Fidelity House Inc., Administration of Limited Unit Rate Service Agreements

The auditor was reviewing DDS human-service contracting to check whether public money was being used accountably, transparently, and cost-effectively.

“The overall audit of DDS was conducted as part of OSA’s ongoing efforts to audit human-service contracting activity by state agencies and to promote accountability, transparency, and cost effectiveness in state contracting.”

The report says LUSA money is meant for short-term, unexpected client services, but DDS used these contracts in ways that were not properly controlled and sometimes not consistent with that purpose.

“That report presents our system-wide audit, which determined that, although LUSA funding is supposed to be used for intermittent unanticipated services to clients as needed, DDS is not properly administering these contracts.”

If you are a taxpayer, client, family member, or service provider, this matters because the audit questions whether state disability-service funds were properly documented and used for services rather than unrelated purchases or accounting fixes.

“Documentation was also not sufficient to verify that payments were not duplicative or excessive and that the contractor had actually provided the LUSA services billed.”

The auditor found $601,067 in questioned funding involving Fidelity House, including missing or inadequate documentation, capital and non-service purchases, and payments that should have gone through other contract mechanisms.

“In many instances, the same transaction was associated with multiple problems.”

The report says oversight agencies should review the issues, and Fidelity should strengthen controls so LUSA services are properly performed, documented, billed, and accounted for.

“In accordance with the recommendations of the overall report and the testing results specific to Fidelity, Fidelity should implement appropriate control measures to ensure that all LUSA services are performed, documented, billed, and accounted for in compliance with applicable requirements.”

This was not a small paperwork issue: Fidelity received about $880,595 in LUSA payments during the audit period, and the auditors focused on the $601,067 processed during accounts-payable periods, finding problems with all of it.

“Fidelity received approximately $880,595 of the above-stated $62.2 million in total DDS LUSA payments.”

LUSA stands for Limited Unit Rate Service Agreement. In plain terms, it is a state contract tool DDS can use to buy limited, as-needed services from an approved provider when a client is not already covered by another contract.

“LUSAs are a form of a master contract agreement that can be used by DDS to purchase services from a preapproved contractor on an intermittent, limited-time basis for clients who are not already covered through an existing contract.”