should ensure that all charges are pre-approved, contractually authorized, and properly documented before processing payments. EOHLC should ensure that it complies with contract terms and payment approval procedures to avoid similar issues in the future.
3. EOHLC should limit the use of gift cards, and in instances where it does allow them, EOHLC should implement stronger control mechanisms like those required for other public benefit programs within the Department of Transitional Assistance to prevent potential abuse or misspending of taxpayer-funded benefits.