AASBO Education Programs Advance Purchasing

1. AASBO Education Programs Advance Purchasing

2. AASBO Advance Purchasing Session IV: Disputes, Due Diligence & Surplus • Protests, claims, disputes & appeals • Due Diligence • Materials Management • Special situations

3. You make the call… • You receive a protest from a subcontractor. The basis of the protest is that the awarded vendor is listing an unlicensed subcontractor to perform part of the work. The relief requested is that you use the protestor’s firm as the subcontractor under the awarded contract. What do you do? • You receive a faxed protest at 5:00 pm on the 10th day after award notices were issued. The department closes at 4:30 pm. What do you do? • You receive a protest from an unsuccessful offeror under a recent RFP. The basis of the protest includes the following: Her firm is the low bidder, the firm has a long history of service to the district, the firm is a certified woman-owned business and the governor instructed all state agencies to use such firms, the awarded vendor does not have the resources necessary to do the job. What do you do? • You have reviewed a protest and determined the basis of the protest is valid. What are your options? What do you do if the order has been placed? What do you do if the work is in process?

4. Protests, Claims, Disputes & Appeals Protest Procedures Resolution of protests (R7-2-1141) • Informal resolution… is authorized • Formal resolution… is addressed by the governing board designated District Representative • The administrative process for resolving protests, claims and disputes is not optional (R7-2-1184) Filing a protest (R7-2-1142) • A protest can be filed by any interested party… • A protest must contain certain content Time for filing a protest (R7-2-1143) • How do you count the days? Stay of procurement (R7-2-1144) • How do you decide whether to stay or proceed?

5. Protests, Claims, Disputes & Appeals Protest Procedures Decision by District Representative (R7-2-1145) • There are specific timelines and content requirements • There are specific consequences for failure to act Remedies (R7-2-1146) • The district representative must base the decision on the facts and the rules • The district representative has a number of remedies for a sustained protest • The protestor has the opportunity for redress of an adverse decision Appeals of the District Representative’s decision • An appeal is the protestor’s form of redress and must be based upon a legal of factual error in the decision (R7-2-1147) • There are specific timelines, content and reporting requirements (R7-2-1147-1150) • Appeals are decided by an impartial hearing officer (R7-2-1158) • The hearing is a very formal process (R7-2-1181 through R7-2-1182) • The district pays all costs associated with the hearing, but may recoup the cost of the hearing if the district prevails (R7-2-1158-C)

6. Protests, Claims, Disputes & Appeals • Bottom line… • Try to resolve controversies informally • The formal protest is a powerful tool for a vendor to air grievances • The protest tool comes with specific requirements and obligations • Provide vendors with the facts about protests • Base all decisions on the facts and do the right thing • A protest decision will be part of the evidence in an appeal • Develop quality evidence • It is OK to let the vendor know that appeals are expensive • A hearing is like an administrative trial • Testifying at a hearing may not be pleasant • The rules for resolving contract claims and controversies are similar to the protest rules (R7-2-1155 through R7-2-1157) • The best way to avoid a protest, claim or dispute is quality contracting

7. You make the call… • A sales rep tells you that his national purchasing cooperative contract has the lowest cost available. He also tells you that school districts throughout the country are using the contract with confidence. What are you considerations? • Your facilities director brings you a requisition for a roofing project under a cooperative contract. You begin a rev iew of the solicitation. The first this you see is, “This document is a Request for Proposal. It differs from a Request for Bid/Quotation in that Unified School District 259 is seeking a solution, as described herein, not a bid/quotation meeting specifications for the lowest price.” What do you do? • Your superintendent wants an explanation of due diligence, wants you to show him where it is required by law, and wants to know the specific requirements for performing due diligence. What do you do? • You received a requisition for a purchase to be made from an unfamiliar purchasing cooperative. You review the contract and do not believe it appropriate for the district to use. What do you do?

8. Due Diligence Defining Due Diligence • Due diligence is the verification of information and its documentation given to a factor in order to facilitate a decision as to whether or not a particular item should be purchased. • Public entities always want to take as little risk as possible and want to be assured that the money they expend will be compliant. • The term due diligence is most often associated with the use of cooperative purchasing contracts.

9. School District Limited amount of due diligence is required for cooperative purchasing programs audited by the AZ Auditor General More thorough due diligence is required for cooperative purchasing programs receiving the procurement practices review required by the AZ Auditor General Substantial due diligence is required for cooperative purchasing programs not receiving the procurement practices review Required by the AZ Auditor General Due Diligence Levels of Diligence* *AZ Auditor General Staff

10. Due Diligence Limited due diligence • AzSPO = State Procurement Office • ADOT = AZ Department of Transportation • ADE = AZ Department of Education • Why? • Audited by the AZ Auditor General • Documents, T&Cs are reviewed by the State Attorney General’s Office • They have authority for statewide contracts • Considerations • Confirm the contract is valid • Ensure your purchases comply with the contract

11. Due Diligence Additional due diligence • GPPCS = Greater Phoenix Purchasing Consortium of Schools • SAVE = Strategic Alliance for Volume Expenditures (school administered) • YEPA = Yuma Educational Purchasing Association • Why? • Common procurement rules • Cooperation & coordination • Subject to the procurement practices reviews required by the AZ Auditor General • Considerations • Request results of the most recent procurement practices review • Confirm compliance with the school district procurement rules • Confirm inclusion of required cooperative purchasing contract requirements • Confirm your district falls within the definition of participants • Confirm the scope is sufficient to cover your purchases • Ensure your purchases comply with the contract

12. Due Diligence Other Players • MESC = Mohave Educational Services Cooperative • TCPN = The Cooperative Purchasing Network • WSCA = Western States Contracting Alliance • NIPA = National Intergovernmental Purchasing Alliance • NJPA = National Joint Powers Alliance • SAVE (Cities and Counties) • US Communities • Considerations • Check for a procurement practices review meeting AZ Auditor General requirements • Confirm compliance with AZ school district procurement rules • Confirm inclusion of required AZ cooperative purchasing contract requirements • Confirm your district falls within the definition of participants • Confirm your district meets the requirements for participation • Confirm the scope is sufficient to cover your purchases • Ensure your purchases comply with the contract

13. Due Diligence Documenting due diligence • AzSPO • Download and maintain a copy of the contract • Entities subject to the procurement practices reviews required by the AZ Auditor General • Obtain & review a copy of the most recent procurement practices review • Obtain and review a sample of the cooperative’s contracts • Substantiate your purchase complies with the contract • Entities not subject to the procurement practices reviews required by the AZ Auditor General • Obtain and review a sample of the cooperative’s contracts • Substantiate that the contract you use complies with the AZ school district procurement rules and other applicable requirements • Substantiate your purchase complies with the contract • Be prepared to substantiate compliance with the cooperative purchasing requirements in the USFR Compliance Questionnaire.

14. Due Diligence GSA Purchases • GSA purchases are an exception to the school district procurement rules • A.R.S. §15-213 requires the following for GSA purchases: Determination that the purchase is "cost effective” & "in the best interest of the district." That means seeking competition and making a written determination based upon that market research.

15. You make the call… • You are selling a used pickup truck via competitive sealed bid. The auto shop crew chief submits a bid. What do you do? • Historically, your public auctions are not successful. You again have surplus for disposal. What do you do? • For years, the maintenance department has collected scrap metal from school sites and sold it to fund an annual staff picnic. All district employees are invited to attend the picnic. The administration thinks this is an excellent morale builder. What do you do? • You traded in the old copiers when you made your most recent copier purchase. Today’s paper includes a picture of the trades in the landfill. What do you do? • You have an metal ramada that is in the way of a building addition. You are disposing of it via competitive sealed bid. What are some important terms of the sale?

16. Materials Management General rules for disposal of surplus property • All surplus materials, regardless of value, must be disposed of in accordance with the materials management rules. • The only exceptions are A.R.S. § 15-342(7) related to sales or leases to the state, county or city, and A.R.S. § 15-342(18) related to the disposition of surplus or outdated learning materials. • Methods of disposition include… • Competitive sealed bidding • Public auctions • Established Markets • Trade-in • Posted prices • State surplus property manager • Other methods of disposition are available under specified conditions

17. Materials Management • Some realities of surplus property disposition • The procurement rules definition of surplus property is very broad • Certain people are precluded from purchasing surplus property • Make sure your disposition contract protects the district • Often, the surplus has little value and disposition is difficult • Consider partnerships • Use all of the options • Document what you do

18. Special Situations Open Discussion