(The Center Square) – The Colorado Department of Transportation agreed with all 20 recommendations made by State Auditor Kerri Hunter regarding the lack of oversight on $3.5 billion spent on projects.

The 138-page audit specifically reviewed “alternative delivery contracting methods,” commonly defined as selecting a team to develop, procure and design a transportation project. The audit reviewed the design-bid-build delivery method and construction manager/general contractor or design-build approach. During fiscal years 2021 and 2022, the department managed 19 alternative delivery projects, ranging from $8.3 million to $1.17 billion.

“Overall, auditors concluded that the Department lacks sound, consistent, and transparent processes for deciding to use alternative delivery methods, awarding and determining the parameters of alternative delivery contracts, managing alternative delivery contracts, ensuring that alternative delivery contracts provide expected cost-effectiveness benefits, and adhering to accountability and transparency expectations,” according to a media release from the auditor announcing the report.

“When the Department does not follow its established process for determining the most appropriate delivery method for a project, this can result in increased cost to the State, such as difficulty negotiating a contract price, as well as undesirable project outcomes, such as schedule delays or legal risks,” Stefanie Winzeler, legislative audit supervisor, said in a statement. “Our analysis showed that design-build projects are more likely to have schedule delays, cost overruns, and legal disputes when compared to the default, low-bid delivery method. The department’s management of construction manager/general contractor projects has resulted in statutory violations and payments above fair market values.”

In five of 12 construction manager/general contractor projects, the audit found the department paid contractors approximately $700,000 to continue work after contracts expired, a violation of state law. Approximately $158 million was paid for construction work related to expired contracts.

The department uses independent cost estimators to ensure fair and open pricing with construction manager/general contractors. However, during the two-year period the department paid $18 million more than independent cost estimates in all 27 project contracts.

The audit found the department didn’t always follow its own policies for alternative delivery projects. Half of 16 projects reviewed found the department didn’t fully use its selection process when deciding whether to use an alternative delivery method. The failure led to “increasing the risk of choosing an unsuitable delivery method that could lead to cost and schedule overruns,” according to the report. The audit also found some proposals were incorrectly scored and should have been rejected.

The audit found the department lacks a method of evaluating whether alternative delivery methods conform to state laws requiring a timely or cost-effective alternative to standard methods. Design-build and design-bid-build projects are more likely to have schedule and cost overruns, the report found.

The audit also found the department doesn’t provide clear and consistent information on alternative delivery projects on its website. It also found the department doesn’t follow the Colorado Open Records Act by consistently meeting accountability and transparency standards.

The department is responsible for building and maintaining all roads in the state highway system, which currently covers 23,000 lane miles, 3,400 bridges and 35 mountain passes.