What’s New in Arizona School District Procurement Compliance?

A auditorium with empty seats procurement

As I travel around this great state of ours, I work with districts large, tiny, and in-between. I help them remain compliant with the myriad school district procurement issues that face school business officials every day. Whether it is a quick email/text question or a full-blown training presentation for everyone from the Governing Board to the secretaries at the schools, I recognize the need to do what is in the best interest of the district while remaining procurement compliant. I recently did a procurement presentation for a Governing Board in Northern Arizona and I thought the presentation would also make a great article for ASA. So here it is.

Procurement Requirements

In the very recent past, there have been new procurement compliance requirements placed upon us and it is important we recognize the impact on our overall procurement operations at our school districts. House Bill 2663 signed by the governor, a year ago this spring, added some procurement requirements. Among other things, further due diligence will be required for our contracts. Federal purchasing has come under much more scrutiny than in the past. The School Facilities Board has requirements that are more restrictive than the School District Procurement Rules. These procurement requirement changes are going to change the landscape of school district procurement for all of us.

While most people in Arizona recognize the budget bill that gave our teachers a much-needed raise, that bill also clarified and added procurement requirements to school districts. The bill reiterated conflict-of-interest requirements and the personal and criminal liabilities for violations of the procurement rules.

Districts must now provide a “rationale” in the form of a written determination for awarding cooperative contracts. Specific requirements for verifying licenses for vendors have also been added to the statute.  There are now specific prohibitions for reprisals and gifts. These changes can be found in ARS 15-213 and have been updated in the School District Procurement Rules adopted by the State Board of Education last year.

Best Practices

As far as cooperative contract awards, districts are now required to provide a rationale when selecting vendors on a cooperative contract. This will be an additional step in your due diligence process. The rationale must be in writing. Your documentation should state the thought process for the selection of the vendor in two or three sentences at a bare minimum. Documenting three quotes from a cooperative or multiple cooperatives in the form of a written determination and justifying the selection based upon the quotes obtained would certainly comply with the requirement. However, there is no specific requirement to obtain quotes from cooperatives and should only be considered as a best practice recommendation. The most important thing is to provide a written justification on just how your district chose the particular cooperative vendor contract. I am happy to work with any districts to help them navigate the best practices to comply with this new cooperative procurement requirement.

Federal Guidelines

Federal purchasing for your school nutrition programs is under scrutiny by the Health and Nutritional Services at the Department of Education. Your district will be audited every three years to ensure compliance with federal procurement guidelines. Federal laws and regulations specify the methods school districts must follow to properly procure goods and services (7 CFR 200 and 210) and the Department of Education is required to ensure that school districts comply with the applicable regulations through audits, administrative reviews, technical assistance, training, guidance materials, and by other means. (7 CFR 210.19(a)(3). 

While the Department of Education audits your foodservice purchases, federal requirements apply to ALL purchases using federal dollars. Even though the federal quote requirement thresholds are the same for purchases from $10,000 to $100,000, there are additional federal clauses that should be added to federal purchases. For purchases under $10,000, federal provisions require you to rotate vendors unless you obtain three quotes. It is important to recognize that formal federal purchases over $100,000 require additional federal procurement clauses not always found in our regular formal procurement documents and cooperative contracts.

The School Facilities Board (SFB) is charged with adopting rules establishing minimum school facility guidelines, assessing school buildings against these guidelines, and providing monies to bring the buildings up to the guidelines. In providing monies, SFB has established procurement guidelines that can be more restrictive than the School District Procurement Rules. 

Districts should work with their liaisons and review the procurement decision matrix on the SFB website to ensure compliance with requirements imposed by the SFB. Failure to comply with SFB procurement requirements can result in funding being denied. The SFB is continually working toward developing procurement procedures that will ensure the best possible expenditure of funds. So it is important to keep in touch with your liaison on all issues and questions and review the website for updates regularly. 

Valley Schools is Here to Help

We all know that school district operates in a fishbowl. School district procurement is audited to an even higher level than state agencies, cities, counties and higher education in Arizona. When “non-compliance” is discovered, the media will not hesitate to report on it. As I travel around the state and work with school districts on procurement matters, I always stress that “Procurement Compliance is Job 1.” OK, I kind of took that from Ford even though I drive a Chevy.  But, it has never been truer than it is today that compliance is the most important job for an Arizona school procurement official. It is getting a bit more complicated, but keep networking with other districts and look to AASBO and me for help. 

If a procurement question comes up, email me. If I don’t know the answer, I promise not to make one up. I will find someone who knows the answer and do my best to keep you on the compliance path. If you need procurement assistance or training in your district, contact me. That’s why I am the Procurement Compliance and Training Officer for Valley Schools. It is my hope this article gave you some things to keep in mind as you make purchases for your district. Don’t forget to hug your designated purchasing folk at your district.  They will keep you out of trouble! Go Procurement Go!

Bill Munch, CPPO, CPPB is the Procurement Compliance and Training Officer for Valley Schools Management Group, recipient of the 2018 AASBO Bill Lovett Award, and the 2016 NIGP National Purchasing Manager of the Year.  He may be reached at bmunch@vsit.org.

 

By Bill Munch, CPPO, CPPB