An Audit Report on Information and Communications Technology Cooperative Contracts at the Health and Human Services Commission Page: 2 of 38

                                
An Audit Report on
tate         Information and Communications
ditor's Technology Cooperative Contracts at the
ffice       Health and Human Services Commission
John Keel, CPA
State Auditor                                                                       SAO Report No. 14-013
December 2013
Overall Conclusion
The Health and Human Services Commission
(Commission) has processes designed to help                 The Information and
ensure that purchases for information-                   Communications Technology
technology-related goods and services                   Cooperative Contracts Program
(computers, computer devices, software,               The Information and Communications
telecommunication devices, staffing services,         Technology Cooperative Contracts
and maintenance services) comply with                 Program (Program) is a streamlined
cooperative purchasing program
applicable state purchasing laws, rules, and the      managed by the Department of
Department of Information Resources'                  Information Resources (Department)
that offers contracts for information-
Information and Communications Technology             technology-related products and
Cooperative Contracts Program (Program)               services including hardware, software,
requirements.                                         staffing services, maintenance, and
other services with a high customer
demand. The other services may
From September 2011 through February 2013,            include managed services and
the Commission reported that it made $367.3           technology training services that may be
million in total payments for information-            used by state and local governments,
public education entities, and other
technology-related purchases, and it made             public entities in Texas, as well as
$147.3 million (40.1 percent) of those                public entities outside the state.
payments through the Program.                         State and other public entities may
further negotiate better pricing for
volume purchases and otherwise tailor
Opportunities exist for the Commission to             their purchases through entity-specific
strengthen its contract management processes          statements of work and service level
to help ensure that (1) Program purchases             agreements, according to individual
customer needs, budgets, and projects.
provide best value in terms of the price paid         The Program is established under Texas
for a Program good or service, (2) Program            Government Code, Section 2157.068.
purchases are free from real or apparent              Source: The Department of Information
conflicts of interest, and (3) monitoring of          Resources.
Program contracts helps to ensure the quality
of goods and services delivered. Specifically:
Best Value. The Commission should strengthen its processes to ensure that
goods and services purchased through the Program provide best value.
Texas Government Code, Section 2157.003, defines best value as the lowest
overall cost for a Program good or service. The Commission did not maintain
consistent documentation to support noncompetitive purchases for Program
goods, services, and deliverables-based information services. In addition,
while the Commission generally ensured that it paid for Program staffing
services at rates that did not exceed the not-to-exceed rates established by
the Department of Information Resources, it did not ensure that the rates
paid for purchased Program goods and services included either the
Department of Information Resources' negotiated discount rate or a higher
discount rate.
This audit was conducted in accordance with Texas Government Code, Section 321.0132.
For more information regarding this report, please contact Cesar Saldivar, Audit Manager, or John Keel, State Auditor, at (512) 936-
9500.