Internal Controls — Contract Management


  • Performance under a contract meets the terms, conditions and specifications of the contract.
  • Contracts are properly awarded.
  • Reduce (and prevent, if possible) collusion between vendors and employees and/or among vendors during the bidding, awarding, drafting, payment or execution of the contract, by, among other things, segregating duties among personnel.
  • Vendors are qualified to perform the work required by the contract.
  • The original contract price is not increased through the use of frequent or unnecessary change orders.
  • Only allowable costs are billed and paid.
  • All goods and services under the contract are delivered or performed.


  • A vendor, contractor or supplier will be paid more than is provided for by contract.
  • Governments are susceptible to: unauthorized charges; prices in excess of those agreed upon; claims for unallowable costs; quantities or qualities that differ from those agreed upon; and charges that should be attributed to another contract.
  • Vendor (accountant, attorney, architect, engineer, contractor, etc.) is not licensed or not authorized to do business in the jurisdiction.
  • False and fraudulent billing schemes result in pricing irregularities, double billing, mischarging, etc. 
  • Products are subject to substitution, non-delivery or misdelivery.
  • Kickback schemes and conflicts of interest occur.
  • Systematic mischarging results from programmatic extension.