Revenew's innovative cost recovery auditing and
contract risk management services provide the only
comprehensive "procure-to-pay"
audit solution in the marketplace today.

Our client signed a contract with a key supplier that resulted in a significant price decrease. The cover sheet was dated January 1, 2015. The body of the contract contained language stating an effective date of November 1, 2014, though the term “effective date” was not defined in the contract. The supplier’s position was that the lower prices should go into effect the day our client signed the contract: March 1, 2015. Our client, however, was expecting the decrease to take effect on the stated effective date of November 1, 2014. The price difference amounted to $500,000 for the four-month period in question. Revenew’s contract compliance audit team identified this issue and helped our client achieve a recovery settlement of $250,000. Our contract language risk assessment team also provided specific language to be added to our client’s master purchase agreements defining the term “effective date” – and maximizing savings on future contracts.

While auditing a general contractor construction contract for our client we discovered that many aspects of the lump sum fringe benefit rate (overhead mark-up) was overestimated compared to actual costs. This was a cost-based agreement with an additional fee applied to all costs for contractor profit. The lump sum fringe benefit rates were applied to every dollar of labor supplied by general contractor and/or union workers with different rates applied for union and non-union laborers. The fringe benefit included worker’s compensation, vacation fund, education and training, retirement benefits, health coverage, payroll taxes, union fees, small tools and safety program. The fringe rates applied for billing purposes were unchanged year-to-year and after reconciliation of actual cost to estimated fringe rate for all these components, we found that labor mark-ups were being overcharged by nearly 8% for every dollar of labor billed over the audit period. As a result of Revenew’s in-depth contract compliance audit, our client recovered a negotiated settlement of $325,000.

The scope of our contract compliance audit of fluid hauling trucks included more than 7,000 small-dollar invoices and $20 million in spend over a three-year period. Our team secured critical data from the contract trucking company, including line item invoices, timekeeping and payroll transactions. After merging these files into one comprehensive database comprised of more than 30,000 transactions, our recovery audit team discovered that the trucking company was billing more than 24 hours in a day for individual trucks/drivers. Our recovery totaled $1.3 million for hours billed in excess of 24 per day.

A $50 million electrical materials distributor contract allowed for a tiered, declining markup based on the supplier’s actual cost. However, the supplier used a forecasted “replacement” cost instead of actual cost and then applied a sales margin (using divide-by methodology) instead of a cost-plus markup (using multiplication methodology). In addition, the supplier’s system could not automatically apply the correct markup and had to manually adjust for higher cost items. These issues totaled $1.4 million and a $1 million settlement was negotiated because the contract language was not as clear as it could have been. The “Best practice” contract language we provided to our client was included in a contract amendment immediately following the audit settlement.