Kentucky Transportation Cabinet Announces Completion of the Investigation of Change Orders
The Kentucky Transportation Cabinet (KYTC) today announced the findings of a recently completed investigation of the change order process. Change orders are modifications to state highway contracts that can change project costs and work activities. The cabinet’s Office of Inspector General (OIG) initiated the investigation of change orders to examine five (5) change orders issued in 2003 during the previous administration.
“Governor Fletcher directed the cabinet to improve accountability and provide better value to the taxpayers,” said acting Transportation Secretary Bill Nighbert. “Prior to questions being raised about the exorbitant amount of change orders issued by the previous administration, we began implementing policies to better manage the process and ensure taxpayers are not paying for unnecessary project changes.”
The preliminary OIG findings in September of last year made 11 recommendations to improve the change order process. The final OIG report has 5 additional recommendations. The final process included the review of 2,900 change orders in calendar years 2002, 2003 and 2004. As a result, this administration has placed tighter controls over the change order process. No longer are change orders approved by staff personnel in the field or approved without documentation establishing the need for the contract change.
“We have a clear process to evaluate change order requests based on their merits,” said Secretary Nighbert. “The Commissioner of Highways must approve each change order. Additionally, for the first time ever, both the construction and design divisions must agree that the change is needed.”
In the first six months of Fiscal Year 2004, the Cabinet reduced the amount spent on change orders by more than $50 million. The money saved is rolled into other projects so the taxpayers get better value for their tax dollars. The cabinet has reduced the percentage of change orders relative to the total amount of contract work from 27 percent in the first half of Fiscal Year 2004 to only 6 percent in the first half of Fiscal Year 2005.
“Our administration set out to create real change in how state government does business,” said Governor Ernie Fletcher. “The investigation by the OIG and subsequent findings coupled with the savings we have already announced show our administration has made positive changes in the process, thus making us better stewards of taxpayer dollars.”
Throughout the investigation, the Office of Inspector General pro-actively asked the U. S. Department of Transportation’s Office of Inspector General and the Federal Highway Administration to provide its expertise and resources to assist our OIG to analyze the cabinet’s past and current. As a result, the cabinet is confident in its findings of NO criminal wrongdoing by past or present cabinet employees in the handling of change orders, in addition to no finding of “favoritism.”
The Office of Inspector General functions as an independent investigative agency within the cabinet and provides its analysis and recommendations to correct any problems.
NOTE: The complete report is available for pickup at the Public Affairs Office in the Transportation Cabinet Office Building in Frankfort. For your overview information, we have provided you with a timeline and fact sheet. The additional information is below.