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Auditor General Jack Wagner Finds Deficiencies in PennDOT's Handling of Public Safety and Identity Theft Issues
Releases two reports on oversight of drivers' licenses, construction inspectors
HARRISBURG (Dec. 18, 2007) – A special performance audit released today by Auditor General Jack Wagner found that the Pennsylvania Department of Transportation, or PennDOT, lacked adequate controls over its inventory of the high security materials used to make state drivers’ license and identification cards.
Wagner also released a separate special investigation that concluded that PennDOT, despite having revised its procedures for awarding contracts to inspect road and bridge construction, still failed to verify the qualifications and experience of outside inspectors.
Discussing both reports, Wagner said, “These are two important public safety issues that PennDOT has committed to address. We will follow up at the appropriate time to make sure all appropriate measures are in place to protect the public interest.”
Complete copies of both reports, including PennDOT’s response to each, are available at www.auditorgen.state.pa.us. The two reports are summarized below.
Audit – Secure Inventory Management System (SIMS)
PennDOT, which is responsible for managing the Commonwealth’s driver licensing program, contracted out the computerized production of drivers’ licenses and identification cards in June 2000. The contractor was required to develop and implement the Secure Inventory Management System, or SIMS, to track high security inventory of laminate overlays, card stock, and other materials used to make drivers’ license and identification cards. The prime contractor, in turn, subcontracted out the software development and warehouse functions.
Wagner found PennDOT’s controls over the inventory to be inadequate, citing poor monitoring, training, and procedures that led to hundreds of cards and laminate overlays being stolen, lost, and otherwise unaccounted for.
“As a result of PennDOT’s lack of oversight, the risk of fraud, abuse, identity theft, illegal production of licenses and cards, and other criminal activities is high,” he said.
Wagner’s audit, which covered the period of January 1, 2003 through December 31, 2005, also found that PennDOT’s contracts failed to require an independent review of its contractors’ internal controls, giving the agency no assurance that those controls are suitably designed, operational, and sufficient.
The audit report offered eleven recommendations to PennDOT, including:
“While some issues still need to be addressed, PennDOT has changed and improved its system and controls as a result of our audit,” Wagner said. “I commend PennDOT for its positive response to both this audit and our special investigation. The controls in place today are better than at the time of our audit.”
Investigation – Construction Inspection Consultants
PennDOT is responsible for maintaining 40,000 miles of state-maintained roadways and 25,000 state-maintained bridges. Because of the large volume of road and bridge work undertaken by PennDOT, it must hire outside construction inspectors to supplement its in-house staff. A major factor in PennDOT’s selection process was the experience and qualifications of the individual inspectors listed by each outside inspection firm as part of its bid. However, due to employee turnover, the firms would often send substitute inspectors to the job site.
“Not only did PennDOT fail to verify the qualifications and experience of the individual inspectors who were listed in firms’ bids for contracts, but it also failed to verify the qualifications and experience of the substitutes who actually performed the work,” Wagner explained.
After Wagner completed this investigation, PennDOT further revised its procedures for selecting, evaluating, and monitoring the outside firms. Wagner stated that, if all of those processes and procedures are fully and effectively implemented, they would appear to address all of his concerns. However, he emphasized that he would follow up to ensure that PennDOT has fully implemented the newest processes and procedures and to assess their effectiveness.
The investigation report offered seven recommendations to PennDOT, including:
Wagner began his special investigation in February 2006 in order to determine if PennDOT was enforcing new policies and procedures it had put in place following allegations made by a whistleblower in 2003.
The whistleblower had also alleged that outside firms were providing the management at PennDOT’s Engineering District 11-0 in Allegheny County with gifts, perks, and other financial benefits. When Wagner’s investigators learned that at least two other state agencies with specific jurisdiction over such matters were already investigating those allegations, they discontinued their investigation of the matters in order to avoid a duplication of effort and resources. The results of the other investigations have not been publicly released as of the date of this report.
“Upon the completion of those other investigations, or upon our receipt of other allegations of similar misconduct, we will make a determination as to whether the public’s justified concerns have been satisfied and whether to re-open our own investigation on this important issue,” Wagner said. “If necessary, we will reopen our investigation.’’
Auditor General Jack Wagner is responsible for ensuring that all state money is spent legally and properly. He is the Commonwealth’s elected independent fiscal watchdog, conducting financial audits, performance audits and special investigations. The Department of the Auditor General conducts approximately 5,000 audits per year. To learn more about the Department of the Auditor General, taxpayers are encouraged to visit the department’s Web site at www.auditorgen.state.pa.us.
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