DUE DILIGENCE. NIGP Capitol Chapter Career Seminar August 16, 2011

Transcription

1 DUE DILIGENCE NIGP Capitol Chapter Career Seminar August 16, 2011 Presented by: Bill Munch Director of Purchasing Mesa Public Schools Craig A. McKee, CPPB Director of Outreach and Education Mohave Educational Services Coop., Inc

2 DUE DILIGENCE This presentation is designed as an overview of the process of performing due diligence reviews of cooperative contracts. You can create an effective process to verify the that the outside contracts you use comply with applicable Arizona rules, regulations and statutes. We will go through Mohave contract due diligence review and show other tools for reviewing contracts. This is an interactive presentation, provided you ask questions

3 The Purpose of Due Diligence Due diligence is the process a buying entity uses to verify that a cooperative procurement contract complies with the rules, regulations and statutes applicable to the entity s competitive procurement. An added benefit of due diligence is increased confidence in the buying entity s decision to use someone else s contract. Performing due diligence places the buying entity in a better position to react to any challenge resulting from the use of a cooperative contract. To achieve the purposes above, and to comply with applicable rules, due diligence must be performed by the buying entity.

4 Supporting Information Districts are responsible for ensuring that procurements, whether done independently or through a cooperative purchasing agreement, are done in accordance with School District Procurement Rules. The appropriate amount and complexity of due diligence to be performed by a district will vary based on the procuring entity with which the district is participating. A.R.S (F) requires school districts and school purchasing cooperatives, in connection with any audit conducted by a certified public accountant, to have a systematic review of purchasing practices. The Office of the Auditor General has prescribed guidelines for performing these reviews as part of the Procurement Compliance Questionnaire for cooperatives and the Expenditures section of the USFR Compliance Questionnaire for districts. A cooperative or lead district (entity) that has had such a review within the past year and made the results of the review available, may not warrant the same amount or complexity of due diligence as an entity that has not undergone a review or for which the results are unavailable. For example, if an entity had no findings as a result of its review, districts may need to do little or no additional due diligence beyond obtaining a copy of the compliance questionnaire as documentation for the results of the review. However, an entity that did not have a review or had a review with significant findings, would require a greater amount and complexity of due diligence. Districts should also consider any other information available on the entity s procurement practices. USFR Memorandum No. 248, Arizona Auditor General, September 22, 2010

5 Supporting Information Districts may, but are not required to, perform due diligence for every contract procured through cooperative purchasing. If an entity had no findings as a result of the review discussed above, districts may not need to review a particular contract except to ensure that the specific good or service to be purchased from the vendor is part of that contract. For an entity where more due diligence is required, it may be adequate to perform due diligence on a sample of contracts procured by the entity if that sample provides reasonable assurance that the entity s procurement practices comply with the School District Procurement Rules. To perform due diligence, districts may want to consider using the procurement questions in the compliance questionnaires as a guide in reviewing cooperative purchases. Districts must use their judgment in determining the appropriate amount and complexity of due diligence required for each procuring entity with which they participate. For audit purposes, districts should retain documentation of the due diligence performed and its results in a procurement file. USFR Memorandum No. 248, Arizona Auditor General, September 22, 2010 People need to document what they did to determine that the examined contract meets their requirements. Documentation used for due diligence reviews may be stored in electronic form, as long as the documentation is available for reference. Printing is not required. Auditor General Update at AASBO Meeting, 3/9/05

6 Step 1: Procurement Practices Review An independent CPA firm annually tests Mohave s procurement practices with the Auditor General s Cooperative Procurement Compliance Questionnaire. The questionnaires are available on our website. Go to Mohave s website, Click on the Member Information link in the Purchasing Services menu.

7 Step 1: Procurement Practices Review Click on the Due Diligence link.

8 Step 1: Procurement Practices Review Click on How Does Mohave Comply with the Rules and Regulations of the State.

9 Step 1: Procurement Practices Review Click on link to the most recent Cooperative Procurement Compliance Questionnaire. Save a copy of the questionnaire on your desktop. Note In the screenshot to the right, the most current Cooperative Procurement Compliance Questionnaire was for the period ending December 31, A new questionnaire is prepared each year as part of Mohave s audit.

10 Step 1: Procurement Practices Review Open the saved copy of the Cooperative Procurement Compliance Questionnaire. Examine the questionnaire for findings. Review findings to determine the significance. No findings. JTP, 3/3/10 Document your review with a note pasted into the questionnaire or by adding a document to the contract folder with the details of your review. Move the Cooperative Procurement Compliance Questionnaire file to a Due Diligence folder on your computer. Notes Mohave has no findings in its Cooperative Procurement Compliance Questionnaires. Per the Arizona Auditor General, this helps reduce the amount of additional due diligence. It is not necessary to repeat the procurement practices review for each contract. However, it is recommended that one or more Mohave contracts be examined each year to help ensure compliance with the Arizona Auditor General s requirements.

11 Step 2: Contract Review Return to the Member Information page. Click on Contract Documentation.

12 Step 2: Contract Review Click on Alphabetical Menu.

13 Step 2: Contract Review Click on the letter that corresponds to the first letter in the name of the vendor whose contract will be reviewed. There is an entry for each active contract. Each entry includes Vendor s name Contract number Date of the last revision to the contract documents Note The revision date can be helpful. If you performed due diligence on a Mohave contract after the revision date, the documents have not changed and it should not be necessary to again perform due diligence on that contract.

14 Step 2: Contract Review Click on the link for the contract to be examined. The contract folder will be downloaded to your computer. Note The location of the downloaded folder is determined by your computer s setup (i.e., downloaded file or desktop).

15 Step 2: Contract Review The contract document files are zipped. Some computers do not automatically extract zipped files. If that is the case with your computer, you will see a file similar to this. 09C_HILL_0529.zip If your computer does not automatically extract the zipped file, you will need to extract the contract documents folder with a program like WinZip or StuffIt Expander. After extraction, you will see a contract documentation folder similar to this. The folder contains the documents for the selected contract. 09C_HILL_0529

16 Step 2: Contract Review Open the contract documentation folder. 09C_HILL_0529 A window will open providing a list of contract documents. Open the Compliance Questionnaire

17 Step 2: Contract Review The document contains the Arizona Auditor General USFR Compliance Questionnaire items applicable to the contract. To assist members with contract review, Mohave examined the requirements to confirm contract compliance. The left column has the Auditor General s requirement. The right column has Mohave s explanation of compliance. Each explanation tells you where you can go to verify Mohave s statement. To confirm contract compliance check Mohave s response to each requirement in the questionnaire. Verify Mohave s compliance by reviewing the document and/or page referenced in Mohave s response. (Additional guidance on the next slide)

18 Step 2: Contract Review Review of multiple files is required to verify information in the compliance questionnaire. The information below shows the questionnaire topic and corresponding contract documentation file. Due Diligence Review Item USFR Compliance Questionnaire Determination for issuing an RFP Bidders list, time & date stamp (receipt log), public opening record Due date & time, terms & conditions, performance requirements, specifications & scope of work, evaluation criteria, etc. Request for Best & Final Offer* Vendor s bid/proposal Vendor s best & final offer Award and extensions Pricing Mohave Contract File to Review Compliance Questionnaire (i.e. 09CHILL0529 Compliance Questionnaire.pdf) RFP Determination (i.e., 09CHILL0529 RFP Determination.pdf) Bidders List & Bid Opening (i.e., 09CHILL0529 Bidders List & Bid Opening.pdf) RFP (i.e., 09CHILL0529 RFP.pdf) Request for Best & Final Offer (i.e., 09CHILL0529 Request for Best & Final Offer.pdf) Proposal and Best & Final Offer (i.e., 09CHILL0529 Proposal & Best & Final Offer.pdf Award, Extensions and Amendments (i.e., 09CHILL0529 Award & Extensions.pdf Pricing Summary (i.e., 09CHILL0529 PricingSummary.pdf *Best and final offers are used solely with competitive sealed proposals. Best & final offer documents will only be found in contracts with the RFP prefix. They will not included in contracts with an IFB prefix.

19 Step 2: Contract Review Document your review with a note pasted into the questionnaire or by adding a document to the contract folder with the details of your review. Based upon guidance from the Arizona Auditor General, you have now performed due diligence on this contract. The Arizona Auditor General requires that a school district perform due diligence on at least a sample of purchases it made through each cooperative the District participated in during an audit period to help ensure that those purchases were in compliance with the school district procurement rules. Reviewed document & confirmed contract compliance. JTP, 3/3/10 Therefore, it is not necessary to perform due diligence on every Mohave contract. However, it is recommended that one or more Mohave contracts be examined each year.

20 Step 3: Document Due Diligence All due diligence should be documented for future review. For school districts, this is essential to comply with the requirements in the USFR Compliance Questionnaire. There are not specific requirements for due diligence documentation. Mohave s suggests that electronic documentation is the most effective and efficient means to substantiate due diligence reviews. 16. Did the District perform adequate due diligence for each cooperative the District purchased through during the audit period to help ensure that those purchases were in compliance with the School District Procurement Rules? (Note: Indicate below each cooperative the District purchased through and whether due diligence was adequate based on the guidelines provided in USFR Memorandum No. 248.) Cooperative: The following slide demonstrates one means to electronically document due diligence reviews.

21 Step 3: Document Due Diligence 09CHILL0529 Compliance Questionnaire 09CHILL0529 RFP Determination 09CHILL0529 Bidders List and Bid Opening 09CHILL5029 Request for Best & Final Offer MESC Procurement Compliance Questionnaire 2009 Due Diligence 09CHILL0529 Pricing Summary 09CHILL0529 Award, Extensions and Amendments 09C_HILL_ CHILL0529 Proposal and Best & Final Offer 09CHILL0529 RFP Hillyard Contract Documents Due Diligence Documents Annual Due Diligence Folders Main Due Diligence Folder

22 Mesa Public School Buyer Resource Page

23 Mesa Public School Buyer Resource Page

24 Mesa Public School Buyer Resource Page

25 Other Due Diligence Tools

26 Summary Due diligence is here to stay Performing due diligence should not prevent the use of a cooperative contract Performing due diligence can be conducted with ease and success Maintain records to substantiate your determinations Proper due diligence will help verify the benefit of cooperative contracts

27 Questions? Bill Munch Director of Purchasing Mesa Public Schools Craig A. McKee, CPPB Director of Outreach and Education Mohave Educational Services Coop., Inc