Audit of DWM’s MTHP
February 15, 2013
The City of Chicago Office of Inspector General (OIG) has released an audit that found the City’s Department of Water Management’s (DWM) Material Truck Haul Program (MTHP) to be generally well administered, yet still susceptible to risk of fraud.
MTHP, a successor to the scandal-plagued Hired Truck Program, ensures material delivery to sewer and water facilities and job sites, as well as the removal of debris from those same sites. In 2011, MTHP was used to haul 999,076 tons of materials/debris to and from the job sites, resulting in $16,707,955 of billings by MTHP vendors.
Specifically, the audit, which focused solely on work done in 2011, also found that almost 95% of the signatures given to confirm material pick up or delivery did not match DWM’s authorized signature list. The audit further concluded that DWM underpaid vendors by more than $600,000 in 2011, as well as delayed paying vendors for nearly $10 million worth of goods and services for up to 7 months.
“The failure to ensure authorized signatures to validate pick-ups and deliveries leaves the program susceptible to fraud,” said Inspector General Joe Ferguson. “Moreover, underpayment or slow payment for goods and services creates a disincentive for vendors to do business with the City. In turn, that may deprive the City, and its taxpayers, the benefits of full market participation in the competitive procurement process.”
OIG found MTHP to be well administered due to the audit’s first two findings: the program’s invoices were accurate and the MTHP coordinator appropriately assigned service requests to the lowest-priced vendors.
“Despite three significant issues, we found the program to be generally well administered,” said Ferguson. “DWM is taking affirmative action to address the holes we have identified in their processes. We will continue to monitor their progress and may perform a follow-up audit if needed.”
DWM has indicated it has begun to review its payment processes, as well as develop procedures to ensure vendors are paid both in a timely and an accurate manner. The department has also stated it is reviewing its authorized signature procedures to mitigate the risk of fraudulent transactions.