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Federal Bureau of Prisons Management of Construction Contracts

Report No. 02-32
August 2002
Office of the Inspector General


APPENDIX III

AUDIT OBJECTIVES, SCOPE AND METHODOLOGY

Audit Objectives

Our objectives were to determine whether the BOP: (1) is adequately managing new construction-related contracts and has improved its management since our last audit in 1998; and (2) is making accurate and timely payments to contractors.

Scope

The audit was conducted in accordance with the Government Auditing Standards issued by the Comptroller General of the United States.† To accomplish our audit objectives, we performed audit work at the BOP Central Office located in Washington, D.C., a recently constructed USP facility in Coleman, Florida, and three ongoing prison construction projects in McCreary County, Kentucky (USP) and Victorville, California (FCI and USP).

Our audit work focused on the BOPís management of construction contracts after they were awarded; we did not audit the pre-award process.† As a result, we did not make a determination as to whether the contract award amount, which was competitively bid, was reasonable.† Instead, we focused on four areas: the cost of contract modifications, the timeliness of ongoing projects, the quality-control process, and payments made to contractors.

Methodology

We assessed the processes and controls that the BOP established over prison construction projects by interviewing staff at both the BOP Central Office and at the four sites that we visited.† We also examined contract files, which included modifications, justifications, and other related documentation at these locations.

In our review of modification costs, we selected a judgmental sample of the ten highest dollar changes to the contract at each of the four sites we visited.† The universe of contract changes that we selected from included only those changes that resulted in an increase in the total contract amount.†We did not test contract changes that decreased or did not affect the cost of the contract.

In our review of project schedules, we determined whether each project site that we visited was on schedule by interviewing BOP staff and reviewing progress measurements.† In addition, we selected all modifications that increased the contract duration and reviewed them to determine whether they were adequately supported and justified.† For the ten ongoing projects that we did not visit, we analyzed progress measurements in the BOPís weekly progress reports to determine whether the ten ongoing projects are scheduled to be completed on time.

To review the BOPís quality control process, we examined its oversight and inspections of contractors at the four locations we visited.† In addition, we reviewed all available Field Observation Reports and Deficiency and Omissions Reports at three of the construction sites.

In our review of contractor payments, we selected 20 payments at the USP Coleman project; 10 payments made to the general contractor and 10 payments made to the construction management firm.† Each sample included the five highest dollar payments with the remaining five payments selected judgmentally.† We reviewed all 38 payments at the FCI and USP Victorville projects.