LANSING, N.Y.—The Office of the New York State Comptroller’s Division of Local Government and School Accountability is recommending the Lansing Central School District update its competitive bidding policies and procedures following a 14-month audit period.
The objective of the audit, which reviewed district purchases from July 1, 2020 to Aug. 31, 2021, was to determine if the Lansing Central School District used a competitive process to procure goods and services. The audit was issued on May 27, 2022 and can be read in full here. The report found that district officials did not always seek competition to procure goods and services and thus “may not have procured goods and services economically and in a manner that is in the best interests of taxpayers.”
In response, the district committed to changing its policy, and “may engage in periodic review every 3-5 years” to make sure services are being secured at a good price.
“The District agrees that processes and procedures should be in place to ensure a competitive process of procurement that promotes favorable prices/costs,” the district’s statement reads. “However, the District would like to note that there may be scenarios that would be excluded. For example, being located in a somewhat rural area, we are often limited to only one potential service provider. It is also noteworthy, that although the District may not have engaged in periodic formal competitive processes for all contracts, the district has consistently engaged in extensive research to determine if other options exist, and if so, potential prices/costs.”
Specifically, the report found that LCSD did not seek competition for its insurance provider, an expense that totaled $232,624 during the audit period, as well as for four professional services: occupational therapy, physical therapy, speech therapy and legal service providers, which totaled $301,023 during the audit period.
The report also estimated that the LCSD used the same insurance provider for about 20 years without seeking competition and used the four professional service providers for at least 10 years without periodically seeking competition. The report also found that the district may have saved at least $3,700 on fuel costs if it had used a state contract.
The LCSD contracts with Delaware-Chenango-Madison-Otsego Board of Cooperative Educational Services (DCMO BOCES), which provides cooperative bidding services for school districts looking to purchase goods and services. The state comptroller’s office conducted a separate audit on DCMO BOCES, released on February 11, 2022, which found that the agency did not ensure goods and services were obtained in accordance with its own purchasing policy and procedures, such as by not seeking competitive bids.
New York State General Municipal Law requires school districts to advertise for competitive bids for purchase contracts exceeding $20,000 and public works contracts exceeding $35,000, with a few exceptions including for insurance coverage and professional services. However, General Municipal Law still requires school boards to adopt written policies and procedures for procuring goods and services not subject to competitive bidding requirements.
The report concluded that the LCSD’s existing procurement policy and procedures did not do an adequate job providing district officials guidance on how and when to seek competitive bids.
“Although the policy requires employees to use a [request for proposals] process when procuring independent auditing services, the procurement policy and purchasing procedures did not adequately explain how to procure professional services, insurance coverage or other goods and services not subject to competitive bidding,” the report states. “The purchasing procedures explained only how to use the BOCES purchasing service and did not address any exceptions or allowances for not seeking competition.”
Although there are no set rules regarding how often to use an RFP process or obtain quotes, the report states that a school district’s procurement policy should establish “reasonable” intervals to do so to ensure district officials procure services at a favorable price.
Kathryn Heath, the LCSD’s business administrator, said the district did not seek competition for the aforementioned services due to long-standing relationships with the providers or because there were a limited number of providers available. Heath also said she was unaware that the state contract had cheaper fuel prices and that the district used the BOCES purchasing service to “provide stability for fuel prices for the entire school year.”
The report included a statement from LCSD Superintendent Chris Pettograsso and Heath serving as both the district’s response to the audit and its corrective action plan, stating that the LCSD “agrees with the overall intent of the audit findings with minor clarifications” and that a review and overhaul of the LCSD Policy Manual begun during the 2019-2020 school year.