Austin audit finds gaps in consultant contract oversight

A recent internal city audit found major gaps in how city departments justify and manage consultant contracts, raising concerns over hundreds of millions of dollars in spending.

From 2023 to 2025, the city spent more than $279 million on consultants, with annual spending rising by $21 million in the two year period, marking a 25% increase. The majority of the new costs came from consultant expenditures for Austin Energy, Austin Economic Development, Austin Technology Services and Austin Aviation.

Based on its findings, the City Auditor's office recommended that the city's finance department provide instructions on how to assess whether a department needs a private consultant; ensure departments document progress and assess goals for consultants; and require performance evaluations.

The recent consultant report is one of several internal city auditors have released in recent months, finding issues with city processes. Audits released in December found widespread contract oversight failures and missing documentation in Austin airport contracts. That same month, internal auditors also caught a former Austin Energy employee routing nearly a million dollars in public funds to fake vendors over six years.

The consultant audit, presented to a council committee Wednesday, reviewed 28 consultant contracts across nine departments and found that staff did not conduct a needs assessment before hiring the consultant in almost 40% of contracts. In around 71% of contracts, departments did not formally evaluate the contractor’s performance.

“This could result in rehiring consultants with performance issues and may discourage consultants from providing the City with their highest quality work,” auditors wrote in the report.

In six of the reviewed contracts, staff could not provide evidence they had received all required results. In some cases, city staff were unable to answer basic questions about the contracts like whether the department assessed what it needed from the consultant before it hired them or whether the department got results from the consultant.

For around 82% of the contracts, hiring teams did not evaluate whether city staff could do the same work of a consultant in house. City staff did not measure results from the consultant's work in 16% of the contracts reviewed.

City officials also noted that one contract for over $240,000 referenced the wrong contractor. The report said staff noted the discrepancy at the time and said they would correct it during contract renewal. But the issue was never corrected despite at least two other amendments being made to the contract.

“This could impact the City’s ability to enforce the contract or to take legal procedures against the consultant should a contract dispute arise,” auditors wrote.