Finding Text
Low Rent Program-CDFA#14.850
Finding 2023-001-Non-Compliance with Procurement Policy-Procurement
Criteria and Condition
All amounts above the Small Purchase Threshold (SMT) should follow the Procurement Policy. Depending on the amount, telephone, email, or written bids may be acceptable. In other instances, depending on the estimated amount of expenditure, more strict methods are required by both the Authority’s Procurement Policy and also federal regulations regarding procurement. Even when individual expenditure amounts paid are below the SMT, if it is reasonable to assume that similar expenditures through the year will in total exceed the SMT, obtaining other bids is still required.
Context
During the audit year, $142,665 was paid to the same contractor for heating and cooling maintenance expenses, in approximately 25 payments. Most of each of the 25 payments were for more than one service.
$52,791 was paid to the same contractor noted above for plumbing work, in 37 payments. Many of the 37 payments were for more than one service.
It does not appear the Authority solicited bids or quotes from other contractors for these services.
Effect
The possibility of paying more than a reasonable charge was not reduced to a lower level by soliciting quotes for the same service. Management asserts that this is the only entity that locally, will both timely appear on a regular basis and perform a satisfactory service. Often the service required may not be a technical emergency. Nevertheless, management asserts, the service such as a toilet plumbing problem or non-functioning air conditioning in hot weather is a near emergency.
We do note that a large related-type job for replacement of 87 air conditioners, replacement of water lines, and other work was reviewed. The contract-award was dated February 13, 2023. The work appeared to be properly advertised for bid, bids obtained, insurance and references checked, and awarded with the advice and review of the architect. The award was for $739,849. It appears Davis-Bacon compliance is being properly monitored on that job. Field reports and monitoring reports by management are being prepared. The first payment was in August 2023.Cause
Oversight by management.
Questioned Costs
None
Recommendation
We realize it is not practical to bid out all services rendered for similar services that result in 62 payments (25 and 37 above), with multiple particulars covered by most if not all the payments.
However, Management should periodically bid out specific jobs, specifying the factors involved in making the award, and noting price is not the sole determining factor. These will have to be uniform jobs where the services needed are predictable. Then, for a reasonable period of time, this vendor would be used for the same electrical of plumbing type service without individual quotes.
Hourly rates should also be compared among vendors, since often the electrician, plumber, or other contractor may not know what they may encounter until they are into the job.
When management is unable to obtain three or more quotes, they should review and document the charges for uniform services and hourly rates in nearby cities for comparison purposes.
View of Responsible Officials
I am Skip Evans, Executive Director and Designated Person to answer these findings. I will comply with the auditor’s suggestion.