Letter Report on the Expenditures Submitted by Accenture LLP for Its Access NYC Program Contract with the New York City Department of Information Technology and Telecommunications

Letter REPORT IN BRIEF

Access NYC is an online resource that promotes self-sufficiency among NYC’s residents by providing a single point of entry to City, State and Federal human services benefit programs.  This free service helps the NYC residents to find out if they qualify for the City, State and Federal benefit programs such as Medicaid, Food Stamps or help with utility bills.  DoITT awarded a contract to Accenture LLP (Accenture) to provide systems integration services for the Access NYC Program between November 1, 2007, and October 31, 2012.  The contract’s value was approximately $111 million.  As of October 2012, Accenture was paid $109,406,005.

This audit determined whether the expenditures for the Access NYC Program contract were reasonable and justified. 

Results

The audit identified internal control deficiencies regarding DoITT’s contract management and payment approval process.  The lack of detail on timesheets and the delay in approving timesheets invalidated the timesheet review process and DoITT’s ability to determine whether work performed justified payments made. 

Accenture also had a significant imputed mark-up on services provided by its subcontractors with a mark-up ranging as high as 178 percent.  For the contract period, subcontractors billed Accenture $2,286,371 for services and Accenture added a mark-up of $1,061,505, with an average mark-up rate of nearly 58 percent, when Accenture billed the City for those services.

Further, DoITT delayed submitting payments for certain hardware and software invoices for up to 150 days in January 2009.  By not paying invoices in a timely manner, DoITT forwent the sales discount provided in the contract.  In January 2009, DoITT only paid three of the seven invoices on hardware and software purchases within 30 days of receipt and did not ensure that the sales discount was applied to subsequent invoices as allowed under the contract.  

The audit made the following four recommendations to DoITT:

• Strengthen the internal controls for its payment approval process by:
• Reviewing and approving timesheets in a timely manner;
• Ensuring that consultant obtains proper written approval/waiver before extra hour(s) of work performed is paid; and 
• Ensuring that hardware and software purchased by the contractor is fully supported by documentation that the quantity ordered was actually delivered. 

• When feasible, take advantage of any sales discount available.

• Improve its contract monitoring policy by ensuring that all future contracts:
• Require contractors to provide more detailed information on the timesheets, including but not limited to:
• A more detailed description of the work performed.
• Work location for each specific task order if the hourly rates are affected by work location.
• Include a clause that limits the mark-up percentage (imputed or otherwise) that contractors can charge on subcontractor services and equipment.
• Require contractors to provide proof of delivery for all hardware and software purchased.

• Consider conducting a market survey of the hourly rates being paid for various IT consultant work titles and establish a not-to-exceed rate that should be used as a basis for future contracts.

DoITT officials disagreed with most of the audit findings and recommendations.  DoITT agreed that sales discount was not received.  The total overpayment by the City was $6,834 and Accenture has agreed to reimburse the City for this amount.

We suggest that DoITT specifically reconsider the recommendations requiring that contractors provide more detailed information on their timesheets and to limit mark-up percentages that contractors can charge on subcontractor work in future contracts since these are areas where significant cost savings can be achieved.