Vinfen Corporation Administration of Limited Unit Rate Service Agreements

The Auditor reviewed these payments because DDS LUSA payments were often made late in the fiscal year, which the audit considered higher risk for improper use or irregularities.

“Based on this analysis and the results of prior audits that identified issues with LUSA transactions, we concluded that LUSA payments processed late in the year, particularly during the accounts-payable period, might pose disproportionately high risks of improper use or other irregularities.”

These funds are supposed to pay for unexpected, limited-time client services, but the audit says weak controls can lead to unclear, duplicate, excessive, or improper payments.

“As a result, if a LUSA agreement is erroneously used to pay for services that have already been effectively reimbursed through a regular contract, the contractor may improperly receive excessive or duplicative reimbursement of program costs.”

For a Massachusetts resident, this matters because the report is about whether state human-service dollars were properly approved, documented, and spent.

“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 Auditor said there was not enough proof that many payments were properly authorized, properly billed, not excessive, and actually tied to services delivered.

“The lack of adequate documentation violated the previously quoted provisions of the Commonwealth Terms and Conditions for Human and Social Services, and as a result, there was insufficient evidence to show that these LUSA payments had been properly authorized and accounted for; that they were not duplicative or excessive; and that the contractor had actually provided the LUSA services billed.”

The issue was significant because Vinfen received about $1.63 million in LUSA payments during the period, and about 70% of that was processed during the late accounts-payable periods the audit focused on.

“Approximately $1,141,511 (70.1%) of the payments to Vinfen was processed during the accounts-payable periods for fiscal years 2009 through 2011.”

A LUSA is basically a state contract tool DDS can use to buy short-term, as-needed services from an approved provider when those services are 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.”