From:                                         Machann, Beth A - Controller

Sent:                                           Friday, October 31, 2014 10:57 AM

To:                                               Kniech, Robin L. - City Council

Cc:                                               Vigoda, Clay - Auditor's Office; Berckefeldt, Denis - Auditor's Office; Benavidez, Adrienne - General Services Administratn; Martinez, Scott - City Attorney Office; Stuart, Skye - Mayor's Office; Smith, Shelley - City Council; Riedell, William J. - Office of the Controller; Bennett, Kelli A - Office of the Controller; Merritt, Robert D - Auditor's Office; Gongon, Rafael - Auditor's Office; Wheeler, Robert G. - Department of Law; Slattery, Daniel B. - Department of Law; Tateyama, Laura M - Office of the Controller

Subject:                                     Update on NAPS Discrepancies

 

I’m pleased to report that yesterday we met with members from the Auditor’s Office, General Services and the City Attorney’s Office and we have all agreed to a revised number of hours worked, hours paid and the variance that should be requested as a credit from the vendor.

 

As I mentioned in my previous e-mail we provided General Services an analysis of hours worked (according to LCP Tracker) and hours paid by General Services and the other user agencies.  During our review we found that our original analysis did not include a two week time period.  The time period should have been January 1 through September 30, 2013. The correct variance is 12,575.77 in hours that were paid the additional prevailing wage base, fringe and labor burden of $1.37.  The overpayment based on these hours is $17,228.80.  In addition, there was an overpayment due to apparent duplicate billings of $8,185.16 bringing the total that should be requested as a credit from the vendor, NAPS of $25,413.96. 

 

Clay Vigoda sent you an e-mail explaining that they had used an incorrect rate for the prevailing wage increase in their calculation, therefore our focus was on the hours, and not the difference in amounts owed based on the Auditor’s Office spreadsheet.

 

Here is a table that shows the original hours provided to General Services, the Auditor’s Office figures and the revised hours that we have agreed to:

 

	Hours Paid	Hours Worked	Variance
Originally Provided to General Services by Controller's Office	69,329.39	60,616.50	8,712.89
Auditor's Office figures	72,910.60	60,343.50	12,567.10
Revised 10/24/14	73,094.77	60,519.00	12,575.77

 

 

I hope this resolves the questions around hours and amount overpaid to the current vendor.  The next step is for us to look to the future and ensure that there are sufficient controls in the contract management of the new contract.  We look forward to working with General Services in this and will keep the Auditor’s Office informed of that process.  I also plan on attending the November 18^th Committee to give you an update on the controls.

 

Thank you.

 

 

 

Absolutely, thank you so very much.  Each of these steps are greatly appreciated. 

 

Sincerely,

 

 

 

Councilwoman Kniech,

 

My office did assist both the Auditor’s Office and General Services in collecting information.  We provided copies of all NAPS invoices for 2013 and 2014; but we didn’t do any analysis, that was performed by the Auditor’s Office.  We provided the number of hours worked according to LPC Tracker (the Auditor’s Office Prevailing Wage system) and the number of hours billed according to invoices to General Services.  We did not perform any analysis, only the difference in hours. 

 

We have begun reviewing the Auditor’s Office spreadsheet and comparing it to our detail of hours worked and hours billed to determine where the number of hours difference could be.  As soon as we have that I’ll meet with both parties to ensure we are all in agreement and then reply to you with that information. 

 

In addition, I’ve assigned Kelli Bennett in my office to work with General Services to review their internal controls, review the proposed new contract structure and ensure that appropriate controls are in place. 

 

I will plan on attending the November 18^th Committee meeting and will bring others within my office in case there are questions.

 

I hope this is what you are looking for, but if I’ve misunderstood something or you have any additional questions, please let me know.

 

 

 

 

Dear Beth,

 

For reasons the committee could not figure out, it appears that the Auditor’s Office and General Services did not in fact meet in person to compare numbers on billing vs. actual going backward on the NAPS contract.  I understand that the Controller’s office did acquire documents from the Auditor’s office and provided its own review of the paperwork for General Services and came up with a 8,000 hour discrepancy valued at a $20,000 overpayment.  The Auditor’s calculations are attached and they came up with a higher overpayment, it appears part of this may be the disputed amount being paid for labor burden above and beyond the actual base wage. Although I am personally concerned about the policy decision to pay that labor burden amount, I am much more concerned, and I believe the committee majority is more concerned, with discrepencies in hours worked versus hours billed.  Can you please review the Auditor’s figures and respond to myself and the Auditor’s office with your final conclusion on whether or not the Controller stands by the analysis you did for General Services in terms of the discrepancy in hours, or whether now having the Auditor’s calculations in hand, you believe indeed the discrepancy in hours was greater than your original estimate to General Services.  Regardless of what occurs going forward with the floor vote on the contract amendment, I believe it is critical that we as a city are sure we did not pay more than was owed to-date.  It is my sincere hope that the Auditor’s office will make themselves available to meet with you in person and/or to answer any questions you may have about their calculations. 

 

Also, please plan to attend committee on November 18.  I will be asking you to share your view of the internal controls in place in General Services with regard to ensuring accurate payment on this contract going forward under a new RFP/contract structure. It is my sincere hope that if you need to spend any more time with General Services reviewing their policies and procedures in order to answer this question that you will be able to do so prior to the 18^th and they will make themselves available to the extent necessary for you to provide an objective analysis of the internal controls.

 

Please contact Shelley Smith if you have any questions or need to discuss anything in this request further, or if you have any concerns.

 

Thank you very much for your involvement recently and hopefully for your additional expertise.

 

Sincerely,

 

 

 

 

Dear Council members:

Attached please find an analysis performed by the Auditor’s Office on invoices billed by NAPS in 2013 for the Prevailing Wage (PW) increase. A few things of note to make understanding the spreadsheet easier:

1)      The invoices analyzed are from January 2013 – September 2013. Starting with the October 2013, the format for invoicing was changed and NAPS no longer provided specific hours in which they were requesting reimbursements for the PW increase. Instead they only showed lump sum dollar totals for each facility.

2)      The PW increase that went into effect in December 2012 for 2013 was $0.33/hour. NAPS consistently billed, and was paid $1.37/hour for the increase and their “labor burden” during 2013.

3)      There are a number of invoices that were for duplicate hours. These are noted by an “*” after the month. If it was a duplicate then no hours were logged  as “Hours Worked” when the duplication bill was submitted – these hours were already accounted for and paid by the previous invoice.

4)      You will also see a “ᶛ” after some months. This indicates we did not receive an invoice previously for the facility that is being shown. So this would be a new facility to the contract.

5)      Additionally, you will notice some invoices do not show  either the “Hours Worked”, the “Hours Billed” or both are missing. In most of these instances – except as noted in #3 above – the actual hours were not provided and/or broken out in a way that the Auditor’s Office could analyze. For those invoices the amount billed and paid is shown in the “PW Increase $$ Billed”.

 

You will also find a PDF file of each of the individual invoices we analyzed.

 

I will be attending the committee meeting tomorrow and am available to answer any questions you may have. Additionally, the Auditors Office is continuing to look into the NAPS invoices and will provide additional information to the Council as it becomes available.

 

Thank you to Beth Machann and the Controller’s Office for their assistance in pulling together the necessary information!

 

Thank you,

Clay Vigoda

Director/ Government, Community Affairs & Prevailing Wage

720-913-5014

clay.vigoda@denvergov.org