October 24, 2012
Continuing its efforts to identify additional efficiencies and cost savings to redirect more funds to our classrooms, Chicago Public Schools (CPS) will work with two vendors to identify and ultimately recapture unpaid credits and overpayments from its vendors. The Board of Education today approved contract with two firms – Revenew International LLC and Professional Auditing Services of America – to provide services that will ensure the District is paying only for what it receives in goods and services. Their work also will ensure that the District is appropriately compensated in credits due from vendors.
“Given the fiscal challenges Chicago Public Schools faces, we continue to scour the status of every contract,” said CPS Chief Executive Officer Barbara Byrd-Bennett. “This is another step we are taking with our new Office of Procurement leadership to make sure anyone doing business with CPS knows we are carefully examining all business practices to ensure that we maximize the resources we can allocate to the classroom.”
The recovery audit services provided by the two firms include:
- Reviewing and analyzing accounts payable and procurement information from both internal and external sources to determine whether CPS has overpaid,
- Tracking any overpayments and, in cases where overpayment is discovered, requiring that suppliers remit funds to CPS, and
- Tracking and pursuing funds from vendors or contractors who no longer do business with the Board.
Specifically, the firms will seek to identify instances of duplicate billing or payments, CPS payments to an incorrect supplier, payments outside of agreed-to terms, sales tax issues or possible fraud.
CPS will only pay Revenew and Professional Auditing based on a percentage of what they recover – also called a “gainshare” arrangement. For contracts valued more than $10,000, CPS will pay 40 percent of each recovery made in the amount between $30,001 and $499,000 and 25 percent of each recovery made in the amount of $500,000 to $1 million.
The agreements run for one year with three one-year renewal options. The firms will report on fund recovery or credits and provide detailed summaries of overall auditing activity, including cost-saving opportunities they have identified, best practice recommendations and training to personnel for improvements based on their recovery work and other observations.
Utilizing audit recovery services follows other actions CPS has implemented in its Office of Procurement, which has moved to end “business as usual” purchasing practices by renegotiating contracts, creating competition in the marketplace and building stronger vendor relationships to ensure that the District is dedicating every available dollar to students and classrooms.
The District is also working with global consultant A.T. Kearney to assess District spending in such areas as operations, transportation and custodial supplies. Earlier this year CPS negotiated reduction with its food and milk vendors, saving the District about $1.6 million in Fiscal Year 2013.
Chicago Public Schools serves 403,000 students in 681 schools. It is the nation’s third-largest school district.