720-913-5000 auditor@denvergov.org

Examination Report

Interstate Highway Construction Inc. Contract

The objectives of the examination were to review the following:

  • Denver International Airport’s review of Interstate Highway Construction Inc.’s compliance with contract terms

  • The airport’s review of Interstate Highway Construction Inc.’s use of subcontractors under the contract to include an examination of associated pay applications

  • Understand the change orders to determine the airport’s compliance with the construction services contract

  • Understand The airport’s internal controls associated with the review and approval of pay applications and change orders

  • The airport’s oversight of Interstate Highway Construction Inc.’s compliance with construction project progress reporting and adherence to project budgets

  • The airport’s oversight of the construction project closeout processes and procedures for the construction services contract

The objective of our examination of the City and County of Denver’s contract with Interstate Highway Construction Inc. at Denver International Airport was to evaluate the airport’s review of the contractor’s compliance with contract terms, internal controls associated with the review, approval of pay applications and change orders, use of subcontractors, and adherence to project progress reporting and construction project closeout processes. CliftonLarsonAllen LLP conducted this examination on behalf of the Auditor’s Office. I am pleased to present the results of this examination.

The examination revealed an ineffective tracking system for subcontractors that could impact the accuracy of meeting the “disadvantaged business entity” goal listed in the contract.

As a result, the examination provided one recommendation for the airport and Denver Economic Development & Opportunity’s Division of Small Business Opportunity to improve internal controls for tracking and monitoring payments made to subcontractors. By strengthening internal controls and implementing the recommendation provided, Denver International Airport can more effectively monitor compliance with the contract provisions for its construction projects.

This examination is authorized pursuant to the City and County of Denver Charter, Article V, Part 2, Section 1, “General Powers and Duties of Auditor,” and was conducted by CliftonLarsonAllen LLP in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the examination to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our examination objectives. We believe the evidence obtained provides a reasonable basis for our findings and conclusions based on our examination objectives.

We extend our appreciation to personnel at Denver International Airport and within the Division of Small Business Opportunity who assisted and cooperated with us and CliftonLarsonAllen LLP during the examination. For any questions, please feel free to contact me at 720-913-5000.

Denver Auditor’s Office

Timothy M. O’Brien, CPA Auditor

City and County of Denver, Denver Auditor’s Office Denver, Colorado

We have examined the City and County of Denver’s Department of Aviation’s (Denver International Airport) compliance with contract #201732479 “Runway 8-26 Complex Pavement Rehabilitation” with Interstate Highway Construction Inc. (the contractor) during the period May 1, 2017 through July 31, 2018 as it relates to Denver International Airport’s review of the contractor’s compliance with contract terms, internal controls associated with review and approval of pay applications and change orders, evaluation of the Denver International Airport’s review of the use of subcontractors by the contractor, and evaluation of the Denver International Airport’s review of the contractor’s adherence to project progress reporting and the construction project closeout processes. Management of Denver International Airport is responsible for Denver International Airport’s compliance with the specified requirements. Our responsibility is to express an opinion on Denver International Airport’s compliance with the specified requirements based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and the standards for attestation engagements contained in Government Auditing Standards. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether Denver International Airport complied, in all material respects, with the specified requirements referenced above. An examination involves performing procedures to obtain evidence about whether Denver International Airport complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.

Our examination does not provide a legal determination on Denver International Airport’s compliance with specified requirements.

In our opinion, Denver International Airport complied, in all material respects, with contract #201732479 “Runway 8-26 Complex Pavement Rehabilitation” with the contractor as it relates to the contractor’s compliance with contract terms, internal controls associated with review and approval of pay applications and change orders, evaluation of the Denver International Airport’s review of the use of subcontractors by the contractor, and evaluation of the Denver International Airport’s review of the contractor’s adherence to project progress reporting and the construction project closeout processes during the period May 1, 2017 through July 31, 2018.

CliftonLarsonAllen LLP

Broomfield, Colorado November 21, 2019

CliftonLarsonAllen LLP (“CLA”) was engaged by the Auditor to perform an examination of Denver International Airport’s contract No. 201732479 (“Runway 8-26 Complex Pavement Rehabilitation”) with Interstate Highway Construction Inc. during the period of May 1, 2017, through July 31, 2018. This examination related to Denver International Airport’s review of Interstate Highway Construction Inc.’s compliance with contract terms, the airport’s internal controls associated with review and approval of pay applications and change orders, evaluation of the airport’s review of Interstate Highway Construction Inc.’s use of subcontractors, and evaluation of the airport’s review of Interstate Highway Construction Inc.’s adherence to project progress reporting and construction project closeout processes. As part of the deliverables, CLA presented an examination report to the Audit Committee.

The agreement we examined between Denver International Airport and Interstate Highway Construction Inc. was entered into on May 26, 2017, for an amount up to $22,204,974.25. This agreement was awarded to Interstate Highway Construction Inc. through an invitation for bids and proposal process from qualified general contractors, dated February 24, 2017.

Recommendation: We recommend that Denver International Airport coordinate with the Division of Small Business Opportunity to enhance the internal controls surrounding the process for tracking and monitoring payments made to subcontractors within the B2G Contract Management System to ensure the amounts listed in the system accurately reflect the amount paid to each subcontractor.

Follow-up report

A follow-up report is forthcoming. 

Audit Team: Dawn Wiseman, CliftonLarsonAllen LLP, Allison Slife, John-Paul LeChevallier