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Division of LocaL Government & schooL accountabiLity
o f f i c e o f t h e n e w y o r k s t a t e c o m p t r o L L e r
report of ExaminationPeriod Covered:
July 1, 2014 – December 31, 2015
2016M-195
Uniondale Union Free School District
Procurement
thomas p. Dinapoli
Page
AUTHORITY LETTER 1
INTRODUCTION 2 Background 2 Objective 2 Scope and Methodology 2 CommentsofDistrictOfficialsandCorrectiveAction 2
PROCUREMENT 4 Written Quotes 4 Competitive Bidding 6 Recommendations 6
APPENDIX A ResponseFromDistrictOfficials 7APPENDIX B AuditMethodologyandStandards 10APPENDIX C HowtoObtainAdditionalCopiesoftheReport 11APPENDIX D LocalRegionalOfficeListing 12
Table of Contents
11Division of LocaL Government anD schooL accountabiLity
State of New YorkOffice of the State Comptroller
Division of Local Governmentand School Accountability July2016
DearSchoolDistrictOfficials:
AtoppriorityoftheOfficeoftheStateComptrolleristohelpschooldistrictofficialsmanagetheirdistrictsefficientlyandeffectivelyand,bysodoing,provideaccountabilityfor taxdollarsspent tosupportdistrictoperations.TheComptrolleroverseesthefiscalaffairsofdistrictsstatewide,aswellasdistricts’compliancewithrelevantstatutesandobservanceofgoodbusinesspractices.Thisfiscaloversight is accomplished, in part, throughour audits,which identify opportunities for improvingdistrictoperationsandBoardofEducationgovernance.Auditsalsocanidentifystrategiestoreducedistrict costs and to strengthen controls intended to safeguard district assets.
FollowingisareportofourauditoftheUniondaleUnionFreeSchoolDistrict,entitledProcurement.This auditwas conducted pursuant toArticleV, Section 1 of theStateConstitution and theStateComptroller’sauthorityassetforthinArticle3oftheNewYorkStateGeneralMunicipalLaw.
This audit’s results and recommendations are resources for district officials to use in effectivelymanagingoperationsandinmeetingtheexpectationsoftheirconstituents.Ifyouhavequestionsaboutthisreport,pleasefeelfreetocontactthelocalregionalofficeforyourcounty,aslistedattheendofthis report.
Respectfullysubmitted,
Office of the State ComptrollerDivision of Local Governmentand School Accountability
State of New YorkOffice of the State Comptroller
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Background
Introduction
Objective
Scope andMethodology
Comments ofDistrict Officials andCorrective Action
The Uniondale Union Free School District (District) is located in the Town of Hempstead, Nassau County. The District is governed bytheBoardofEducation(Board),whichiscomposedoffiveelectedmembers. The Board is responsible for the general management and control of the District’s financial and educational affairs. TheSuperintendentofSchoolsistheDistrict’schiefexecutiveofficerandisresponsible,alongwithotheradministrativestaff,fortheDistrict’sday-to-day management under the Board’s direction. The purchasing agent is responsible for reviewing and approving all purchase orders as well as soliciting and opening bids.
TheDistrictoperatesnineschoolswithapproximately6,950studentsand 1,370 employees. The District’s budgeted appropriations forthe2015-16fiscalyearwereapproximately$175.4million,fundedprimarilywithrealpropertytaxes.
The objective of our audit was to assess the District’s procurement procedures.Ourauditaddressedthefollowingrelatedquestion:
• DidtheBoardensurethatDistrictofficialspurchasedgoodsand services in compliance with General Municipal Law(GML)andtheDistrict’spurchasingpolicy?
WeassessedtheDistrict’spurchasingpracticesfortheperiodJuly1,2014throughDecember31,2015.
We conducted our audit in accordance with generally accepted governmentauditingstandards(GAGAS).Moreinformationonsuchstandards and the methodology used in performing this audit are includedinAppendixBofthisreport.Unlessotherwiseindicatedinthisreport,samplesfortestingwereselectedbasedonprofessionaljudgment,asitwasnottheintenttoprojecttheresultsontotheentirepopulation.Where applicable, information is presented concerningthe value and/or size of the relevant population and the sample selectedforexamination.
The results of our audit and recommendations have been discussed withDistrictofficials,andtheircomments,whichappearinAppendixA,havebeenconsidered inpreparing this report. Districtofficialsgenerally agreed with our recommendations and indicated they would take corrective action.
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The Board has the responsibility to initiate corrective action. Pursuant toSection 35 ofGeneralMunicipalLaw,Section 2116-a(3)(c)ofNewYorkStateEducationLawandSection170.12oftheRegulationsoftheCommissionerofEducation,awrittencorrectiveactionplan(CAP)thataddressesthefindingsandrecommendationsinthisreportmustbepreparedandprovidedtoourofficewithin90days,withacopyforwardedtotheCommissionerofEducation.Tothe extent practicable, implementation of the CAPmust begin bytheendof thenextfiscalyear.Formore informationonpreparingandfilingyourCAP,pleaserefertoourbrochure,Responding to an OSC Audit Report,whichyou receivedwith thedraft audit report.TheBoardshouldmaketheCAPavailableforpublicreviewintheDistrictClerk’soffice.
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Procurement
The objectives of a procurement process are to obtain services,materials, supplies and equipment of the desired quality, in thequantity needed, generally at the lowest price, and in compliancewith applicable laws andBoard requirements.The appropriate useofcompetitionhelpsensurethatprocurementsarenotinfluencedbyfavoritism,fraudorcorruption,andthatpublicfundsareexpendedinthemostefficientmanner.Therefore,itisimportantthatDistrictofficialsseekcompetitionwhenavailable.
GMLrequiresadvertisingforcompetitivebidsforpurchasecontractsthatequal,oraggregate,tomorethan$20,000andforpublicworkscontracts that equal, or aggregate, to more than $35,000.1 GMLalso requires the Board to adopt a written procurement policygoverning the purchase of goods and services that are not subject to competitivebiddingrequirements.ThispolicyshouldindicatewhenDistrictofficialsmustobtainquotations,outline theprocedures fordeterminingwhichmethodwill be used and provide for adequatedocumentation of the actions taken.
The Board generally ensured that District officials complied withGMLandtheDistrict’sprocurementpolicyforpurchasesrequiringquotesandpurchasessubject tocompetitivebidding.However,wefoundthatDistrictofficialscouldimprovetheirpurchasingprocessbyattachingsufficientsupportingdocumentationtoclaimsforpurchasesnotsubjecttocompetitivebidding.Inaddition,officialsshouldensurethat purchases are made only after the purchasing agent issues an approvedpurchaseorder.Whensufficientsupportingdocumentationis not available for reviewor purchaseorders are executed after apurchase is made, there is an increased risk that unauthorized orinappropriate purchases could be made.
The Board has adopted a purchasing policy for the procurement of goodsandservicesbelowthebiddingthreshold.ThepolicyrequiresDistrictofficialstoobtainthreewrittenquotesforpurchasesinexcessof$500andup to$20,000 forpurchasecontracts and$35,000 forpublicworks contracts. Prior to a purchase order being approved,thedepartment requesting thepurchasemustobtainwrittenquotesor provide documentation if they are using alternative pricing such as a State or county contract or a cooperative bid. For contracts or cooperative bids, at a minimum, this documentation should show
Written Quotes
1 ProcurementsexemptfromcompetitivebiddingincludepurchasesmadeusingState and county contracts, emergency purchases, sole source purchases,professional services and insurance.
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what contract is being used, the effective date of the contract, theitem(s) being purchased and the price. In addition, all purchasesrequireanapprovedpurchaseorder issuedbythepurchasingagentprior to purchases being made.
During the period July 1, 2014 through December 31, 2015, wejudgmentally2 selected purchases made from 20 vendors totaling$168,670.Thepurchaseordersforeightofthesepurchasestotaling$85,417 indicated theyweremade from a government contract orcooperative bid or were an emergency purchase.3 Although thepurchaseordersreferencedgovernmentcontractsorcooperativebids,therewasnotsufficientinformationattachedtotheclaimstoallowfor verifying that the items and pricing on the invoices matched the contractsorcooperativebids.Districtofficialssubsequentlyprovideduswithcopiesofthecontractsorbids,whichshowedthattheDistrictgenerally obtained contract pricing for these purchases.
However, we noted an instance where the District purchased 51jacketsat$94.50each fora totalof$4,820 thatwerenot includedonthereferencedcountycontract.Adequatedocumentationattachedto the purchase order and comparison of item and price would have indicated that the item being purchased was not part of the county contract.Foranother$3,530purchase,officialsdidnothaveadequatesupport to show the District paid the hourly repair rate stated in the contract.Oftheremaining12purchasestotaling$83,253theDistrictobtainedatleastthreewrittenquotesfor11purchases,whiletheotherpurchase was made from a sole source vendor.
Inaddition,fourpurchaseorders4totaling$27,355weredatedaftertheinvoicedates,whichmeansthatthesewereconfirmingpurchaseorders. For example, one purchase order for printing serviceswasdatedOctober26,2015buthadacorrespondinginvoicefromApril14,2015,atotalof195daysearlier.
Without verifying items on a government contract or cooperative bid,theDistricthasnoassurancethattheitemsbeingpurchasedandprices paid agree to what is listed on the contract or cooperative bid or,insomeinstances,thattheitemsarepartoftheparticularcontract.Additionally,byplacingordersforgoodsorserviceswithoutavalidpurchaseorder,Districtofficialsarecommittingfundswithoutproperauthorization.
2 SeeAppendixB,AuditMethodologyandStandards, for our sample selectionmethodology.
3 One of the purchases was for emergency repairs for a water main break.4 WenotedthatoneinvoicewasforanannualservicecontractdatedJuly1,2014withapurchaseorderdateofJuly17,2014.Theseinvoicesareusuallygeneratedaheadoftime,duetothenatureoftheserviceprovided.
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GMLgenerallyrequirescompetitivebiddingforpurchasecontractsover $20,000 and public works contracts over $35,000 and theseamounts are included in the District’s Board-approved purchasing policy. Competitive bids must be publicly advertised and publicly openedatthescheduledplace,dateandtimesetforthinthenoticetobidders. The District’s purchasing policy states that individual sealed bidsmustbedatestampeduponreceiptandkeptinasecure,lockedlocationuntil thetimeofopening.Thepolicyalsorequiresat leasttwoDistrictemployeestobepresentateachbidopening,includingthepurchasingagent.Afterbeingopened, itcallsforallbids toberecorded and analyzed.
We randomly selected 11 vendors who provided goods or services to the District that were subject to competitive bidding. We determined whetherDistrictofficialsobtainedcompetitivebidsforthesepurchasesandfollowedtherequiredproceduresforprocessingandanalyzingthebidsthatwerereceived.Thesevendorswerepaidatotalof$4.2millionforthe2014-15fiscalyear.TheDistrictobtainedcompetitivebidsforsixvendorswhowerepaidacombinedtotalof$3.3million.Oftheremainingfivevendorstotaling$827,194thepurchaseswereappropriately made by using other government contracts. ExceptforminordiscrepanciesthatwediscussedwithDistrictofficials,theDistrictappropriatelyfollowedGMLandtheirpurchasingpolicyformaking and processing purchases subject to competitive bidding.
Districtofficialsshould:
1. Attachsufficientdocumentationtoclaimstoensurethattheyreceive the correct items and pricing when purchasing goods and services from government contracts or cooperative bids.
2. Ensure that purchases are not made until the purchasing agent has issued an approved purchase order.
Competitive Bidding
Recommendations
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APPENDIX A
RESPONSE FROM DISTRICT OFFICIALS
TheDistrictofficials’responsetothisauditcanbefoundonthefollowingpages.
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APPENDIX B
AUDIT METHODOLOGY AND STANDARDS
Toachieveourauditobjectiveandobtainvalidevidence,weperformedthefollowingprocedures:
• We interviewedDistrict officials and employees to gain an understanding of theDistrict’spurchasing procedures.
• We reviewed the District’s purchasing policy.
• We judgmentally selected 20 vendor claims to review for compliancewithDistrict policyin solicitingwrittenquotesduringour auditperiod.Weexcludedpayments toprofessionalassociations,employeereimbursementsandproprietaryeducation-relatedexpendituresfromourpopulation.Toensureweobtainedpurchasesmostlikelytorequirequotations,wenarrowedourpopulationtovendorswhoreceivedonlyasinglepayment.Fromthis,weselectedthe20highestpaymentsthatwerenotsubjecttocompetitivebidding.Thisresultedinatotalof20vendorswhowerepaidacombinedtotalof$168,670.
• We used electronic cash disbursement data to determine which purchases made from vendors weresubjecttocompetitivebiddingduringthe2014-15fiscalyear.Wereviewedthepurchasesfor compliance with GML and District policy. We excluded payments to professionalassociations,employeereimbursementsandproprietaryeducation-relatedexpendituresfromourpopulation.Therewerepurchasesmadefrom44vendorstotalingapproximately$13millionthatweresubjecttocompetitivebidding.Usingarandomnumbergenerator,weselected11vendorswhowerepaidatotalof$4.2millionduringthe2014-15fiscalyear.
WeconductedthisperformanceauditinaccordancewithGAGAS.Thosestandardsrequirethatweplanandperform theaudit toobtainsufficient,appropriateevidence toprovidea reasonablebasisforourfindingsandconclusionsbasedonourauditobjective.Webelievethattheevidenceobtainedprovidesareasonablebasisforourfindingsandconclusionsbasedonourauditobjective.
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APPENDIX C
HOW TO OBTAIN ADDITIONAL COPIES OF THE REPORT
OfficeoftheStateComptrollerPublicInformationOffice110StateStreet,15thFloorAlbany,NewYork12236(518)474-4015http://www.osc.state.ny.us/localgov/
Toobtaincopiesofthisreport,writeorvisitourwebpage:
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APPENDIX DOFFICE OF THE STATE COMPTROLLER
DIVISION OF LOCAL GOVERNMENTAND SCHOOL ACCOUNTABILITYAndrewA.SanFilippo,ExecutiveDeputyComptroller
GabrielF.Deyo,DeputyComptrollerTraceyHitchenBoyd,AssistantComptroller
LOCAL REGIONAL OFFICE LISTING
BINGHAMTON REGIONAL OFFICEH.ToddEames,ChiefExaminerOfficeoftheStateComptrollerStateOfficeBuilding,Suite170244 Hawley StreetBinghamton,NewYork13901-4417(607)721-8306Fax(607)721-8313Email:[email protected]
Serving:Broome,Chenango,Cortland,Delaware,Otsego,Schoharie,Sullivan,Tioga,TompkinsCounties
BUFFALO REGIONAL OFFICEJeffreyD.Mazula,ChiefExaminerOfficeoftheStateComptroller295MainStreet,Suite1032Buffalo,NewYork14203-2510(716)847-3647Fax(716)847-3643Email:[email protected]
Serving:Allegany,Cattaraugus,Chautauqua,Erie,Genesee,Niagara,Orleans,WyomingCounties
GLENS FALLS REGIONAL OFFICEJeffreyP.Leonard,ChiefExaminerOfficeoftheStateComptrollerOneBroadStreetPlazaGlensFalls,NewYork12801-4396(518)793-0057Fax(518)793-5797Email:[email protected]
Serving:Albany,Clinton,Essex,Franklin,Fulton,Hamilton,Montgomery,Rensselaer,Saratoga,Schenectady,Warren,WashingtonCounties
HAUPPAUGE REGIONAL OFFICEIraMcCracken,ChiefExaminerOfficeoftheStateComptrollerNYSOfficeBuilding,Room3A10250VeteransMemorialHighwayHauppauge,NewYork11788-5533(631)952-6534Fax(631)952-6530Email:[email protected]
Serving:NassauandSuffolkCounties
NEWBURGH REGIONAL OFFICETennehBlamah,ChiefExaminerOfficeoftheStateComptroller33AirportCenterDrive,Suite103NewWindsor,NewYork12553-4725(845)567-0858Fax(845)567-0080Email:[email protected]
Serving:Columbia,Dutchess,Greene,Orange,Putnam,Rockland,Ulster,WestchesterCounties
ROCHESTER REGIONAL OFFICEEdwardV.Grant,Jr.,ChiefExaminerOfficeoftheStateComptrollerThePowersBuilding16WestMainStreet,Suite522Rochester,NewYork14614-1608(585)454-2460Fax(585)454-3545Email:[email protected]
Serving:Cayuga,Chemung,Livingston,Monroe,Ontario,Schuyler,Seneca,Steuben,Wayne,YatesCounties
SYRACUSE REGIONAL OFFICERebeccaWilcox,ChiefExaminerOfficeoftheStateComptrollerStateOfficeBuilding,Room409333E.WashingtonStreetSyracuse,NewYork13202-1428(315)428-4192Fax(315)426-2119Email:[email protected]
Serving:Herkimer,Jefferson,Lewis,Madison,Oneida,Onondaga,Oswego,St.LawrenceCounties
STATEWIDE AUDITSAnnC.Singer,ChiefExaminerStateOfficeBuilding,Suite170244 Hawley Street Binghamton,NewYork13901-4417(607)721-8306Fax(607)721-8313
