Department of Transportation

Construction Contract Payments

The Department of Transportation spends more than $1.5 billion a year to build, repair and maintain the State’s highways, bridges and other transportation infrastructures. The work is performed by private construction firms under contract with the Department. We examined the Department’s controls over its payments on these contracts.

We found that the controls for regular construction contracts (in which the contractors were paid certain agreed upon amounts for performing certain agreed upon work) provided reasonable assurance the payments were accurate and appropriate. However, we identified a number of weaknesses in the controls over contracts in which the contractors were paid on the basis of their actual costs. For example, the Department’s daily inspection reports generally lacked the details needed to verify the contractors’ claimed costs, particularly for labor and equipment. As a result of these control weaknesses, there was an increased risk these contractors could be overpaid. We recommended certain improvements be made in the Department’s controls over these types of contracts.

For a complete copy of Report 2006-S-8 click here.
For a copy of the 90-day response click here.