Executive Office of Housing and Livable Communities—Emergency Shelter - Finding 3

The Executive Office of Housing and Livable Communities exercised insufficient oversight of its delivery contract with Spinelli, resulting in overpayments on 9.6% of deliveries.

Overview

EOHLC did not ensure that the food delivery rates charged by Spinelli were in alignment with the delivery rate sheet provided. This delivery rate sheet specified the delivery charges for various cities and towns throughout Massachusetts. However, upon analyzing the monthly invoices, we identified both overcharges and undercharges in the delivery rates billed to EOHLC. These discrepancies were not in accordance with the rates outlined in the official delivery rate sheet from Spinelli. Specifically, deliveries to certain cities and towns were charged higher than the stipulated rates, while others were charged less than the contracted rates.

Specifically, out of 5,142 deliveries made, we found that Spinelli overcharged¹⁷ EOHLC for 493 deliveries (9.6% of deliveries) that had a total overcharge of $4,136. In total, 11.6% of all deliveries were charged incorrect rates. EOHLC was unaware of these overcharged payments until we brought them to its attention. The rate of incorrect charges signals a need for additional controls and oversight over processes and procedures regarding these deliveries.

Overcharges resulted in EOHLC paying more than the contracted rates for delivery services, which constitutes a risk to EOHLC’s financial integrity and ensuring compliance with contractual terms. EOHLC has an obligation to ensure the accuracy and integrity of the invoices it receives from contracted vendors and, as stewards of public money, that it reconciles invoices and pays vendors correctly.

Authoritative Guidance

The overpayments that we identified appear to indicate that EOHLC did not review the invoices before making payments as required by the terms of its contract with Spinelli.

Attachment A of the Executive Office of Housing and Livable Communities Emergency Assistance Shelter Meal Service Scope of Services contract states the following:

V.   Payment Mechanisms, Fiscal Obligations, and Prior Approvals

2.   Invoicing:

Requests for payment by cost reimbursement will be honored and funds will be released based on submission by the Contractor, with review and acceptance by EOHLC, of required data and reports as detailed in this Contract . . . .

Best practice dictates that an agency should review all invoices for accuracy before submitting payments to ensure that the agency is not paying or paying in excess for contracted services.

Reasons for Noncompliance

EOHLC officials stated that they performed a visual inspection of the invoices but did not specifically verify the accuracy of the delivery charges and that the delivery charges aligned with the contracted rate sheets.

Recommendations

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.

Auditee’s Response

EOHLC disagrees that the overpayment of 0.02% of costs under the contract supports a finding of insufficient oversight, but acknowledges that improvements made since the audit period have increased oversight efforts.

Spinelli’s provided approximately 487,373 meals for families and children, at a total cost of $9,446,698. The SAO report asserts $4,136 in overcharges by Spinelli’s, as well as $1,686 in undercharges. The report identifies $2,306 in net overpayments out of a contract with total costs of nearly $10 million, an error rate of just 0.02%. This tiny error rate—just one-fiftieth of one percent—cannot justify a finding of systematic overpayment.⁵

EOHLC is committed to proper invoice review and approval processes. Since the audit period, EOHLC independently bolstered its invoice review process and implemented formal processes for verifying vendor invoices against contract terms and our data. In 2024, EOHLC launched . . . an internal tool for storing formal standard operating procedures agency-wide. [This tool] also contains specific invoice review procedures and the roles and responsibilities of all involved, from program staff to the fiscal team. Moreover, EOHLC added additional staff at varying levels who touch the invoice process. EOHLC further addresses errors in invoices pursuant to the Office of the Comptroller’s Bill Payment Policy.

[. . .]

5.   In a recent report on improper payments, the U.S. Government Accountability Office [(GAO)] set a threshold of “improper payment rates of 10 percent or higher” in identifying programs, drawing on requirements of the Payment Integrity Information Act of 2019, [Public Law] 116–117. GAO, Improper Payments: Key Concepts and Information on Programs with High Rates or Lacking Estimates, GAO-24-107482 (June 27, 2024), https://www.gao.gov/assets/ ​870/869747.pdf. That threshold is 500 times higher than the improper payment rate SAO purports to have identified.

Auditor’s Reply

While EOHLC may not consider the preventable loss of taxpayer dollars, in any amount, to be worth pointing to as an area for needed improvement, we do. EOHLC appears to be attempting to minimize our finding by framing the overpayments in terms of the total cost of the contract or to offset some of the overpayments with underpayments. We remind EOHLC that we pointed to the rate at which incorrect payments occurred to highlight how often incorrect payments were being made, so that EOHLC could recognize the need to improve controls over the process itself—regardless of the amount of each incorrect fee. That the state was overcharged on nearly 10% of these fees points to a need to exercise additional oversight and appropriate controls so that the rate of error decreases and taxpayer dollars, of any amount, are not wasted needlessly. We note that EOHLC has indicated that it is taking steps to bolster its invoice review process in a way that is in line with our recommendations.

As part of our post-audit review process, we will follow up on this matter in approximately six months.

17.    We noted that EOHLC was also undercharged for 106 deliveries (2.1%) that had a total of $1,830. 

Date published:	May 20, 2025