Evaluating Outside Consultants and Contractors
by Michael L. Lauzon, CPA, MBA, Audit Partner
Posted on July 22, 2016
Who are the District’s outside consultants and contractors? Financial advisers, attorneys, auditors, information technology, construction, special education, transportation, food service, and other endless possibilities.
In an increasing world of specialization it seems the usage and demand for consultants and contractors is only increasing but it is not uncommon to encounter issues with the provider delivering the promised product. Below are few steps that can be taken to put an evaluation process in place to ensure your district is receiving what was promised and paid for.
One of the most important tools in evaluating outside consultants and contactors is the written contract that is in place. Some of the items that should be in the contract include: clearly defining who is expected to perform the service, what are the deliverables, setting the time frame for the deliverables, what is expected of the District, are there penalties, is it a fixed costs or hourly billing. In addition, the District may also have an attorney review and help prepare standardized language to be included in service contracts.
Another important tool is having performance measures in place. Some examples of performance measures would be providing the salary report, financial statements, or IEP for each student by the time period specified in the contract. Another step would be reviewing the product/service that is being provided during the process rather than waiting until the contract completion. It is a lot easier to change how a project in progress than doing it all over again.
The final tool is measuring the return on investment. For instance if the company promised a 10% increase in student test scores, did that actually happen? Once you have a new process in place do you find that the usage of consultants in that area is going down or remaining the same? Is the building or product lasting for the amount of time anticipated or are repair costs increasing every year? Measuring the return on investment can be difficult but can provide information as to the effectiveness of the above steps.
Finally, what actions should the District take if you determine the consultant or contractor is not performing? A first step would be to examine the contract to see what remedies are available, such as scheduling a meeting to set new expectations. In some instances it may be deemed necessary to terminate the relationship. Once you have these tools in place you will find it is much easier to monitor the performance of the District’s outside consultants and contractors.