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New Jersey Telecom Audit Finds Unneeded Phone Lines

New Jersey Comptroller's report claims departments lack documentation to justify millions of dollars in phone costs, have renewed contracts for years without legal bidding process.

by / July 9, 2010

A recent audit of New Jersey's telecommunications billing and contracting procedures found major flaws totaling more than $3 million in wasted taxpayer dollars.

Conducted by the recently formed Office of the State Comptroller (OSC), the report focuses on the Office of Information Technology (OIT), which oversees telecommunications billings for the executive branch and landline billing for the judicial and legislative branches of government.

The audit found that nearly one in six of all the state government's phone lines should be disconnected. And a random sample of 518 cell phones revealed that 82 percent of them didn't have written justifications for their employees' use, according to the audit.

Although the audit focused on the OIT, it concluded that much responsibility rested with individual state departments that didn't report the disconnected, unused or unnecessary landlines to the OIT after contacting the vendor.

"According to OIT officials, state departments are responsible for disconnecting unused or unnecessary land-based telephone lines by directly contacting the vendor," the report said. "Subsequent to contacting the vendor, departments are required to provide OIT with notification of the land-based telephone lines that have been disconnected."

This finding was backed by a response letter from New Jersey Chief Technology Officer Adel Ebeid: "Unless OIT received a notification to disconnect a telephone line, the state will incur a monthly fee for that telephone line."

The 21-page report from the Comptroller's Office found that many state departments weren't keeping documentation to justify employees' use of cell phones and that the state extended telecommunications contracts without opening them up to bid, as required by law. Also, unreasonable expenses stemmed from employees calling directory assistance (such as 411), even though free services were available. The comptroller said former employees' phone lines weren't disconnected, some for years, which amounted to significant amounts of unnecessary expenses.

"The state is paying hundreds of thousands of dollars every month for phone lines that are not even being used," State Comptroller Matthew Boxer said in a press release ( "Examples of government waste don't get much clearer than that."

New Jersey's independent Comptroller's Office was created in January 2008 and is charged with measuring government performance in an effort to bring greater efficiency and transparency to state agencies. This is its first telecommunications audit.

In addition, the OSC found the following issues and areas of waste:

  • More than 18,000 landlines could have been eliminated, saving the state more than $2.8 million annually.
  • Nearly 1,400 wireless lines could have been eliminated, saving the state $412,000 annually. 
  • More than $250,000 in "unreasonable costs" was incurred to call directory assistance, or 411 services, during a one-year period. 
  • A one-time savings of more than $40,000 for disconnected data service lines that the state says it's owed by Verizon. 
  • Many state departments do not maintain documentation to justify their employees' wireless device assignments -- about 19,000 such devices are being used by executive branch employees.

Unnecessary Phones Disconnected

In response to the audit, which the Comptroller's Office took 10 months to complete, 18,265 landlines have been disconnected or suspended for 30 days pending final disconnection, the OIT disconnected the state's 1,394 unused wireless lines and has stated it will conduct periodic reports of lines that are no longer in use.

The OIT has already contacted Verizon to have 411 calls blocked from state-issued phones and will revise its telephone policy to include some of the OSC's recommendations.

"We are reviewing the findings of that report and currently

the Office of Information Technology's policy is for each agency to identify unused lines and issue a termination request as appropriate," OIT Spokeswoman Shelley Bates read from a prepared statement. "Moving forward, OIT will issue quarterly zero usage reports to agencies to take a more proactive approach in terminating unused lines. In addition, OIT will make a full review of the state's policy for phone lines and take corrective action as appropriate."

Another issue highlighted in the report is a lack of documentation regarding employees' cell phone issuances.

"Assignment of wireless devices to state employees must be based upon the need to have constant communication, and the benefit must justify the cost," the report said. "We found that many departments were not maintaining documentation to justify their assignment of such devices."

Contracting Procedures Disputed

As well, in a review of four state telecommunication contracts, the Comptroller's Office found each had been extended at least seven times without being opened up to bid -- and one of them had been extended 22 times.

A review of OIT and the Department of Treasury's Division of Purchase and Property -- the state's procurement agency -- concluded both agencies obtained waivers from competitive bidding by incorrectly labeling certain telecommunications services as being available from only one source, the report states.

"The state has prevented fair vendor competition in its telecommunications contracts for more than a decade and essentially handed out a no-bid contract with each extension," Boxer said in the release. "As a result, the public cannot be sure that the state is getting a fair price."

Responding to the aforementioned issue, the OIT said that it and the procurement agency have tried to open up the contracts for bid. Ebeid's letter of response stated the report demonstrates a "lack of understanding" on how the telecommunications billing and contracting processes work.

He said telecommunications contracts were extended after deep discounts were negotiated with the vendors, which has saved the state more than $12 million since 2007. Ebeid also noted that the state's analog-based Centrex Operations is a critical piece of the overall picture. "We are unable to take advantage of the competitive opportunities unless we modernize our entire infrastructure into an IP-based network," his letter said. "As we modernize the Garden State Network and increase its capacity, we will be able to transport voice and data on a shared network."


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Karen Wilkinson

Karen is a former staff writer for Government Technology magazine.

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