After decades of contract oversight problems, the City of Austin is now scrutinizing the way its hands out and watches over taxpayer money.
Austin City Council has ordered a comprehensive review of Austin’s contracting process and grant management. That review will consider updating policies, exploring new technology, developing a vendor rating system, centralizing oversight and other possible changes.
The increased push for scrutiny is born out of an ongoing, public struggle with contract oversight. For years, the Austin City Auditor’s Office has pointed out weaknesses in tracking how contractors spend money and whether they delivered what they were paid to do.
Mayor Kirk Watson, who prompted the review, said a revamped system could help the city identify problems faster. The city’s budget deficit puts every dollar spent under scrutiny, including contracts, which represent billions of dollars each year. In fiscal year 2025, the city spent $2.5 billion on contractors.
“My feeling is that we ought to be responsive to the audit reports,” he said. “That’s why we do them.”
Since 2002, the city auditor has found flaws in contracts for housing, social services and HIV programs, among others. A March audit of $279 million in consulting contracts noted that the city did not consistently evaluate performance or justify why the city even needed outsiders to do the work.
After an Austin Current investigation into the city’s Live Music Fund grants, an internal audit showed weak oversight and gaps in billing.
Now City Council members say they want more accountability in how the city manages its contracts and grants.
“It’s extremely important to become more systematic with the tracking and management of these areas,” said Council Member Krista Laine during Thursday’s City Council meeting.
Audits over the years have largely centered around one weakness: The city does not have rigorous rules to ensure it gets what it pays for. Auditors pointed to inconsistent standards across city departments. But officials did not quickly or consistently implement the auditor’s recommendations, so the problems persisted.
Now city staffers will consider how the city can most effectively handle its contracts and grants. That could mean creating a centralized monitoring system, standardizing contract documents or stepping up compliance and enforcement. It could also result in a dashboard to measure performance and outcomes.
Reviewing such a large operation is a big undertaking, said City Auditor Jason Hadavi. But it seems to fall in line with other initiatives by the manager’s office, he said.
“I think the timing is good, because one thing that I’ve seen from the city manager and his staff is they’re looking at shared services or looking at how we manage technology in other places,” Hadavi said. “So I think there’s a commitment to make these types of improvements.”
The council gave the manager until the end of 2027 to substantially complete the review. Right now the city is already undergoing a citywide efficiency audit, working on a bond package and figuring out next year’s budget.
“There’s a lot going on,” Watson said, “and I want to make sure it gets done right.”
