AUSTIN, Texas — An internal audit reveals consultant services for the City of Austin in the last several years may have had oversight gaps.
Auditors reviewed 28 consultant contracts with the city, finding that the city might not be able to show that consultant services were justified or that they helped the city meet objectives or resident needs.
The audit, conducted by the Austin City Auditor’s Office, found that:
Staff didn’t conduct a needs assessment before hiring in 40% of contracts
The hiring department didn’t appear to assess in-house capabilities to see whether city staff could have done the work instead in 82% of contracts
Sixteen percent of contract deliverables weren’t specific or measurable
The majority of contracts — about 71% — were closed without reviewing contractor performance
According to the audit, between fiscal years 2023 to 2025, the city spent over $279 million on consulting services. In that time, annual expenditures increased by 25%, or $21 million, and were mainly for Austin Energy, Austin Economic Development, Austin Technology Services and Austin Aviation.
The audit focused on general consulting services, which included advice and assistance relating to public health, software and technology management, environmental and operational strategies and human resource management.
It also found a lack of adequate guidance on how departments should perform and document a needs assessment.
“Mismanaged contracts can undermine the public’s confidence in an organization’s financial practices,” the audit report said.
Beyond consultant services, the City Auditor’s Office said some departments took several weeks to respond to the office’s requests for information, calling it the result of “poorly organized information.”
“For example, it took one department over six weeks to find the supporting documentation for the deliverables because they said the previous contract manager had left the City and they did not know where to find this information,” the audit said.
The audit found that city departments don’t consistently evaluate the performance of consultants, which could lead to rehiring consultants with performance issues and missing opportunities to encourage consultants to offer the highest quality of work.
According to the audit, most departments — about 64% —didn’t conduct performance assessments at the end of the consultant service in the sample used.
In two of the contracts, staff weren’t able to provide documentation related to performance assessments because of the departure of original contract managers, leading staff to not know where to find the documentation.
In one contract, the wrong consultant was referenced, which the City Auditor’s Office points out could “impact the City’s ability to enforce the contract or to take legal procedures against the consultant should a contract dispute arise.”
The city auditor recommends Austin Financial Services provide clear guidance on how to conduct needs assessments and work with the City Manager’s Office to ensure departments maintain essential contract documentation, procurement documentation and contract deliverables.
It also recommended city departments perform post-consultant performance evaluations and lessons learned, establish evaluation criteria and determine how results can be used in future hiring.
The proposed date to implement the recommendations is Oct. 1, 2026.
Read the full audit here: