Objective

To assess the extent of implementation of the four recommendations included in our initial audit report, Monitoring of Construction Management (Report 2020-S-42).

About the Program

Established in 1960, the Office of General Services (OGS) facilitates the work of State agencies through the provision of architectural, engineering, and construction management services for buildings statewide. One component of its mission is to design and build facilities for State agencies and public authorities. To achieve that mission, OGS operates the Design & Construction Group (D&C), which provides State agency clients a full range of architectural, engineering, contracting, and construction management services, including the management of a construction project’s schedule, cost, quality, safety, scope, and function.

D&C is generally responsible for managing OGS’ construction contracts. However, contracts may be managed by either D&C staff or a combination of D&C and construction management consultant staff, or may be contracted out completely to a construction management consultant that assumes most of D&C’s responsibilities. If OGS determines that a construction management consultant is needed, OGS solicits bids through a Request for Proposals (RFP). The RFP specifies the nature of the project as well as requirements. For each proposal, OGS completes a Cost and a Technical Review, including an assessment of the bidder’s experience; personnel; planning and execution; and minority-and women-owned business enterprise (MWBE), small business, and subcontracting goals. OGS selects the top three firms for further evaluation and recommends awarding the contract to the highest-ranking firm.

Pursuant to Article 15-A of the New York State Executive Law, State agencies are required to establish goals for MWBE participation in their contracts. Accordingly, construction contracts and construction management contracts contain specific MWBE utilization goals and related requirements. To count toward OGS’ overall MWBE participation goal, the MWBE must perform a commercially useful function—that is, a useful role proportionate to the payment received for the work—and may not act as a pass-through or unnecessary participant.

During the period April 1, 2018 through March 31, 2023, OGS’ inventory of contracts included 3,302 ongoing construction contracts valued at $3.7 billion and 29 active construction management contracts valued at approximately $418 million.

The objective of our initial audit, issued on December 30, 2021, was to determine if OGS was adequately monitoring construction management contracts to ensure they met the terms and requirements, and if the oversight and administrations costs associated with carrying out this function were supported and related. The audit covered construction management contracts that were active between April 2015 and July 2020 and additional information provided by OGS through August 2021. We found that OGS had generally taken steps to adequately monitor construction management contracts to ensure that the terms and requirements were met and that costs were supported and related. However, we identified several areas that need improvement. Of the five projects audited, three used a State-certified women-owned business enterprise (WBE) and claimed credits toward each of their contracts’ MWBE goals. However, the WBE subcontracted out all its approved services to a non-MWBE independent contractor and, therefore, the WBE did not provide a commercially useful function. As a result, the $207,316 paid to the WBE should not have been claimed as credits toward the MWBE goals. There was also one construction management consultant’s bid proposal, for a contract valued at approximately $1.8 million, that did not meet the criteria outlined in the RFP, yet this was not reflected in OGS’ evaluation and scoring.

Key Finding

OGS officials made significant progress in addressing the issues identified in the initial audit report. Of the initial report’s four audit recommendations, three were implemented and one was partially implemented.

Key Recommendation

OGS officials are requested, but not required, to provide information about any actions planned to address the unresolved issues discussed in this follow-up within 30 days of the report’s issuance.