The Office of the Comptroller of Puerto Rico issued an adverse opinion on the fiscal operations of the Bureau for Emergency Management and Disaster Administration (Bureau) attached to the Department of Public Safety. The tests performed and the evidence revealed that the operations related to the contracting of professional services and their disbursements were not carried out, in all significant respects, in accordance with the applicable law and regulations.
The Report reveals that the Bureau made illegal disbursements totaling $27,177,343 to pay retroactive amendments to two contracts dated September 2017 and February 2018, whose original amounts were $800,000 and $188,700 respectively.
The contracts originated to support the Office of the Governor Authorized Representative (GAR). This office became part of the Office of Management and Budget in October 2017 and later of the Office of Recovery and Reconstruction (COR3) in March 2018, so the Bureau no longer administered those contracts.
The contracted services were related to the administration of Public Assistance programs and Hazard Mitigation Grants and support for response and recovery efforts after the passage of hurricanes Irma and María.
Even though the original amount of the contracts was exhausted in approximately six weeks, the Bureau allowed the contractors to continue providing services. When a contractor exceeds the maximum amount of a contract, a valid, enforceable, prospective and written contractual relationship ceases to exist.
This situation, contrary to the case law established by the Supreme Court and to Act 237-2004, Act to Establish Uniform Parameters in the Processes for Contracting Professional and Consulting Services for the Agencies and Entities of the Commonwealth of Puerto Rico, harms the Bureau since there are no legal documents establishing the obligations between the parties.
The four-finding audit also points out that the Bureau paid $60,027 for services rendered without a contract to an advertising agency between 2017 and 2019. In addition, $7,677 was disbursed to a contractor for hours of service rendered before a contract was formalized and without having the funds to support the service rendered. In this regard, the commissioners in office allowed the contractors to render services before the amendments were granted.
The auditors identified three amendments totaling $815,425 in federal funds, granted for advertising services between 2017 and 2019, without conducting a free competition process with the participation of several providers. This situation could foster favoritism toward certain providers, and the federal agency that allocated the funds could question and request reimbursement.
Contrary to Circular Letter 1300-02-12, Contracting of Advertising Services, the Bureau made payments of $20,398 in excess of the 15% commission to an advertising agency and other subcontractors. The billing included commissions ranging from 17.65% to 25%.
In addition, the Bureau paid $10,809 between 2016 and 2019 for the storage of documents whose retention period had expired. The director of General Services did not supervise the operations related to the administration of documents that should have been disposed of between 1986 and 2018.
Contrary to current law and regulations, the commissioner contracted the services of certified public accountants up to 14 months after the date established by law, which sets that the contracts to perform the single audits must be granted 90 days before the close of the fiscal year. The examination performed revealed that the contracts from 2016 to 2018 were formalized up to 14 months late. This situation does not allow the federal agencies to have the audit results on time. This Report on the Bureau covers the period from January 1, 2016 to June 30, 2019.
See Audit Report DA-23-20.
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