Job Order Contracting provides several significant benefits to real property owners, building users, and construction contractors. A certain threshold of expertise, however, is required on the part of all stakeholders.
Furthermore, multiple deployment methods have been used for Job Order Contracting: Owner- managed JOC programs, JOC participation using cooperatives, and JOC as a service (outsourcing JOC program set-up and management via a third party).
The results of several audits of job order contracting programs demonstrate that education, experience/professional capability (technical and business), implementation of and adherence to robust business processes, and the mode of deployment affect outcomes.
Contractor price proposals were not always adequately reviewed prior to acceptance.
insufficient number of comparable projects to objectively support a conclusion as to whether the JOC Program resulted in overall lower or higher costs.
JOC construction contractors complied with the costing requirements for non-prepriced items; however, a number of projects had a high percentage of non-prepriced items to total project costs, which diminished the appearance of cost effectiveness.
No one indicated that the contractor’s adjustment factor was reviewed for accuracy. Nearly half of the Project Managers interviewed could not provide support for the pricing of non-prepriced items
JOC permits the issuance of job orders without competition because the tasks ordered were competed as part of the original award. Non-prepriced items are tasks required by the scope of work, but are not included in the Construction Task Catalog. Contractors are required to separately identify non-prepriced items, provide support for pricing, and obtain approval for inclusion in their project proposals. Because non-prepriced items have not been competitively bid, their use should be kept to a minimum to ensure the cost effectiveness of the JOC program.
Of the 298 job orders recorded in PROGEN (the JOC application), 47 included one or more non-prepriced items. Ten of those were issued due to reductions in the scope of work. The following table presents the ratios of non-prepriced items (NPPI) to total project costs for the remaining 37 job orders:
Percentage of NPPI Number of Projects
Less than 25% 5 projects
From 25% to 50% 5 projects
From 50% to 75% 5 projects
From 75% to 99% 11 projects
100% NPPI 11 projects
Job Order Contract Audit – City of Tampa JOC Audit – 2010
The Job Order Contract Program Lacks Sufficient Oversight to Ensure Program Effectiveness
The JOC program inadequately assesses contractors’ qualifications, resulting in a heavy reliance on lowest bid criteria when awarding JOCs.
The JOC program inadequately monitors the quality of contractors’ work. The program does not consistently and promptly inspect JOC projects and ensure SFPUC’s JOC program lacks a policy establishing the program’s purpose that could provide staff guidance when determining which projects to authorize for implementation under JOCs.
SFPUC’s use of JOCs for some projects undermines the intent of the JOC program. The Administrative Code indicates that repair, maintenance, and minor construction projects with costs less than $400,000 should be completed under JOCs. However, four of SFPUC’s
JOC projects were not for repair or maintenance and exceeded the $400,000 limit. Also, some evidence indicates that SFPUC may have divided some larger projects into smaller projects and executed them under JOCs.
Despite prepricing of construction materials and tasks being a practice that helps ensure that the City and County of San Francisco (City) receives competitive pricing for JOC projects, 14 (35 percent) of 40 sampled task orders contained non-prepriced tasks. In eight cases, the non-prepriced tasks represented the majority of the total project costs.
Heavy reliance on non-prepriced tasks reduces the effectiveness of the competitive solicitation process for JOCs.
SFPUC lacks procedures for choosing among JOC contractors when assigning projects and does not document project assignment decisions.
SFPUC may have intentionally divided larger projects into smaller ones. Despite prepricing of construction materials and tasks being what ensures that JOCs are not used to circumvent the regular competitive bidding process, 14 (35 percent) of the 40 task orders reviewed contained non-prepriced tasks. In 8 task orders, the non-prepriced tasks represented the majority of the task order’s total cost. SFPUC also inappropriately approved 5 task orders for federally funded projects, which occurred because federal regulations contradict the expectations of the SFPUC’s commission for JOCs.
Of the 40 task orders reviewed for the audit, four (10 percent) were not repair or maintenance in nature and exceeded the JOC program’s $400,000 limit in the Administrative Code. Of 312 task orders with a status of closed or in construction, 14 (4 percent) had total costexceeding the $400,000 limit. The Office of the City Attorney interprets this limit as delineating minor construction from major construction. Although some of these 14 task orders were originally under the threshold and their total costs increased due to unforeseeable issues, 4 JOC task orders appeared to be major projects…
SFPUC’s administration of the JOC program should be improved. The program’s policies and procedures lack criteria and guidance for key processes. For instance, the program lacks formal procedures for choosing which contractor receives a given project. The policies and procedures also omit criteria for allowing exceptions to the notice to proceed policy and, in 13 percent of task orders reviewed, the contractor began work before SFPUC issued a notice to proceed. The JOC program also maintains no documentation of how it made its project assignment decisions.
= San Francisco – 2012 – OFFICE OF THE CONTROLLER CITY SERVICES AUDITOR
Establish a policy for the JOC program that specifies the intent of the program an may inform project authorization decisions.
Not authorize projects that rely heavily on non-prepriced tasks.
Use qualified staff to evaluate contractor qualifications and weight qualifications more heavily than lowest bid when awarding JOCs.
Develop procedures for assigning projects to JOC contractors and document project assignment decisions.
Consistently inspect JOC contractors’ work and ensure that project managers submit contractor evaluations on time.
– Recommencations for improvement – OFFICE OF THE CONTROLLER CITY SERVICES AUDITOR
We concluded the JOC program was developed with internal control weaknesses, implemented with management deficiencies, and abused by a contractor. In addition, the JOC consultant, The Gordian Group (Gordian), did not fulfill all its responsibilities under its contract. As a result, the HAKC was not adequately prepared to administer its JOC program.
The JOC program can be a useful system for accelerating the process of completion of rehabilitation work at Public Housing Authorities (PHAs). However, the JOC program (as implemented at HAKC) contained internal control weaknesses that contributed to abuses. Because the JOC program is used by other PHAs, we recommend the Assistant Secretary for Public and Indian Housing (PIH) require Gordian to amend its training program and instructional material to require that PHA inspectors use contractors’ detailed proposals when conducting JOC work inspections; and ensure PHAs develop detailed Scopes of Work and independent estimates adequate for comparison to contractors’ detailed proposals…
– Housing Authority of Kansas City, Job Order Contracting Program Kansas City, Missouri 1998
Based on the results of our testing, we found the County Divisions reviewed did not comply with contract provisions for issuing purchase orders under the job order contract.
Specifically, we noted that work was not priced in accordance with contract terms and dollar limits were exceeded. In our opinion, the controls over the review and approval of price proposals, including whether the items proposed were needed to perform the agreed-upon scope of work and whether the price proposed and paid represented an appropriate amount for the actual work performed, were not adequate.
Work awarded under the County’s job order contract was not priced in accordance with contract terms. Section 1.0 of the contract states, “the general guide for pricing and determining allowable work [under the job order contract] is the current RS Means Facilities Construction Cost Data price index.” It was a generally accepted practice for the job order contractor (Contractor) to obtain a quote from a subcontractor for each task needed for a project and prepare a RS Means cost proposal to “back in” to the total of the quotes obtained. Consequently, for many of the projects in our sample, we noted significant differences between the items included in the price proposal and the items actually needed to complete the project.
– Limited Review of Orange County’s Job Order Contract 2012 County Comptroller
Management should improve monitoring activities to ensure the JOC program is only used for projects that meet defined requirements. In addition, systems and processes should be implemented to regularly analyze the dollars spent with each JOC vendor. Data analysis revealed that some vendors currently receive a disproportionate share of the JOC work
While guidelines have been developed to assist in determining when a Job Order Contracting (JOC) project is appropriate, there is currently no systematic monitoring process to ensure JOC projects are awarded objectively and conform to the UT System guidelines. The following risks may occur within the current JOC process, although our review did not identify any specific instances of such:
- The type of project may not be for the “minor construction, repair, rehabilitation, or alteration of a facility,” as required by the guidelines.
- JOCs may be used for time-sensitive projects that would not normally be appropriate under the existing JOC contracting mechanism.
- Absent capability and merit considerations, a JOC Contractor may be awarded a disproportionate percentage of the total JOC work.
- Projects within the same area or location may be split between multiple projects so the spend amount falls under the $600,000 JOC threshold.
In addition, the JOC Contractor Selection Form that is used to collect data about the proposed project does not contain information to assist management in identifying potential exceptions to the guidelines.
-MD ANDERSON CANDER CENTER, Job Order Contracts, Strategic Area: Facilities Risk Type: Financial, Operational, Reputational, Audit Manager: Paul Pettit
City unlikely to achieve anticipated cost savings.
Program not being admisitered as effectively as it should be…
Department training manual states 8-15% total project cost savings with JOC.
– City of New York, Comptroller, JOC Audit
JOC Program did not comply with code requirements and there were internal control deficiencies.
The FSD was not making a determination that using job order contracting would result in cost savings for each project before approving the use of job order contracting … The FSD misused job order contracting to purchase furniture and equipment and payfor storage fees to store excess equipment. FSD has not implemented policies and procedures to check the calculations and input of adjustment factors into Progen by The Gordian Group. The adjustment factors for 4 out of 20 job order contracts we tested were not correctly calculated or input into Progen.
-Los Angeles Unified School District, Office of the Inspector General, Contract Audit Unit Contract Audit Report Performance Audit Job Order Contracting Program
Our review found that the JOC contractor prequalification and selection policies and procedures are not operating effectively. As a result, the contractor prequalification scores (CPS) do not accurately reflect the performance of the bidders and the JOC master contracts are not always awarded to the most qualified prequalified bidders as required by the Public Contract Code.
– Los Angeles Unified School District Office of the Inspector General, Contract Audit Unit Contract Audit Report Special Review Job Order Contracting Program –Contractor Prequalification and Selection Processes CA 15-1044 October 30, 2015
Labor, Material, Equipment, and Subcontractor markups were inconsistently applied resulting in $163,084 in excess costs to the city.
- Supervision charges were added to invoices where the charges did not appear to be
appropriate thereby costing the city $219,939.
- Labor rates were not billed consistently with the labor rates that were actually paid to employees thereby costing the city $73,742.
- Certain construction activities and related charges were billed at rates much higher than rates generated by comparable resources designed to evaluate the reasonableness of proposed construction charges. These higher rates cost the city an additional $84,852.
- Equipment was not consistently billed in accordance with the Rental Rate Blue Book for Construction Equipment as required by the city’s standard contract requirements (SCR).
These inconsistent billing practices cost the city an additional $54,037.
Approximately 25% of the change orders tested appeared as if they should have been included in the design phase of the project, where our experience indicates they would have resulted in less expensive costs.
-City of Philadelphia – Office of Comptroller, DEPARTMENT OF PUBLIC PROPERTY, Change Order and Requirements Contract Review August 2014
Department of Public Works: The Job Order Contract Program Is Generally Effective But Requires Improvements to Ensure Accountability and Consistency
Specifically, Public Works needs better policies and procedures to guide staff on how to use the JOC program, manage JOC projects, and document key decisions. Public Works can also improve its written guidance over determining which projects should be executed through JOC and develop formal practices for assigning project work to JOC contractors.
– CITY AND COUNTY OF SAN FRANCISCO OFFICE OF THE CONTROLLER Ben Rosenfield Controller 7/16/2013
The JOC Program Was Developed With Internal Control Weaknesses, Implemented With Management Deficiencies, And Abused By A Contractor
– Audit Report – District Inspector General for Audit- Great Plains District
SUBJECT: Housing Authority of Kansas City
On December 19, 1994, the HAKC contracted with a JOC consultant, The Gordian Group (Gordian), to set up a JOC system at the HAKC. By mid-March 1995, the HAKC had contracted with two general contractors, F.H. Paschen Venture, Inc. (Paschen) and Brown and Root Services, Inc., to provide renovation work using the JOC process. From April 1995 through February 1997, JOC contractors renovated units and completed various maintenance and repair projects with contracts totaling $10 million.
Although our report addresses only the HAKC JOC program, we understand similar JOC programs are used by at least nine other PHAs throughout the country.