The South Carolina Department of Transportation (SCDOT) has received the agency-wide audit prepared by MGT of America for the Legislative Audit Council (LAC). This audit was a follow-up to the LAC’s own report on SCDOT in 2006. The follow-up audit was mandated by Act 114, also known as the DOT Reform Act signed into law in 2007.

               The latest review shows that SCDOT has been successful in implementing the majority of the 44 recommendations for improvement made by the LAC in 2006. Moreover, the report reveals that the reforms of the agency prescribed by Act 114 have been completely implemented. The audit notes that SCDOT staff made “significant efforts” to comply with the law.

               Transportation Secretary H.B. “Buck” Limehouse Jr. has thanked MGT of America for a thorough and balanced report. “MGT of America has confirmed SCDOT’s attempts to make significant improvements in operations, including our success in implementing the majority of the 44 recommendations from the 2006 LAC review,” Limehouse said. Limehouse noted the audit indicated that the agency has been successful in creating a project selection process as required by Act 114, and continues to refine that process.

               The latest audit also shows that SCDOT needs to eliminate unnecessary delays in the contract process. The report noted that the time between identifying the most qualified bidder for a project and negotiating a finalized contract has actually increased. However the auditors indicated that part of the problem stems from excessive approval and reporting requirements of Act 114, which are time-consuming and costly.

             Some of the highlights of the MGT of America report include:

• Acknowledged that SCDOT generally performs well at reviewing bids and awarding contracts in compliance with state and federal laws and regulations.
• Acknowledged the use of life cycle analyses. This is a process used to determine when best to resurface a highway and whether the use of concrete or asphalt is most cost-effective.
• Reported that contract adjustments in a sampling of 1,009 contracts totaled more than the contract amount. However, the project budgets were not exceeded because the rising cost of fuel and asphalt over the lives of the contracts was anticipated. The auditors noted the adjustments were primarily for fuel and materials and were justified. The ability to make cost adjustments is a provision in most SCDOT construction contracts.
• Noted that SCDOT could make improvements related to change orders and the reporting of those orders to the SCDOT Commission.
• In that same sampling of the 1,009 contracts, auditors found that reductions in contract price occurred in 315 of those contracts creating cost savings.
• Acknowledged that SCDOT has good processes in place to ensure contractors are not manipulating final contract amounts by minimizing bids and then increasing contract amounts through change orders.
• Acknowledged that the Contractor Performance Evaluation System used by the agency has been implemented in line with Federal best practices criteria.
• Noted that the methodology for ranking and estimating maintenance projects could be improved by factoring in the scale of the project and the geography. This means using techniques such as combining a number of small projects into one contract on a large segment of a highway.
• Noted that the agency’s financial system and processes still rely heavily on paper documentation and manual processes.

               Secretary Limehouse said the agency has made great strides in the past three years, but the recommendations in the performance audit will be a benefit. “We agree with the majority of the audit’s suggestions and they will clearly help us refine procedures and processes that will greatly improve the efficiency of SCDOT,” said Limehouse.

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