This article is an excerpt from the 2023 edition of The Art of Tendering: A Global Due Diligence Guide.
In 2021 and 2022 the Office of the New York State Comptroller expanded its ongoing review of New York State local government institutions and found widespread procurement irregularities across the local government sector. These irregularities included the widespread failure to comply with open tendering requirements or seek competitive quotes for below-threshold procurements, weak record-keeping practices, and multiple instances where public institutions needed to update their procurement policies and procedures. These report findings, which reflect the high degree of scrutiny that many public institutions are under for even low-value expenditures, are summarized below.
In its December 2021 report on Boquet Valley Central School District, the Comptroller found that the District failed to obtain open competitive quotes, or any quotes at all, in multiple instances and also failed to procure its professional services in accordance with its purchasing policies. The report recommended that the District ensure compliance with its open tendering obligations.
In its December 2021 report on Quaker Street Fire District, the Comptroller found that the District did not ensure all disbursements complied with the procurement policy and that expense claims were for a proper District purpose. The report also found that the District “did not obtain quotes or bids for two purchases totaling $27,058,” as required by its procurement policy, and that it “approved fuel credit card payments of $4,875 without supporting documentation.” The Comptroller recommended that the District “ensure competitive bidding statutes and purchasing policy requirements are followed” and that “all fuel card charges are sufficiently supported prior to payment.”
In its December 2021 report on Slate Hill Fire District, the Comptroller found that the District “did not always use a competitive process to procure goods and services or ensure expense claims were properly supported or for valid purposes.” More specifically, the report found that the District “did not solicit competition for professional services from seven professional service providers totaling $177,827 or seek competitive bids for goods and services from five vendors totaling $273,497.” The audit also found that the District failed to “obtain written quotes for eight purchases totaling $113,399.” Finally, the report found that the District “paid 113 food and beverage receipts totaling $3,814 without adequate support to show they were a valid expenditure, including eight alcohol purchases totaling $121.” The Comptroller recommended that the District “comply with competitive bidding requirements” and ensure that its expense claims are supported and valid.
In its April 2022 report on Lockport City School District, the Comptroller found that District officials could not demonstrate that they complied with state law in the “piggybacking” award of two contracts worth $240,000. The Comptroller recommended that the District document its analysis when using the piggybacking exception to competitive bidding to ensure that those transactions comply with state law.
In its April 2022 report on Mount Vernon City School District, the Comptroller found that the District failed to “procure its natural gas in accordance with the New York State General Municipal Law (GML)” and that the District failed to obtain “the most favorable terms in the best interest of District taxpayers.” The Comptroller found that the District “did not monitor the natural gas rates charged by the energy supply company” or enter into a written contract for the supply of the natural gas. In fact, the Comptroller found that for a decade the District paid gas rates that were on average two times the benchmark rates and that it “may have been able to reduce its natural gas costs by 40 percent or approximately $911,000 during the audited period had competition been sought for the supply of natural gas.” The Comptroller recommended that the District “procure natural gas in accordance with GML” and that it “fully evaluate and compare benchmark rates before entering into a contract for the supply of that natural gas.”
In its April 2022 report on Lynbrook Union Free School District, the Comptroller found that the District’s purchasing agent did not ensure that District purchases “adhered to the District’s purchasing policy for goods and services falling outside of competitive bidding.” As a result, the report found that the “purchasing agent approved 17 purchases totaling $150,962 without knowing whether the purchases were a prudent and economical use of taxpayer money, and in the District’s best interest.” For example, the Comptroller found that the purchasing agent approved seven purchases totaling $71,141 as direct awards “without confirming that the purchases met the District’s sole source requirements.” The Comptroller recommended that the District ensure all sole source purchases are adequately supported and that it properly review documentation for all purchases before issuing purchase orders, especially in situations where no quotations were obtained.
In its April 2022 report on Ontario County Four Seasons Development Corporation, the Comptroller found that “Corporation officials did not always seek competition or maintain adequate documentation of purchasing processes when procuring goods and services.” The Comptroller recommended that the Corporation adopt a more comprehensive written procurement policy that defines its record-keeping requirements, and that it ensure that it consistently follows its procurement policy.
In its May 2022 report on Onteora Central School District, the Comptroller found that the District “did not always procure goods and services in a cost-effective manner”. For example, the report found that the District did not have proper documentation to demonstrate that a $121,928 bus purchase was competitively bid. The Comptroller recommended that District “officials and staff clearly document compliance with competitive bidding statutes and District’s purchasing policies and procedures.”
In its May 2022 report on Village of Islandia, the Comptroller found that the Village spent over $150,000 at a gas station and auto repair business owned by one of its trustees. The report noted that Article 18 of the New York State General Municipal Law “limits the ability of municipal officers and employees to enter into contracts in which their personal financial interests and public powers and duties conflict.” The Village confirmed that once it became aware of the conflict, it discontinued purchasing from the gas station in question, which was its supplier prior to the election of the trustee, and that the trustee in question had since resigned. The Comptroller recommended that the Village ensure that its officials and employees are familiar with and follow statutory conflict of interest rules.
In its May 2022 report on Lansing Central School District, the Comptroller found that District officials “did not always seek competition to procure goods and services” and that as a result “they may not have procured goods and services economically and in a manner that is in the best interests of taxpayers.” The report found that the District’s “policies and procedures were inadequate and did not help ensure officials sought competition for goods and services.” The Comptroller recommended that the District update its procurement policy and related procedures to include “detailed guidance for procuring goods and services not subject to competitive bidding requirements” and that the District “periodically compare prices for goods and services to State contracts and contracts bid by other governments” to better ensure that it is achieving value-for-money in its purchases.
In its June 2022 report on Town of Charlton, the Comptroller found that “Town officials did not always seek competition when procuring goods and services.” The report also found that the Town could have saved money had it purchased snowplow blades and shoes from a state contract instead of sourcing those products itself. The Comptroller also found that the Town “did not always retain copies of other government contracts used to procure certain goods and services.” The Comptroller recommended that the Town follow its procurement policy and ensure that it maintains adequate procurement records.
In its June 2022 report on Marion Central School District, the Comptroller found that “the Board did not always ensure that competition was sought in accordance with the procurement policies and procedures and competitive purchasing requirements.” For example, of the reviewed purchases totaling $2.1 million, the report found that more than $586,000 worth were not competitively procured. The report also found that the District lacked adequate purchasing policies and procedures and that as a result “officials cannot assure taxpayers that purchases were made in the most prudent and economical manner.” The Comptroller recommended that the District ensure goods and services are procured in accordance with competitive requirements and that it adopt adequate purchasing policies and procedures.
In its June 2022 report on Newark Valley Central School District, the Comptroller found that the District did not always seek competitive pricing for goods and services that were exempt from competitive bidding and, as a result, may not have been procured economically and in the best interest of taxpayers. For example, the report found that the District failed to seek competitive pricing in 13 purchases of goods and services totaling $44,401 and that it overpaid for cleaning supplies by $1,532 due to a discrepancy between the contract rates and the supplier invoice. The Comptroller recommended that the District seek competitive pricing when procuring goods and services and that it review invoices against established contract rates to ensure that it is billed at the proper rates.
In its June 2022 report on Trumansburg Central School District, the Comptroller found that “District officials did not always ensure that goods and services were procured in the best interest of the taxpayers.” The report found that the District failed to follow the recommendations of its external auditor to update its purchasing policy and that it failed to develop written procurement procedures as required by its existing policy. The report also found that the District failed to competitively bid two purchases totaling $95,073 and that it did not have documentation to show that it had obtained quotes for 29 purchases totaling $177,032. The report recommended that the District maintain documentation to confirm when quotes were obtained. The Comptroller also found that the District paid four vendors a total of $414,838 for professional services and insurance coverage without a supporting competitive bidding process and that it has been using those same vendors for approximately 15 years. The Comptroller recommended that the District update its purchasing policy, develop comprehensive written procurement procedures, and ensure that it periodically seeks competition for the procurement of professional services and insurance.
In its July 2022 report on North Syracuse Central School District, the Comptroller found that District officials “did not always seek competition for professional services in accordance with District policy and therefore “may not have been procured in the most economical manner and in the best interest of the taxpayers.” The report found that the District “paid $1.2 million to six professional service providers without seeking competition” and that it spent $2.1 on professional services based on two Request for Proposals (RFPs) that were issued in 2013 and 2014. The Comptroller recommended that the District update its procurement policy to specify the frequently of its professional services RFPs and that it use open competition when procuring those professional services.
In its July 2022 report on Otselic Valley Central School District, the Comptroller found that the District did not always seek competitive pricing when the goods and services were exempt from competitive bidding. In its review of nine purchases valued below the competitive bidding thresholds, which totaled $150,000, the report found that about half of the total expenditures were not subject to price competition. The report also found that the District could have saved almost $14,000 on fuel costs had it used State contracts. The Comptroller concluded that the District’s “procurement policies and procedures were inadequate and did not help ensure officials sought competition for goods and services.” The Comptroller recommended that the District update its procurement policy and procedures to include detailed guidance for procuring goods and services valued below the competitive bidding thresholds and that it “periodically compare prices for those goods and services to State contracts and contracts bid by other governments.”
These audits serve as a reminder to public institutions across all jurisdictions of the need to maintain compliant procurement practices since the expenditure of public funds, even for low-value purchasing, remains subject to public audit scrutiny.
