The Internal Special Audit Unit:
1) Prevents, detects and corrects fraud, waste and abuse in the expenditure of public and private transportation funds.
2) Examines and evaluates MassDOT's operations, including its governance, risk-management practices and internal processes.
The Massachusetts Department of Transportation (“MassDOT”) is responsible for managing the Commonwealth’s roadways, public transit systems and Registry of Motor Vehicles (“RMV”). The Internal Special Audit Unit (“ISAU”) monitors the quality, efficiency and integrity of MassDOT’s operating and capital programs. As part of its statutory mandate, the ISAU seeks to prevent, detect and correct fraud, waste and abuse in the expenditure of public and private transportation funds.
The unit is also responsible for examining and evaluating MassDOT’s operations, including its governance, risk-management practices and internal processes. This also includes the operations of the Massachusetts Bay Transportation Authority (“MBTA”). The ISAU has an additional legislative mandate to review certain MBTA procurements.1
The ISAU’s enabling statute requires it to publish an annual report each March. Below are highlights from that report.
I. Audits, Investigations and Reviews
A. The MBTA’s Privatization of Its Warehouse Operations
As part of its mandate under Section 196 of Chapter 46 of the Acts of 2015 to evaluate the MBTA’s outsourcing of services, the ISAU conducted a preliminary review of the MBTA’s contract to privatize its warehouse operations. “Warehouse operations” refers to storing, tracking and delivering the parts, equipment and other supplies necessary for maintaining and repairing the MBTA’s buses, trolleys and subway cars.
The ISAU’s preliminary review focused on the MBTA’s contract with its third-party vendor, Management Consulting, Inc. (“Mancon”), Mancon’s compliance with the contract and the MBTA’s oversight of Mancon’s performance. Pursuant to its legislative mandate, the ISAU also reviewed the MBTA’s analysis of the costs to privatize its warehouse operations and its cost to perform this function in-house. The ISAU:
- Interviewed MBTA and Mancon employees
- Observed warehousing processes at the MBTA’s and Mancon’s facilities
- Reviewed bidding, contract, financial and performance documentation
As a result of this review, the ISAU identified opportunities for the MBTA to bring Mancon’s performance in line with its contractual obligations and promote a successful partnership. The MBTA could improve its oversight of Mancon’s performance and should hold Mancon accountable for its work. The MBTA should enforce all terms of the MBTA-Mancon contract and enforce the penalties for non-compliance.
This review also highlighted aspects of Mancon’s performance that the MBTA does not formally evaluate, document or pursue corrective actions for. The ISAU recommended that the MBTA consult with legal counsel about amending the MBTA-Macon contract to include specific language requiring Mancon to correct these operational challenges.
As part of this review, the ISAU also evaluated the cost estimates that the MBTA provided to the Fiscal and Management Control Board when it sought approval to privatize its warehouse operations. First, the MBTA reported to the board that it cost $12.1 million a year to conduct the warehouse operations in-house. However, the MBTA could not provide the documents or information that it used to reach that conclusion. As a result, the ISAU could not substantiate the validity of that calculation.
Nevertheless, the ISAU did identify certain costs that should not have been included:
- The personnel costs related to 12 stockpersons who were transferred to newly created positions within the MBTA
- Post-retirement costs
- A $2 million “charge” for mechanics’ unproductive time
Second, the ISAU identified expenses, including consulting services and new hires at the MBTA, that were needed to execute the warehouse contract but that the MBTA did not include in its $7.1-million estimate to privatize warehouse operations.
At the end of its preliminary review, the ISAU shared its findings with MBTA senior management, including opportunities to:
- Improve contract and vendor oversight
- Enhance vendor performance and accountability
- Expand MBTA management communication with field employees
- Promote successful execution of the privatization contract
B. A Review of the Registry of Mother Vehicles’ Merit Rating
In October 2019, ISAU began an in-depth review of the Merit Rating Board (“MRB”) in order to provide recommendations to improve the MRB’s operations, practices, procedures and internal controls. The review began at the request of the board (“Board”) that oversees the MRB.2 The Board also asked the Office to review the MRB’s current role and responsibilities, as well as to identify potential risks to or gaps in the MRB’s ability to meet its statutory obligations.
As part of this ongoing review, the ISAU:
- Performed policy and document reviews
- Observed the MRB’s procedures for document control, citation processing and quality control
- Attended Board meetings
- Reviewed the MRB’s statutory obligations
- Analyzed financial and budget records
- Met with MRB staff to understand their roles and daily procedures
The Office has shared preliminary observations and recommendations with the Board and the interim MRB Director. The Office will continue to be actively engaged in this review in calendar year 2020.
C. A Review of the MBTA’s Non-Revenue Vehicle Fleet Administration
During 2019, the ISAU collaborated with the MBTA to review and improve the administration of its inventory of passenger vehicles that are assigned to specific employees, assigned to departments or used as pool vehicles (collectively, “non-revenue fleet”). At the time of the ISAU’s review, the non-revenue fleet included 558 passenger vehicles ranging from sedans to pickup trucks that MBTA staff use during transit operations.
The ISAU identified opportunities for the MBTA to strengthen its recordkeeping and vehicle assignment process. Within the MBTA’s fleet asset management system, the ISAU also found inaccurate and incomplete records, vehicles assigned to employees who no longer work at the MBTA, instances of multiple vehicles assigned to one employee, and vehicles assigned to MBTA contractors.
The ISAU further found the MBTA did not have procedures or guidelines for determining when an employee needs a state vehicle (for instance, which job functions require a vehicle). The MBTA form for requesting a vehicle did have a “justification” section for requesting a domiciled vehicle, but that section typically was left blank or contained skeletal information.
MBTA staff were receptive to the ISAU’s concerns and recommendations. The ISAU worked with the MBTA to develop a more robust and detailed vehicle assignment form. The new form requires employees to document the need for a full-time or domicile vehicle and to obtain approval from both their supervisor and the COO.
The MBTA required all staff who currently have domicile privileges (i.e., who are allowed to drive their vehicles to and from work) to complete the new vehicle assignment form. As of the end of 2019, the superintendent continued to collect the completed forms and to update the fleet’s electronic records.
This initial review highlighted the need to have accurate fleet records and increased accountability, including a need for the MBTA to have guidelines for assigning vehicles to employees. The ISAU will continue its review in 2020.
II. Fraud Prevention Training
Related to the ISAU’s mission to prevent fraud, waste and abuse of transportation funds, the ISAU developed and delivered fraud prevention training at the request of MassDOT’s Highway Division.
In March 2019, the ISAU team led two training sessions for MassDOT Highway field staff who oversee highway maintenance and construction contracts. The sessions outlined common fraud schemes, fraud prevention techniques and red flags for vendor fraud.
The ISAU maintains a hotline for members of the public to confidentially report suspected fraud, waste or abuse in the expenditure of transportation funds and in public transportation programs. The hotline is available online through the Office, as well as on MassDOT’s and the MBTA’s websites. The ISAU also maintains an employee hotline on MassDOT’s and the MBTA’s intranets.
The ISAU evaluates each complaint received to determine whether it falls within its jurisdiction and whether it merits action. Some complaints lead to extensive investigations, some are referred to other agencies and others are closed if a preliminary inquiry fails to substantiate the allegations. During 2019, the ISAU received 126 complaints from private citizens and public employees.
The ISAU also monitors the RMV’s disability parking placard abuse hotline and receives reports of suspected placard abuse from the public. The RMV’s Medical Affairs Bureau processes this information for further investigation. In 2019, the ISAU received 81 reports of alleged placard abuse.
Boston, MA 02116