Village of Springville - Procurement · The Village of Springville (Village) is located in Erie County (County) and has a population of approximately 4,300. The Village provides services

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:

June 1, 2014 — June 24, 2016

2016M-330

Village of SpringvilleProcurement

thomas p. Dinapoli

Page

AUTHORITY LETTER 1

INTRODUCTION 2 Background 2 Objective 2 Scope and Methodology 2 CommentsofVillageOfficialsandCorrectiveAction 2

PROCUREMENT 4 Recommendations 6

APPENDIX A ResponseFromVillageOfficials 8APPENDIX B OSC Comment on the Village’s Response 15APPENDIX C AuditMethodologyandStandards 16APPENDIX D HowtoObtainAdditionalCopiesoftheReport 17APPENDIX E LocalRegionalOfficeListing 18

Table of Contents

11Division of LocaL Government anD schooL accountabiLity

State of New YorkOffice of the State Comptroller

Division of Local Governmentand School Accountability December 2016

DearVillageOfficials:

A toppriorityof theOfficeof theStateComptroller is tohelp localgovernmentofficialsmanagegovernment resources efficiently and effectively and, by so doing, provide accountability for taxdollarsspenttosupportgovernmentoperations.TheComptrolleroverseesthefiscalaffairsoflocalgovernmentsstatewide,aswellascompliancewithrelevantstatutesandobservanceofgoodbusinesspractices.Thisfiscaloversightisaccomplished,inpart,throughouraudits,whichidentifyopportunitiesforimprovingoperationsandVillageBoardgovernance.Auditsalsocanidentifystrategiestoreducecosts and to strengthen controls intended to safeguard local government assets.

FollowingisareportofourauditoftheVillageofSpringville,entitledProcurement.Thisauditwasconducted pursuant toArticleV, Section 1 of the State Constitution and the State Comptroller’sauthorityassetforthinArticle3oftheNewYorkStateGeneralMunicipalLaw.

This audit’s results and recommendations are resources for local government officials to use ineffectivelymanagingoperationsand inmeeting theexpectationsof their constituents. Ifyouhavequestionsaboutthisreport,pleasefeelfreetocontactthelocalregionalofficeforyourcounty,aslistedat the end of this report.

Respectfullysubmitted,

Office of the State ComptrollerDivision of Local Governmentand School Accountability

State of New YorkOffice of the State Comptroller

2 Office Of the New YOrk State cOmptrOller2

Background

Introduction

Objective

Scope and Methodology

Comments of Village Officials and Corrective Action

The Village of Springville (Village) is located in Erie County (County) andhasapopulationofapproximately4,300.TheVillageprovidesservicestoitsresidents,includinggeneralgovernmentsupport,fireand police protection, electric utility, water, wastewater treatment,road and sidewalk maintenance and code enforcement. Village appropriations for the2016-17fiscalyear totalapproximately$8.6million for all funds. The Village is governed by an elected Board of Trustees (Board) which is composed of four Trustees and a Mayor. The Board is the legislative body responsible for oversight and general management ofVillagefinancialoperations.TheMayorservesaschiefexecutiveofficer, responsible for setting policy, presiding atBoardmeetingsand, along with the Board, overseeing the Village Administrator(Administrator).TheAdministratormanages day-to-dayoperationsand serves as the chief fiscal officer, responsible for maintainingthe Village’s accounting records, preparing financial reports andsupervising and coordinating the procurement process.

The objective of our audit was to review the Village’s purchasing practices.Ourauditaddressedthefollowingrelatedquestion:

• Is the Village procuring goods and services in accordancewith the adopted procurement policy?

WeexaminedtheVillage’spurchasingpracticesfortheperiodJune1,2014throughJune24,2016.

We conducted our audit in accordance with generally accepted governmentauditingstandards(GAGAS).Moreinformationonsuchstandards and the methodology used in performing this audit are includedinAppendixCofthisreport.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 withVillageofficials,andtheircomments,whichappearinAppendixA, have been considered in preparing this report.Village officialsgenerally agreed with our recommendations and indicated they have taken, or plan to take, corrective action.AppendixB includes ourcomment on an issue raised in the Village’s response.


The Board has the responsibility to initiate corrective action. Awrittencorrectiveactionplan(CAP)thataddressesthefindingsandrecommendations in this report should be prepared and forwarded to ourofficewithin90days,pursuanttoSection35ofGeneralMunicipalLaw.FormoreinformationonpreparingandfilingyourCAP,pleaserefertoourbrochure,Responding to an OSC Audit Report,whichyoureceived with the draft audit report. We encourage the Board to make thisplanavailableforpublicreviewintheAdministrator’soffice.


Procurement

GeneralMunicipalLaw(GML)requires theBoard toadvertiseforbidsoncontracts forpublicworks involvingexpendituresofmorethan $35,000 and on purchase contracts involving expenditures ofmore than$20,000.GMLalso requires theBoard to adoptwrittenpolicies and procedures for the procurement of goods and services that are not subject to competitive bidding requirements, such asprofessional services and items that fall under bidding thresholds. ThesepoliciesandproceduresshouldindicatewhenVillageofficialsmust obtain competition, outline procedures for determining thecompetitive method that will be used and describe the documentation requirements and responsibilities. Competitive methods can include competitivebidding,sendingoutarequestforproposals(RFP)andobtaining written and verbal quotes.

Although the Board adopted a procurement policy that requiredobtaining competition for purchases not subject to bidding requirements,Villageofficialsdidnotalwaysensurethatpurchasesweremade in compliancewith the requirements. Furthermore, thepolicy did not include procedures for procuring professional services.

We selected a sample1 of purchases from 30 vendors totalingapproximately$1.7millionandfound thatVillageofficialsdidnotuse competitive methods to procure goods and services from sixvendorswhowerepaidatotalof$196,732forprofessionalservices.Inaddition,Villageofficialsdidnotcompetitivelybidpurchasesfromfourvendorstotaling$148,387,asrequired.

ProfessionalServiceProviders–GMLdoesnotrequirecompetitivebidding for the procurement of professional services that involve specializedskill,trainingandexpertise,useofprofessionaljudgmentordiscretionorahighdegreeofcreativity.However,GMLdoesrequirethat villages adopt policies and procedures governing the purchase of goodsandserviceswhencompetitivebiddingisnotrequired.Prudentbusiness practices provide that contracts for professional services be awarded after soliciting competition. One way to accomplish this is tosendoutanRFP,whichismeanttoensuretheVillagereceivesthedesired service on the most favorable terms or for the best value.

The Village’s procurement policy states that the Board will determine whenapurchaseistobeconsideredaprofessionalservice.However,the policy does not address procedures for obtaining competitive

1 See Appendix C, Audit Methodology and Standards, for sample selectionmethodology.


pricing on purchases determined to be professional services. Of the 30vendorsselected,purchasesfrom10totaling$606,499wereforprofessional services.

Althoughthepolicydoesnotincludewrittenproceduresforobtainingcompetitive pricing for professional services,Village officials sentout RFPs for three professional services: an engineer ($234,853),liabilityinsurance($101,992)andanarchitect($37,397).TheVillageprovided theRFPdocumentationsubmittedby those threevendorsandtheotherproposalsthatweresubmitted.Althoughnotrequiredfor professional services, theVillage generally selected the lowestpricedvendorsfortheseservices.However,VillageofficialsdidnotsolicitcompetitionthroughRFPsorobtainquotesforsixprofessionalservices, totaling $196,732. These services included a landscapearchitect ($109,255), insurance broker ($21,981), engineer for anelectricalproject($18,882),externalauditor($17,973),grantwriter($15,716)andbondcounsel($12,925).Villageofficialstoldusthatthey did not seek competition for these services because the prior administration had used these vendors for several years and developed a good working relationship.

Theremainingvendor,whowaspaid$35,525,wasinitiallyusedbytheVillageforminimaldesignworkonacapitalprojectcosting$2,500.Aftertheworkwascompleted,issuesarosewiththecapitalprojectthat required additional design services. The Board determined that anRFPwouldnotbesentoutandcontractedwiththevendortodothis work as the vendor was familiar with the project.

Competitive Bidding – The Board-approved procurement policy requires competitive bidding for purchase contracts of more than $20,000 and public works contracts of more than $35,000. Thepolicy provides for specific exceptions from competitive biddingrequirements, including purchasing through a State or Countycontract.

Of the 30 vendors selected, purchases from 10 vendors totaling$938,336 were subject to competitive bidding. However, Villageofficials did not competitively bid purchases from four vendorstotaling $148,387.These purchases included fuel totaling $34,333in2014-15and$24,844in2015-16,lightpoles2totaling$32,210in2015-16andwatertankworkcosting$57,000in2015-16.AlthoughVillageofficialssentoutanRFPtofourvendorsforthewatertankwork and received two proposals, the purchase should have beencompetitively bid.

2 The vendor did not install the light poles.


We reviewed the Village’s fuel purchases3madefromJune1,2014through April 30, 2016 totaling $59,1774 and found that Village officialsmadepurchases thatexceededstatutorybid limitswithoutobtaining competitive bids, as required, or using State or Countycontracts.Had theVillage used State contract-awarded vendors, itcouldhavesavedapproximately$8,400,or14percent,forthesefuelpurchases.

ItemsUnderBiddingThresholds – The Village’s purchasing policy requires two verbal quotes for purchases ranging from $1,000 to$2,999andthreewrittenquotesforpurchasingrangingfrom$3,000to$19,999.Wereviewedpurchasesfrom10vendorstotaling$160,159thatfellwithinthesethresholdsandfoundminorexceptionswhichwediscussedwithVillageofficials.

WhenVillageofficialsdonotusecompetitiontosecureprofessionalservice contracts or have procedures in place to document the methodologyfortheprocurementofservicesorthebasisofselection,there is an increased risk that goods and services may not have been obtainedforthebestvalue,ensuringthemostprudentandeconomicaluse of public money.

TheBoardshould:

1. Revise its procurement policy to include clear language addressing the procurement of professional services and prescribing methods for soliciting competition for such services.

2. Require strict adherence to the requirements of its procurement policy.AnydeviationsfromthepolicyforuniquesituationsorextenuatingcircumstancesshouldbeapprovedbytheBoardand documented in the minutes.

TheAdministratorshould:

3. Ensurecompetitivebidsareobtainedforpurchasesexceedingthe bid limits as required by statute and the procurement policy where the use of State or County contracts or other exceptionsdonotapply.

4. Consider taking advantage of State or County contracts for purchases when practicable.

Recommendations

3 Unleadedgasoline4 $34,333 for unleaded gasoline purchased during the 2014-15 fiscal year and$24,844forunleadedgasolinepurchasedduring2015-16


5. Periodically solicit competition, through RFPs or anothercompetitiveprocess,forprofessionalservicecontracts.


APPENDIX A

RESPONSE FROM VILLAGE OFFICIALS

TheVillageofficials’responsetothisauditcanbefoundonthefollowingpages.


SeeNote1Page15







APPENDIX B

OSC COMMENT ON THE VILLAGE’S RESPONSE

Note1

TheprocurementpolicyadoptedonApril4,2016wasreviewedduringourauditanddidnotincludeprocedures for procuring professional services.


APPENDIX C

AUDIT METHODOLOGY AND STANDARDS

Toachieveourauditobjectiveandobtainvalidevidence,weperformedthefollowingprocedures:

• WeinterviewedVillageofficialstogainanunderstandingoftheprocurementprocess.

• We reviewed the Village’s procurement policy to determine if it adequately addressed the procurement of goods and services.

• Weselectedabiased,judgmentalsampleof30vendorswhichwerepaidapproximately$1.7million in our audit period. Our sample was selected based on the total amounts the Village paid the vendors during out audit period and information obtained during our risk assessment process.Weselected10vendorswhoprovidedgoods,equipmentorpublicworksformorethanthecompetitivebiddingdollar thresholds,10vendorswhoprovidedmorethan$5,000in goods or equipment for quotation requirements and 10 vendors who provided professional servicesformorethan$10,000.

• Wereviewedbids,proposals,quotesandsupportingdocumentationtoassessifthepurchaseswere made using competitive methods and/or were in compliance with the Village’s procurement policyandGML.

• We calculated the cost of purchasing fuel off State contract.

WeconductedthisperformanceauditinaccordancewithGAGAS.Thosestandardsrequirethatweplanandperform theaudit toobtainsufficient,appropriateevidence toprovidea reasonablebasisforourfindingsandconclusionsbasedonourauditobjective.Webelievethattheevidenceobtainedprovidesareasonablebasisforourfindingsandconclusionsbasedonourauditobjective.


APPENDIX D

HOW TO OBTAIN ADDITIONAL COPIES OF THE REPORT

OfficeoftheStateComptrollerPublicInformationOffice110StateStreet,15thFloorAlbany,NewYork12236(518)474-4015http://www.osc.state.ny.us/localgov/

Toobtaincopiesofthisreport,writeorvisitourwebpage:


APPENDIX EOFFICE 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,Room3A10250 Veterans Memorial HighwayHauppauge,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

Documents

Village of Springville - Procurement · The Village of Springville (Village) is located in Erie County (County) and has a population of approximately 4,300. The Village provides services