The Texas Education Agency does not have a process in place to adequately oversee the state's $462 million student testing contract with Pearson Education, a report from the State Auditor's Office concluded Tuesday.

The statewide standardized tests "were administered and graded in a timely manner," the report states. But, it says, the TEA division that supervises the contract — which represents 61 percent of the total dollar amount of all TEA contracts — does not have "comprehensive written policies and procedures" for monitoring it, and its employees lack required training in contract management.

Education Commissioner Michael Williams thanked the auditor's office for its recommendations, which he said would be put into effect immediately.

Additionally, the report states, when TEA secured the contract with Pearson, it did not ensure that the contract contained "sufficient detail about deliverables and costs to independently determine the reasonableness of changes in the price." According to the report, the lack of itemization of services provided has limited the state's ability to properly estimate the fiscal effect of implementing the newly passed House Bill 5. The bill makes wide-reaching changes to high school testing requirements. As a result, the TEA must depend on Pearson to determine the expense or savings that come with contract changes.

The report also found that the agency falls short of state disclosure regulations regarding for vendor employees who formerly worked for TEA. After an amendment to the contract made in May 2011, the agency no longer required Pearson to communicate intentions to hire former TEA employees or to restricted those former employees from working on the same services or projects they worked on at the agency. It also failed, according to the report, to ensure that employees working on the Pearson contract filled out conflict of interest forms. When asked by the state auditor, TEA identified 11 former employees who had worked on student assessments at TEA who later went on to work at Pearson.

“I am confident that the Texas Education Agency has been an effective steward and watchdog of taxpayer dollars from the inception of this important contract,” Williams said in a statement, which also noted that since the original bid, the contract had been reduced by $6 million. “However, the SAO review has provided recommendations that can help us better track and strengthen our oversight."

As lawmakers moved to reduce the state’s standardized testing program in response to widespread outcry from parents and school leaders during the recently concluded legislative session, the state's contract with Pearson became the focus of much criticism. Many, including Senate Education Committee Chairman Dan Patrick, R-Houston, attacked what they viewed as the company's excessive influence in the policy-making process, both at the agency and state level.

Lawmakers passed a bill during the regular session that contained language added by Sen. Wendy Davis, D-Fort Worth, requiring the agency to develop methodology for auditing and monitoring performance in its assessment contracts. Gov. Rick Perry vetoed the legislation in June because of concerns over a different provision — but Davis did succeed in amending langauge to another bill that requires the Sunset Advisory Commission to evaluate TEA's contracting procedures for action by the Legislature next session.



"The state audit is the first step toward restoring accountability at the agency," said Davis in a statement Tuesday. "Texas taxpayers must know they’re getting their money’s worth out of these contracts. Just as important, parents must be certain their children are being accurately tested.”