Lapses in Aviation Contracting Process Leads to at Least $55,000 in Cost Overruns

FOR IMMEDIATE RELEASE: June 15, 2012

CONTACT: (773) 478-0534 Jonathan Davey

Lapses in Aviation Contracting Process Leads to at Least $55,000 in Cost Overruns

The OIG released a report on the Chicago Department of Aviation’s (CDA) contracting process, as well as the CDA’s response to the OIG’s findings.

Following an investigation, the OIG identified lapses in the contracting process underlying the 2007 construction of a sidewalk at O’Hare International Airport. These lapses, similar to lapses identified in an OIG investigation that same year involving the construction of an employee break area, resulted in the waste of funds. That investigation led to new CDA contracting procedures which were designed to cut back on contracting improprieties.

The OIG investigation focused on a sidewalk built between Higgins Road and the Aviation Administration Building on Patton Road. Using interviews with multiple City employees, including the City’s Department of Transportation (CDOT) and Department of Procurement Services (DPS), a third party vendor, and a plain reading of the contract CDA used for the sidewalk construction, the OIG determined that CDA significantly overpaid for the sidewalk. Due to their failure to use an already existing lower-cost contracting option, CDA spent $191,830 on the sidewalk; the OIG report estimates that CDA wasted at least $55,000 and up to $102,373.

However, given CDA’s recent steps to improve the construction contract process, and the fact that many of the primary decision makers associated with the Patton Road project are no longer with the City, the OIG made no disciplinary recommendations.

To better assess the effectiveness of those new contracting procedures, the OIG requested that the CDA provide information regarding:

  1. CDA’s current procurement and contract management policies, procedures, and approval mechanisms in place to ensure that all expenditures and use of CDA contracts are cost effective, legitimate and appropriate;
  2. Any and all instances of variation from those policies, procedures, and approval mechanisms since September 1, 2010;
  3. Designation of those individuals currently responsible for CDA procurements and contracts and a description of their responsibilities;
  4. Agendas and minutes from the CDA Capital Improvement Program “roundtable” meetings;
  5. Any additional information regarding the CDA contracting that CDA believes is relevant to the public report.

In its response, the CDA pointed to a more recent example of similar work which demonstrates their current capacity to limit construction costs. The CDA response included information on other CDA contract management and cost control practices such as its Capital Improvement program roundtable.

“It is important for City departments to ensure they incorporate lessons learned from prior failures,” said Inspector General Joe Ferguson. “The CDA manages a diverse set of complex and expensive construction and capital improvement contracts, and ensuring the department is capable of managing those contracts in a manner that appropriately limits costs is vital for City business. I appreciate their timely and complete assistance in this investigation.”