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Comptroller issues adverse opinion on the contracting of school transportation services at the Caguas Regional Educational Office

The Office of the Comptroller of Puerto Rico (OCPR) issued an adverse opinion on the fiscal operations of the Caguas Regional Educational Office (OREC) of the Department of Education. The tests performed and the evidence revealed that the operations related to the contracting of school transportation services, among other objectives, were not carried out, in all significant aspects, in accordance with the applicable law and regulation.

The Report reveals that the OREC did not register with the OCPR 46% of the contracts awarded for school transportation services between 2017 and 2020. In addition, as of July 6, 2023, the OREC had not remitted 256 contracts and amendments for $33.9 million to the OCPR's Contracts Registry, and from 2016 to 2019, it took between 37 and 398 days to register 137 contracts totaling $14.9 million.

This situation, contrary to the current law and regulation, did not allow the contracts to be accessible to the citizenry.  From the sample analyzed, improper payments for $133,864 were detected.

The five-finding audit notes that improper payments for $65,589 were made to three contractors for new school transportation routes not included in the contracts. In this regard, the Department of Education is recommended to recover these funds paid to the carriers.

The OREC formalized a total of 393 contracts for $48.8 million from 2017 to 2020, without holding a formal bid but rather through emergency contracts. This deficiency had been noted in Audit Report 2019-01 of 2018, which concluded that not holding bids was not the correct way to control these costs. This situation also fosters the mistaken notion that emergency contracts serve to bypass the necessary qualifications of suppliers and can benefit specific suppliers.

The Department of Education did not withhold at source $39,024 from eight contractors for the services rendered. The contracts awarded by the OREC establish a withholding of 10% of income tax unless the contractor submits a waiver issued by the Department of the Treasury. Due to this situation, the Department of Education is exposed to penalties established in the Internal Revenue Code.

The auditors detected multiple deficiencies in the files of the carriers' contracts, since none had the permit from the Public Service Commission, nor the documents on the condition of the vehicle or the quarterly inspections. In addition, the OREC did not provide for the auditors' examination the files of 102 contracts for $17.4 million for school year 2019, the service requests were not found, and an Annual School Transportation Plan was not prepared.

The audit comments that, as of November 30, 2023, the $181,723 recommended in Audit Report DA-15-38 of 2015 had not been recovered. From January 1, 2016, to June 30, 2023, the OREC has had a budget of $335.1 million and has made disbursements for $273.6 million. The audit recommends that the Secretary of Education ensure clear and specific compliance with the current legal provisions, the regulation, and the clauses and conditions in the contracts awarded for the contracting of school transportation services, among others.

The OREC report covers the period from January 1, 2016, to August 30, 2022, and is available at www.ocpr.gov.pr. That Office provides services to 35,086 students from 11 towns and 122 schools in Aguas Buenas, Aibonito, Arroyo, Barranquitas, Caguas, Cayey, Cidra, Comerío, Guayama, Gurabo, and Salinas.