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March 03, 2011

 

DiNapoli: State Could Save Millions on Equipment and Software Maintenance Contracts

OSC Issues New Guidance for Agencies

State agencies are wasting millions of dollars annually on equipment and computer maintenance, New York State Comptroller Thomas P. DiNapoli said today as his office issued new guidance on equipment and software maintenance contracts.

"Over the last two years alone, as the state faced fiscal uncertainty, state agencies wasted millions on equipment and software maintenance,” DiNapoli said. “Now more than ever, taxpayers can’t afford to foot the bill for government waste. The guidance we issued today will help agencies make better purchasing decisions and save taxpayer dollars for years to come."

Since January 2009, DiNapoli’s auditors have identified agency failures to negotiate lower prices for maintenance and maintenance vendors that received payment for services not performed.

Audits at Buffalo State College and SUNY Binghamton found elevator maintenance vendors received full payment even though they did not perform 82 to 90 percent of contractually required work during the audit period. Auditors identified up to $50,000 in overpayments at Queens College where the building management systems equipment maintenance vendor performed only two percent of certain required work. Unclear contract terms prevented auditors from finding further savings at these institutions.

When there is only one potential maintenance provider, agencies have an obligation to exercise due diligence in negotiating pricing and determining price reasonableness. DiNapoli’s auditors helped the Division of Criminal Justice Services (DCJS) negotiate $1.8 million in savings over three years on its fingerprint software maintenance contract.  Auditors found the Office for Technology (OFT) could save as much as $2.3 million a year by negotiating a more affordable telephone maintenance contract.

State agencies also need to ensure they do not contract for maintenance services already provided to the agency under a warranty and that they do not pay for services the agencies did not order.  Auditors found Queens College paid its vendor more than $150,000 for maintenance services that were already covered, and paid for, under a warranty.  At DCJS, auditors identified more than $546,000 in payments for license fees intentionally excluded from the contract.

DiNapoli urged managers at all state agencies to examine their equipment and software maintenance contracts for similar savings opportunities.

For a copy of the new guidance go to: http://www.osc.state.ny.us/agencies/gbull/g_244.htm

For the audits on equipment and maintenance contracts, click on the agency names: Buffalo State College, SUNY Binghamton, Queens College, DCJS and OFT.

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