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Top Audit Findings for Competitive Bidding

Top Audit Findings for Competitive Bidding. Puget Sound Finance Officers Meeting November 14 th 2012. Purchasing Folks Aren’t Allowed to Retire . Ημερήσια διάταξη (Agenda). Four Audit Areas That May Trigger Findings: Uniform Exemptions Federal/State Debarment Lists Change Orders

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Top Audit Findings for Competitive Bidding

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  1. Top Audit Findings for Competitive Bidding Puget Sound Finance Officers Meeting November 14th 2012

  2. Purchasing Folks Aren’t Allowed to Retire

  3. Ημερήσιαδιάταξη (Agenda) • Four Audit Areas That May Trigger Findings: • Uniform Exemptions • Federal/State Debarment Lists • Change Orders • On-Call Contracts

  4. SAO 's Number One (or so it seems) Finding • THE PROJECT OR PURCHASE SHOULD HAVE BEEN COMPETITIVELY BID! • A uniform exemption under RCW 39.04.280 either doesn’t apply or has been misapplied and the purchase or project should have been competitively bid. • The purchase or project exceeded the agency's bid limits and should have been competitively bid. • A change order is for work not in the scope of the original contract and should have been competitively bid.

  5. What Does Competitively Bid Mean? • Level 1 - Advertisement, sealed bids, formal bid opening • Anyone who hears about the bid may submit a bid, as long as they are qualified - or responsible. • Level 2 - Request for informal bids, sealed bids (recommended), opening may be informal. • Those vendors or contractors selected from the appropriate roster (vendor or small works) may submit an informal bid, as long as they are qualified - or responsible. • Level 3 - Request for written or telephone informal bids, informal bid opening. • Preferred qualified - or responsible vendors or contractors are invited to submit an informal bid.

  6. Issue #7 • Use of an emergency declaration for non-emergencies. • The Town did not solicit bids for the $55,776 Pennsylvania Avenue South water main project. The project included a water line extension and electrical work for new homes. The Council approved the project as an emergency repair; however, it does not meet the requirements of an emergency repair and should have been competitively bid. • Or use their small works roster. (Level 2) • Or possibly, since the project is less than their bid limits (Level 3)

  7. Issue #6 • Use of emergency declaration to add work to an existing contract. • Three of the change orders, totaling $270,703, were to repair damaged pipes. The District indicated the repairs were an emergency, which would be appropriate for this situation. However, these pipes were in locations outside the neighborhoods included in the project and should have been separately contracted. • The emergency resolution should have awarded a (new) separate contract to the existing contractor.

  8. Issue #5 • Piggybacking purchase of equipment from another agency without verifying that that agency followed its bid laws and RCW 39.34.030(5). • The District purchased equipment during the audit period totaling $521,570. The District entered into inter-local agreements with two other fire protection districts to piggyback on their bids. Using the piggyback process, which allows the District to use the bid results from the other districts, the District purchased two fire engines totaling approximately $394,000. • When piggybacking on other bids, the District should have ensured the other districts followed their competitive bid laws.

  9. Issue #4 • Declaring sole source for a public works contract (not an emergency declaration). • On June 11, 2009, the District waived competitive bidding on a $146,055 construction project by declaring the contract ”sole source”. State law does not provide for a sole source exception for public works unless the entity declares an emergency. The District did not do so and should have competitively procured the contract. • Or use their small works roster. (Level 2)

  10. Soon to be available on PSFOA website Available now at http://www.apwa-wa.org/Uploads/forums/Bid%20Law%20Exception%20Workshop.pdf

  11. Issue #3 (a) • Did not check federal suspension/debarment lists for purchasing or public works contracts. • Federal requirements prohibit grant recipients from contracting with or making sub-awards to vendors who have been suspended or debarred from doing business with the federal government. • The City is required to verify that all vendors receiving $25,000 or more in federal funds have not been suspended or debarred.

  12. Issue #3 (b) • Did not check federal suspension/debarment lists for purchasing or public works contracts. • The City can obtain a written certification from the vendor or insert a clause into the contract where the vendor states it is not suspended or debarred. • Alternatively, the City may review the federal Excluded Parties List issued by the U.S. General Services Administration. https://www.epls.gov/ • This requirement must be met prior to entering into a contract with the vendor. We found the City paid one vendor $49,000 and another $36,000, and did not verify the vendors were not suspended or debarred.

  13. Issue #3 (c) • Did not check state suspension/debarment lists for purchasing or public works contracts. • RCW 39.06.010 - No agency of the state or any of its political subdivisions may execute a contract: • For two years from the date that a violation is finally determined, with any person or entity who has been determined by the respective administering agency to have violated RCW 50.12.070(1)(b), 51.16.070(1)(b), or *82.32.070(1)(b). • During this two-year period, the person or entity may not be permitted to bid, or have a bid considered, on any public works contract.

  14. Issue #3 (d) • Practice Tip (for PW, Purchasing can be similar): • Use a bidder responsibility checklist such as that found in Appendix D of the CPARB's Suggested Guidelines for Bidder Responsibility • Include both the federal and state debarment/ suspension checks as a box on the checklist. • (MOST IMPORTANT) Attach all supporting documentation for all checklist items to the checklist. • Including dated printouts of the applicable portions of the federal and/or debarment webpage checks.

  15. Issue #2 (a) • Change orders for work outside project scope. • State the scope of the project in terms of implementing the city's master sidewalk plan, with a prioritized list/map of sidewalks in the contract documents that exceeded the funds tentatively available, even if detailed plans are not provided for all of the sidewalk sections. • State a range of quantities for each unit price item that covers the possibility of additional funds becoming available (and project segments added), with the note that unit prices apply throughout the range.

  16. Issue #2 (b) • Change orders for work outside project scope. • If the DOE grant was imminent, the city could have shown the landscaping and irrigation as an additive alternative and secured prices for this work in the original bidding process. • State in the Contract Documents, particularly in the Bid Proposal, that the additive alternate will be added to the project through a change order as funding permits. • CAUTION: Think carefully about adding additive alternates during a project if doing so would change the order of which contractor would have been the low bidder at the time of bid.

  17. Appendix H8 in Purchasing, Bidding, and Contract Management Sourcebook: http://www.mrsc.org/subjects/pubworks/sourcebook/sourcebooktoc.aspx#H Soon to be available on PSFOA website

  18. Issue #1 (a) On-Call Contracts • “Traditional” Public Works Contracts • Fixed Scope (Point A to Point B or Renovate City Hall) • Predictable Quantities Within Project Scope • Readily Determinable Project Cost • Specified Time Frame For Completion

  19. Issue #1 (b) On-Call Contracts • On-Call Contracts • Indeterminate Scope • Unpredictable Quantities • Task Orders or Mini-Projects Are Requested on As-Needed Basis • Contract Amount Is Not Guaranteed • Contract Time is on Calendar Basis, Not Based on Project Completion • Contracts are Generally 1-2 Years

  20. Issue #1 (c) On-Call Contracts • System-Wide Maintenance Contracts • Maintenance activities or repairs that are planned in advance and budgeted. • These contracts are usually on an annual basis, with optional renewals, but multi-year contacts are also common. • The project scope references an annual work plan for system maintenance or master plan for improvements • Actual work performed depends on the budget amount available in relation to the bid prices.

  21. Issue #1 (d) On-Call Contracts • Blog Posts • Mike Purdy - SAO Opinion on On-Call Contracts • MRSC - On-Call Contracts Not Kosher • MRSC - Some On-Call Contracts ARE Kosher • (http://insight.mrsc.org/ ) (Soon to be available on PSFOA website.)

  22. Issue #1 (e) On-Call Contracts • Notes: • On-call A/E and personal service contracts ARE kosher. • SAO said " On-Call contracts are not specificallyauthorized in state law." • Contracts for system-wide maintenance/repair contract are not on-call contracts. • On-call contracts below an agency’s bid limits are permissible for many agencies. For details on this, please look at Best Practices for Small On-Call (Work Order) Public Works Contracts. (Soon to be available on PSFOA website.)

  23. Questions?More Information? John W. Carpita, P.E. Public Works Consultant Municipal Research and Services Center2601 Fourth Avenue, Suite 800 Seattle, WA 98121-1280 206-625-1300 Fax: 206-625-1220 jcarpita@mrsc.org

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