Transcript Arizona Administrative Code - Scottsdale Unified School

Arizona School Procurement
A Guide to the Purchasing Process
Scottsdale Unified School District
Governing Board Meeting
11 August 2009
David Peterson, Ass’t Superintendent
School District Procurement
Includes
• Small Purchases
• Large Purchases
• Warehousing
• Distribution
• Contracts Administration
• Inventory Management
• Fixed Assets Management
• Property Disposal
Key things We must remember
The “rules” exist
The rules are not optional
The rules apply to every one
The rules are specific, but do not provide clear answers for all questions
Certain personnel within our school district are charged with enforcing
the rules
When enforcing the rules, those individuals are doing their jobs, not
throwing up roadblocks to prevent you from doing yours
There are penalties for not following the rules
The most severe of those penalties are assessed against individuals, not
school districts
You can follow the rules and get your job done
School District Procurement is
Governed By
Arizona Revised Statutes
A.R.S. § 15-213, A. is key to procurement
Other subsections (B-G) also apply
Uniform System of Financial Records (USFR)
Applies to purchases of $33,689.00 or less
Applies to inventory management
Applies to fixed assets management
Section VI-G is the applicable section
Arizona Department of Education School District Procurement Rules
Applies to all procurement with values over $33,689.00
The bid threshold is adjusted annually
Applies to procurement protest and claim resolution
Applies to disposition of assets
Governing Board Policy
Sets local requirements for the school district
May be more restrictive than the USFR or procurement rules
May not be less restrictive
Arizona Administrative Code
Article 10
School District Procurement Rules
Primary source for the “school district procurement code”
Authority
Arizona Revised Statues §15-213
A, B, C, D, E, F, G
History of School District
Procurement Code
• 1984: State Procurement Code adopted. Does not
apply to schools.
• 1984: Legislature directs State Board of Education
to adopt procurement rules.
• 1987: State Board of Education adopts School
District Procurement Code (AAC Article 10)
Purposes of Procurement Code
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Increased Public Confidence
Ensure Fair and Equitable Treatment
Maximize Purchasing Value of Public Monies
Foster Competition and Free Enterprise
Provide Safeguards for Quality and Integrity
Simplify the Procurement Process
Bid Thresholds
• Under $5,000 - no formal competition, use
catalog, past experience (District Policy)
• $5,000 to $15,000 – 3 verbal quotes (USFR and Board
Policy)
• $15,000 to $33,689 – 3 written quotes
(USFR and
Board Policy)
• Over $33,689 – Sealed Invitation for Bid or
Request for Proposal (ARS 15-213)
• Bid threshold adjusted annually by DOE
Types of Purchases
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Sole Source
Requests for Quotations
Invitation for Bids
Request for Proposals
Professional Services
Emergency Procurements
Purchasing Cooperatives
Sole Source
(Copyrighted & Patented – i.e., software)
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Shall be avoided – Unless…
No reasonable alternative exists
Governing Board determines in writing
Written evidence and determination of the
basis for the procurement
Request for Quotation
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Purchases under $33,689.00
Three verbal or three written quotes
Purchasing file
Each quotation has it’s own specific number
and file
Competitive Quotations
An acceptable quotation includes
Date of quote
Name of firm
Name of person providing quote
Item or service offered (description, brand & model)
Unit price
Extended cost
Freight, sales tax & other charges
Total cost
Warranty, delivery & other important information
Name of person obtaining quote
Must be provided with the purchase requisition
Verbal quotes can be noted on the requisition
Written quotes must be on vendor quote form or letterhead
Invitation for Bid
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> $33,689.00
Award requires Governing Board approval
Commodity driven
Lowest responsive and responsible bidder
Cost is the significant evaluation factor
Request for Proposal
• > $33,689.00
• Requires Governing Board approval to
Issue and Award
• Functionality driven
• Cost is only one of the evaluation factors
• Allows discussions with offerors
• Allows a best and final offer
Bids and proposals are used to make purchases with
costs above the competitive sealed bid threshold
Bids are…
Proposals are…
Formal requests for offers from the
school district
Formal requests for offers from the school
district
Formal offers from vendors
Formal offers from vendors
Firm as received. No negotiation is
allowed
Subject to revision by means of best & final
offers
Awarded to the lowest responsible &
responsive bidder
Awarded to the vendor whose proposal is
determined to be most advantageous to the
District
Utilized most often for commodity or
services purchases where the
requirements can be clearly defined
and award is based primarily, but not
solely, on price
Utilized most often for commodity or services
purchases where the requirements are not
clearly defined and award is based primarily
on factors other than price
Types of Purchases Over Bid
Threshold To Governing Board
• Sole Source (Copyrighted, patented)
• Emergency (To protect health, safety of
student or employees or to protect equip)
• Existing Cooperatives
– State of Arizona, Mohave, GPPCS, US
Communities, TCPN, SAVE
• Formal Solicitations (RFP or IFB)
Professional Services
• Architect, engineer, land surveyor, assayer,
legal, geologist and landscape architect
• Demonstrated competence and
qualifications are criteria
Exceptions to the Competitive
Procurement Requirements
Emergency Procurements
Have an immediate impact on the health, safety or welfare of the public,
employees or students, or the operational capabilities of the district
Sole Source Procurements
Only one source is available to supply a required material or service
Avoid sole source procurement unless it can be documented that there is
not a reasonable alternative based upon a functional, operational or
programmatic requirement
Cooperative Purchasing
This is not an exception, but another means of meeting the competitive
procurement requirements
Multiple public procurement units share contracts, when the contracts meet the
requirements of the Procurement Rules
Emergency Procurements
• Immediate and serious need for materials, services or
construction
• Procurement cannot be met through normal methods
• Seriously threatens the functioning of the district
• Seriously threatens the preservation or protection of
property, public health, welfare or safety
• Examples: floods, epidemics, natural disasters, riots, fire
or equipment failures
• Governing Board designates a board member or district
official to make purchases
Purchasing Cooperatives
• One or more public procurement units
• Aggregate materials, services or construction
• Achieve greater cost savings
Formal Solicitation Procedures
• Generally same for IFB or RFP; method for award is
difference
• Approval for issuance obtained
• Scope of work created
– Previous solicitations
– Samples from other districts or public entities
– Drafting thru committee
– Consultants
• Medical insurance or other complex item
Formal Solicitation Procedures
• Insert terms and conditions and boilerplate
• Send to registered bidders (bidders list)
– Other potential bidders as recommended by users,
other districts, consultants
• Out for bid for 14 days or more
• Specified time and date for public opening
– IFB name and prices are read publicly
– RFP only name is read.
– All other information is confidential until award
Formal Solicitation Procedures
• Bids/offers are checked for responsiveness
– Everything included and signed, bids on time,
samples included, bid bonds, licenses
• IFBs checked for low bidder
– User asked to check if product bid meets the
minimum specifications
• RFP given to committee for evaluation
– Committee of one or more persons
– Construction and A&E have additional requirements
- registered architect, number of members
Evaluation Committee
• Chaired by department head or designee
• Using department recommends members
– Conflict of Interest
• Evaluation criteria jointly decided between using
department and purchasing department
• Code states all “information contained in the proposals
shall be confidential as to avoid disclosure. . . during the
process of negotiation”
PROTESTS
• Vendor may file protest with District representative
(Director of Purchasing Services)
• District has 14 days to respond
• All offerors are notified of protest
• District response made
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Options – cancel contract, continue award, re-bid,
reject protest, other
• Certified letter response sent.
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Vendor may appeal to Governing Board
Protest Appeal
• Must be filed within 10 days to District
representative
• Must set forth the information required for bid
protest;
• Must articulate the precise factual or legal error
in the decision of the District Representative.
• District Representative notify Governing Board
and other parties within 3 days
Protest Appeal
• District to provide hearing officer
• District to provide response to appeal
to hearing officer within 7 days
• Case is heard IAW R7-2-1181
• Governing Board sustains or rejects
appeal.
Checks and Balances
• Separation of duties: who requests,
procures, receives, pays, etc…..
• Signature requirements
• Invoice payment authority
• Outside independent audit
• Outside legal counsel
• Open record law
• Centralization
Challenges
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Units: line item vs aggregate
Threshold limits
Known demand vs splitting requirements
Growing pains
Procuring what we need, when we need it,
at the lowest competitive cost
Cost
• Means the aggregate cost of all materials
and services, including labor performed by
force account.
Force Account
• Work performed by the school district’s
regularly employed personnel.
Change Order
• A written order which directs the contractor
to make changes that the changes clause of
the contract authorizes the governing board
to order.
Change Order Percentage
• A change order which increases or decreases the
contract amount in excess of $15,000.00 or five
percent of the contract amount, whichever, is
greater may be executed if the governing board
determines in writing that the change order is
advantageous to the school district.
Purchase Requisitions
Commonly completed by the ordering sites
• Create requests to purchase
• Used by the Purchasing Department to issue purchase orders
• Are not the same as purchase orders
• Must not be used to place orders with vendors
• Must be accurate, complete & legible
• Commonly have several stops before they reach the Purchasing
Department
Purchase Orders
Must be issued before materials, services or construction items are ordered or
received
Create procurement contracts on behalf of the school district
Place certain obligations on the vendor & the school district
Possess certain permissions and restrictions
Should not be revised or exceeded without approval from the Purchasing
Department
Help control the vendor payment process
Committing the school district to a purchase before a purchase order is
issued creates an after the fact purchase. After the fact purchases are
violations of the rules that apply to school district procurement. Serious
consequences may result from after the fact purchases.
What happens if the rules are not followed?
School districts generally have internal procedures to address rules
violations. These tend to be geared toward addressing the issue,
resolving it to the benefit of all parties, and preventing future
occurrences.
Violations can result in severe personal penalties. These include:
Responsibility for the debt
Payment of a 20% penalty
Payment of interest
Loss of employment
Repaying the state
Payment of legal fees & court costs
A Class IV felony conviction
Seizure of personal assets
The rules cost my school money.
What can we do?
This is a frequent complaint. However, we have found that
the lower prices generally result from one or more of the
following:
Different quality
Vendor operates on cash basis
Loss leaders
Ancillary costs make up the difference
Short term sale
No after the sale support
Risk of the purchase falls on the buyer
Why do we have to buy from the
low bidder?
If we’ve done our jobs right, the low price is
normally the best buy. However, cost is never the
only factor considered. We also consider other
factors such as quality, delivery time, warranty,
purchase terms, etc. A low bid can be rejected if
it is documented that it does not comply with all
requirements.
Governing Board
Role in Procurement
How should board members respond to contacts
from vendors?
During Actual Procurement the Buyer is the ONLY
authorized person allowed to communicate with vendors
During all other times Board members can talk to vendors
to get information or discuss products at a Trade Show
Conflict of Interest – File Letter and Announce at
Board Meeting
Consent/Non consent items – Routine purchases on
Consent. Any Item can be pulled for discussion
How Does the New Financial
System Help Avoid Problems?
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Separation of Duties – Overseen by System Administrator
Complete Tracking
Budget Control – No Money no Requisition
Purchases over Bid Threshold must have additional approval
System allows Property Control Tracking
Industry Leading Audit Trail
DISCUSSION