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NJASBO

PUBLIC SCHOOL PURCHASING

“What NJASBO Offers to You!”

PRESENTER

MR. JAMES SHOOPSCHOOL BUSINESS ADMINISTRATOR (RET.)

FEBRUARY 2016

NJASBO Presentation [1] February, 2016

NJASBO

“What NJASBO Offers to You!”

NJASBO is committed to provide the best possible guidance and support to School Business Administrators and other school officials to do their job and to do it well.

Today’s presentation will provide guidance on Public School Purchasing. It is hopeful that our membership will avail itself to the guidance and many support documents that are found on the NJASBO website.

Public School Purchasing

Part I Announcements and BroadcastsPart II Major Methods of Procurement with DocumentsPart III Topics of Interest

Technical support—Public School PurchasingIf you have questions on Public School Purchasing you may reach Jim Shoop at the following e-mail addresses

[email protected]

[email protected]

February 2016—James Shoop


mailto:[email protected]

mailto:[email protected]

Part I: Broadcasts and Announcements May 26, 2015

NJASBO Guidance for P.L. 2015, Chapter 47Report of Awarded Contracts – due by July 1

Pursuant to PL 2015, Chapter 47 N.J.S.A. 18A:18A-42.2 the ______________ Board of Education intends to renew, award, or permit to expire the following contracts previously awarded by the board of education. These contracts are, have been, and will continue to be in full compliance with all state and federal statutes and regulations; in particular, New Jersey Title 18A:18A. et seq., N.J.A.C. 6A Chapter 23A, and Federal Uniform Administrative Requirements 2CFR, Part200. LIST All Contracts that the Board has awarded (or you believe will be awarded) and included in the official board minutes during the past 12 months, ending June 30. This would include contract awards pursuant to New Jersey’s procurement laws; i.e. bids for goods and services, transportation, as well as awards pursuant to board resolution for professional and extraordinary unspecifiable services.

Section 2 of the Law (Added by Jim Shoop)

N.J.S.A. 18A:18A-42.2 (b)

b. Prior to the execution, extension, or renewal of any school district contract that was not included in the report prepared pursuant to subsection a. of this section, the school business administrator shall notify the board of education in writing of all applicable federal and State laws, rules, and regulations relating to the contract.


July 9, 2015

RESOLUTIONS FOR ADOPTINGNEW BID THREHOLDS

Below are sample resolutions that can be used to establish the new bid thresholds, for QPA’s and Non-QPA’s, which became effective July 1, 2015. These amounts (QPA - $40,000 and Non-QPA - $29,000) will remain in effect until June, 2020.

Resolution #1 Resolution Increasing the Bid Threshold—Qualified Purchasing Agent WHEREAS, (Name of school official), School Business Administrator/Board Secretary possesses a qualified purchasing agent (QPA) certificate; WHEREAS, the Governor, in consultation with the State Treasurer and pursuant to N.J.S.A. 18A:18A-3 (b), on July 1 , 2015 has increased the bid threshold amount for school districts with purchasing agents who possess qualified purchasing agent certificates, from $36,000 to $40,000; NOW, THEREFORE BE IT RESOLVED that the (Name of Board of Education), pursuant to N.J.S.A. 18A:18A-3 (a) and N.J.A.C. 5:34-5.4, establishes and sets the bid threshold amount of $40,000 for the board of education, and further authorizes (Name of SBA/Bd. Secy.) to award contracts, in full accordance with N.J.S.A. 18A:18A-3 (a), for those purchases that do not exceed in the aggregate of the newly established bid threshold amount.


RESOLUTIONS FOR ADOPTINGNEW BID THREHOLDS

Resolution #2 Resolution Increasing the Bid Threshold—Without QPA Purchasing Agent WHEREAS, the Governor, in consultation with the State Treasurer and pursuant to N.J.S.A. 18A:18A-3 (b), on July 1, 2015 has increased the bid threshold amount for school districts whose purchasing agents do not possess a qualified purchasing agent (QPA) certificate, from $26,000 to $29,000, WHEREAS, the (Name of Board of Education) would like to take advantage of the maximum statutory bid threshold amount of $29,000 for school districts who do not have a qualified purchasing agent; NOW, THEREFORE BE IT RESOLVED that the (Name of the Board of Education), establishes and sets the bid threshold amount of $29,000 for the board of education, and further authorizes (Name of SBA/Bd. Secy.) to award contracts, in full accordance with N.J.S.A. 18A:18A-3 (a), for those purchases that do not exceed in the aggregate the newly established bid threshold amount.


August 3, 2015

Office of the State ComptrollerProcurement – Notification of Contracts over

$2 million and $10 million

N.J.S.A. 52:15C-10 requires contracting units must notify OSC as early as practicable, but no later than 30 days before advertisement, of any negotiation or solicitation of a contract that may exceed $10 million. Contracting units must also provide post-award notification for any contract for an amount exceeding $2 million. Notification must be given within 20 days of the award.

Go to www.nj.gov/comptroller/compliance/index.html Instructions and the required forms can be found at the link above. All forms are to be remitted to [email protected]

Section: 52:15C-10: Notice to State Comptroller of award of certain contracts;

10. a. In furtherance of the duty of the State Comptroller to audit and monitor the process of soliciting proposals for, and the process of awarding, contracts by contracting units which contracts involve a significant consideration or expenditure of funds, a contracting unit shall provide notice to the State Comptroller no later than 20 business days after the award of a contract involving consideration or an expenditure of more than $2,000,000 but less than $10,000,000.

Section 10 of the law added by Jim Shoop


Apple Products and ServicesThe announcement below is one that was sent by John Donahue to the membership in November and December 2015 and January 12, 2016.

Good Morning: I just finished checking with Treasury about the status of the Apple State Contract. I wish I could report that I see a resolution coming soon, but I cannot. My December email on this subject is below:

Good Afternoon:

I have been hearing from some of you about the problem that exists due to the expiration of the Apple State Contract. Apple continues to negotiate the terms and conditions of this contract and we all hope that it will get resolved in good time. But that’s the problem, we don’t how long this will take, and I have spoken to both the national Apple office and our Department of Treasury. No one can or will commit to when this will get resolved.

I know some of you have a letter from Apple indicating that you can purchase directly from them as a “sole source”. Although there is a state protocol for proprietary goods and services, I don’t recommend this process. So what do I recommend, go out to bid.

Yes, you can submit to Apple a formal bid at [email protected]. I have spoken to the folks at Apple and they explain to me that they have three project managers to handle government bids. One problem though! They can’t handle the requirement to submit bid bonds, so if that is critical (and I don’t see why it must be) to you then submitting your bids through this website may not help you. Please know that a bid bond is a local decision and not “required” by law. Your bid specification can be the Apple products you desire or “equivalent”. If you can’t wait until the national and state contract is in place, this bid process should work. They tell me that they have handled formal bids from New Jersey in the past.

John Donahue NJASBO Presentation [7] February, 2016

Part II: Methods of Procurement Document Review

“We just can’t go to Costco and buy items off the shelf!”

Methods of Procurement

It’s More Than Bidding!

Methods of Procurement for Public Schools

A. Advertise for BidsB. Solicit for QuotationsC. Request for Proposals (RFP)D. Competitive Contracting ProposalsE. Extraordinary Unspecifiable Services (EUS) and InsuranceF. State Contract PurchasesG. Emergency ContractsH. Cooperative Purchasing AgreementsI. Shared Services AgreementsJ. Sound Business PracticesK. Proprietary Purchases L. Federal Funds Grants—2 CFR Part 200 Uniform Grant GuidanceM. Federal Funds—National School Lunch—7 CFR 210.21


Methods of ProcurementPublic Schools

Procurement Method

A. Advertise for Bids (Purchases that exceed the bid threshold--$40,000)This method is used for contracts for goods, materials, services and public works projects that exceed the bid threshold of $40,000.

ExamplesBuilding Services TechnologyPlumbing, Electrical, HVAC work Computer Supplies/EquipmentCustodial Supplies Printers / ComputerPublic Works Project Interactive White Boards

Food Services* Title I Testing Groceries and Canned Goods Test Scoring ServicesPest Control ServicesBaking Goods—Rolls, Bread Athletics

FootwearDistrict Athletic Supplies/EquipmentFurniture Phys Ed Supplies/EquipmentAV EquipmentCalculators

Award of Contract--Lowest Responsible BidderThe common thread of all these bids is that the board has to award the contract pursuant to N.J.S.A. 18A:18A-4 (a) to the lowest responsible bidder.

*Subject to Federal Guidelines 7 CFR 210.21

Purchases of goods and services when using Federal Funds are subject to Federal Guidelines 2 CFR Part 200 (Effective July 1, 2015)

It is recommended that school districts use two (2) different bid boilerplates1. Goods and Services Bid Boilerplate2. Public Works Bid Boilerplate



B. Quotations (Purchases that fall between $6,000 and $39,999)This method of procurement is used for contracts for goods, materials, services and public works projects that in the aggregate between $6,000 and $39,999.

Examples: Athletic Wear Fitness EquipmentAthletic Trainer Supplies Instrument ReedsDry Cleaning Services Payroll Checks

Award of Contract—Price and Other FactorsThe Board of Education, is obligated to solicit at least two (2) competitive quotations and award the contract pursuant to N.J.S.A. 18A:18A-37 (a), to the vendor whose response is most advantageous, price and other factors included.

It is recommended that school districts use two (2) quotation boilerplates

1. Goods and Services Quotation Boilerplate2. Public Works Quotation Boilerplate



C. Request for Proposal—RFP--This method is preferred for contract for:

Professional Services Academic/Operational Services Medical (Contracts less than $40,000) Auditing; Accounting Instructional Services Legal Educational Services Engineering, Architectural Professional Development

Award of Contract—Evaluative CriteriaThe RFP method is designed to award the contract to the vendor based upon a list of criteria which is includes as recommended by the NJ State Comptroller’s Office with the publication

Best Practices in Awarding Service Contracts (2010)

Technical Criteria Submission of narrative how firm will provide services; planned approach; measurable results Understanding how services will be provided

Management Criteria Business organization; staffing Experience; and Knowledge of district

Cost Criteria Fee proposal submission; cost analysis

The contract for an RFP contract does not; I repeat does not have to be given to the respondent who submits the lowest price. The evaluative process is designed to award the contract to the respondent whose response will provide the highest quality service at a fair and competitive price.



D. Competitive Contracting (Certain Contracts over $40,000)This method is used for certain contracts over $40,000.00.

The district can only use this procurement method for contacts that are outlined in N.J.S.A. 18A:18A-4.1. Some of the examples that are permitted are:

1. Proprietary Computer Software for Board Usea. Student Information Systemsb. Business Office; Human Recoursesc. Student Transportation

2. Professional Development Services3. Educational Consultant Services4. Instructional Improvement Services

The award of contract is similar to the RFP award—an evaluative criteria which includes, price and other factors considered.

E. EUS—Extraordinary Unspecifiable Services--InsuranceThis method is the procurement method for the purchase of insurance and insurance consulting services. Similar to the RFP process

F. Other Procurement Methods

State Contract (GSA Contracts) Purchasing National Cooperatives Emergency Contracts Cooperative Purchasing Agreements Shared Services Agreements Sound Business Practices


Part III: Topics of Interest

NJASBO Procurement Presentation

Topics of Interest

Issuing Professional Services Contracts; The January Organization Meeting

The Use and Misuse of the RFP with additional items

1. List of Professional Services2. NJDOE Approved Clinics and Agencies3. A Word About the RFQ4. Notice of Intent—Purchase of Related Services

Public Notices for Award of Contracts

Preparation of Board Resolutions; Awarding Contracts for Goods and Services

The Purchase Order Rationale Form; An Argument for Its Use

You Are Being Watched; Audits That Befell School Business Administrators

Ethics in Purchasing—You Must Always Lead by Example


Issuing

Professional Services Contracts

The January Organization Meeting


Issuing Professional Services Contracts; January Organization Meeting

Professional Services Contracts Insurance Broker of RecordArchitect/Engineer Health BenefitsAuditor Property and CasualtyBoard Attorney Reminder—Insurance consultantOther Legal Services services should not be classified asSchool Physician professional services contracts.

Calendar Year Award of ContractsMany school boards award professional services contracts and make Insurance Broker of Record appointments in their January Organization Meeting. Many of the board resolutions have contract dates on a calendar year basis

January 1, 2016 through December 31, 2016

These calendar year contracts may be problematic!

1. Vendor Contracts Overlapping Two (2) Budget Years Having professional services contracts overlap two budget years may cause some problems as to issuing of two (2) purchase orders; advertising two (2) contract awards in the newspapers; maintaining two (2) legal services budgets, two (2) legal services billings and possible open purchase orders. It could become very confusing for all concerned.

2. Permitting Time to Procure Professional Services Contracts Yes, contracts for professional services are an “exception to bidding” however, there is administrative code to consider in the award of all professional services contracts.


Issuing Professional Services ContractsN.J.A.C. 6A:23A-5.2 (a) (5)

“Professional services contracts are issued in a deliberative and efficient manner that ensures the district receives the highest quality services at a fair and competitive price or through a shared service arrangement. This may include, but is not limited to, issuance of such contracts through a request for proposals (RFP) based on cost and other specified factors or other comparable process.”

Are you able to provide written documented evidence of a “deliberative and efficient manner?”

Are you able to provide written documented evidence that your district used the RFP process to procure the professional services contract?

Are you able to provide written documented evidence that the professional services contract was issued through a “comparable process?”

Competitive Proposals Required—N.J.A.C. 6A:23A-9.3 (c) (11)The NJDOE sets as a standard and a requirement that

“The district solicits competitive proposals with fee quotes or uses a comparable process to ensure the district receives the highest quality services at a fair and competitive price prior to the award of contracts for professional services.”

Are you able to provide written documented evidence to the Executive County Superintendent that you solicited competitive proposals or used a “comparable process” in procuring professional services contracts?


Possession of Procurement Documents

Procurement Documents IJust a reminder for those districts who awarded professional services contracts at the January 2016 Organization Meeting. Did you have in your possession the following procurement documents from each vendor, prior to the award of contract?

NJ Business Registration Certificate Affirmative Action Evidence Iran Financial Disclosure Activities Form

Procurement Documents IIDid you have in your possession the following document from each vendor, at least ten (10) days prior to the award of contract?

Chapter 271 Political Contribution Form

All of these activities for issuing professional services contracts take time and by having the contracts dated for a school year

July 1, 2016 through June 30, 2017

instead of a calendar year, will permit the School Business Administrator to take the appropriate time needed to for the procurement process.

3. New Board Member Enthusiasm Sometimes newly elected board members get overly enthusiastic and want to make contracted vendor changes at the Organization Meeting.

By having the professional services contracts dated for a school year—July 1, 2016 through June 30, 2017, will give the newly elected board members an opportunity to see and review the Business Office operations as it pertains to procuring contracts.


4. NJSBA Guidance—Contracts Aligned with Budget Year

FREQUENTLY ASKED QUESTIONSCONCERNING BOARD OF EDUCATION ORGANIZATION 2015-16

The New Jersey School Board’s Association annually issues guidance on Board of Education Organization Meetings. The nineteen (19) page document has become the guiding force for all Board Secretaries to use.

On page 17 under the Contracts Section the NJSBA offers the following guidance:

“It would appear that contractual items that are administratively aligned with the budgetary, fiscal or academic year would be best established with a July 1 to June 30 timeframe. Items that are more aligned with board governance would be best set with a time frame aligned to the organizational year of the board, be it April/May to April/May, or January to January. Even then, the administrative ease of aligning with the fiscal year, especially when there are budgetary concerns, may take precedence. Again, a board may wish to consult with board counsel as to the best way to approach its contractual obligations.”

5. No Legal Obligation There is to the best of my knowledge, no legal obligation to have professional services contracts appear on the Organization Meeting Agenda.

No matter what lists of items you may have seen, either from the NJDOE, NJSBA or even NJASBO, it is only suggested to have professional services contracts on the agenda.

Note: please review with your board attorney all items that are required by law, code or board policy to appear on the Organization Meeting agenda.


The Use and The Misuse of the RFP

Additional Topical Information

1. List of Professional Services2. NJDOE Approved Clinics and Agencies3. A Word About the RFQ4. Notice of Intent—Purchase of Related Services


Methods of Procurement

The Public School Contracts Law and supporting administrative code have provided to school districts, various methods of procurement to use for the purchase of goods and services for our schools. Among the major ones are:

Advertising for Bids N.J.S.A. 18A:18A-4 (a)Solicitation of Quotations N.J.S.A. 18A:18A-37 (a)Competitive Contracting N.J.S.A. 18A:18A-4.1Extraordinary Unspecifiable Services N.J.S.A. 18A:18A-37 (b)

Another major procurement method is the Request for Proposal (RFP).

The Request for Proposal (RFP)The Proper Use

The Request for Proposal (RFP) is supported for use as a procurement method as follows:

A. Procurement of Professional Services—Part IThe use of the RFP procurement method for professional services is supported by N.J.A.C. 6A:23A-5.2 (a) (5).

“Professional services contracts are issued in a deliberative and efficient manner that ensures the district receives the highest quality services at a fair and competitive price or through a shared service arrangement. This may include, but is not limited to, issuance of such contracts through a request for proposals (RFP) based on cost and other specified factors or other comparable process.”


B. Procurement of Professional Services—Part IIThe use of the Request for Proposal procurement method for to purchase professional services is further supported by N.J.A.C. 6A:23A-9.3 (c) (11).

“The district solicits competitive proposals with fee quotes or uses a comparable process to ensure the district receives the highest quality services at a fair and competitive price prior to the award of contracts for professional services.”

C. Specialized Goods and Services—Competitive ContractingSchool districts may use another procurement method when purchasing specialized goods and services as listed in N.J.S.A. 18A:18A-4.1. This method is called the Competitive Contracting process.

School districts using the Competitive Contracting process

“…shall utilize a request for proposal documentation…” Reference—N.J.S.A. 18A:18A-4.4 and N.J.A.C. 5:34-4.2 and 4.3

It appears, therefore, that the State of New Jersey has authorized the use of the Request for Proposal (RFP) process for the procurement of certain specialized goods and services, including professional services.

It also appears that school districts have to provide documentation during their budget review that they solicited competitive proposals or used a comparable process in the award of professional services contracts.


The Request for ProposalThe Possible Misuse

Advertising for Bidding—the Standard!The State of New Jersey has clearly outline in N.J.S.A. 18A:18A-4 (a) the following:

“Every contract for the provision or performance of any goods or services, the cost of which in the aggregate exceeds the bid threshold, shall be awarded only by resolution of the board of education to the lowest responsible bidder after public advertising for bids and bidding therefor, except as is provided otherwise in this chapter or specifically by any other law.”

It is noted that the State of New Jersey has highlighted that every contract that exceeds the bid threshold shall be awarded to the lowest responsible bidder after public advertising for bids and bidding.

ExceptionsThe State of New Jersey has provided an exception clause if you want to use another procurement method.

So, it appears that you either bid or use another procurement method recognized by law when purchasing goods and services.

Guidance on the Misuse of the RFP MethodIt appears that certain school districts are using the RFP method for procuring certain goods and services, when they should have gone out to bid. Please seek legal guidance if you want to use the Request for Proposal (RFP) method for goods or services other than professional services or those goods and services listed in 18A:18A-4.1 under Competitive Contracting.


Good News! A List of Professional ServicesAs many know, professional services as defined in N.J.S.A. 18A:18A-2 (h) are an exception to bidding, however, not an exception to a competitive or comparable process. After reading the definition of professional services, School Business Administrators were left on their own to determine what particular services were indeed, professional services.

There was no list of services that were deemed “professional services.”Over the year the following services were considered safe ones:

Accounting; Auditing MedicalLegal Architectural; Engineering

After that, it was anyone’s guess. Not so. In a most unlikely place, the NJDOE has in an official document, outlined those services they deemed professional services. The document is

The Uniform Minimum Chart of AccountsNew Jersey Public Schools

2015-2016

Please note page 46 of the Chart of AccountsObject Code Description

320 Purchased Professional - Educational Services. Purchased professional services supporting the instructional program and its administration. Included would be purchased educational services for Pre-K, instructional classroom technologies, instructional support technologies, curriculum improvement services, counseling and guidance services, related and extraordinary services such as speech, occupational and physical therapy, child study teams, and contracted instructional services.

330 Other Purchased Professional Services. Expenditures for purchased professional services other than professional educational services. Included are management consultant services, school management support activities, election services, medical services, legal services, architectural services, accounting services, auditing services, negotiating services, and other such services.

Proceed with Caution!—List of Services in Chart of AccountsPlease review the list of services with your board attorney to obtain a legal opinion of what services would meet the test of the definition of professional services.


NJDOE Approved Clinics and Agencies

Board Attorney Review and OpinionMany school districts provide related services to students with special needs. Are the related services as noted on the NJDOE Approved Clinics and Agencies professional services as defined in N.J.S.A. 18A:18A-2 (h)?

Provide a list of the services to your board attorney. Ask the board attorney to meet with the district official that coordinates activities for special needs students. The SPED coordinator and the board attorney will review the services and the board attorney will provide an opinion as whether the service can be deemed a professional service.


A word about the RFQ—Request for Qualifications!Another method that has appeared on the procurement scene is called the RFQ—Request for Qualifications. The NJ Division of Local Government Services has recognized this procurement type in Local Finance Notice 2007-11 page 4

Request for Qualifications—RFQ“Using this model, a Board can specify the desired qualifications, establish criteria for, and award open-ended contracts (for terms as allowed by law) based on those proposals, which may or may not include pricing proposals. Orders for specific services would then be placed as needed with individual contractors based on price quotations, ability, or availability of specific goods or services. An RFQ does not require an evaluation based on price – it can be based on skills, ability to deliver a certain product, or range and breadth of a product line – with price being agreed upon at the end of the evaluation process.”

Proceed with Caution—When Using the RFQ MethodA stated earlier, to be in compliance with N.J.S.A. 18A:18A-4 (a), it appears that you either bid or use another procurement method recognized by law when purchasing goods and services.

I have found no evidence of the RFQ method in the Public School Contracts Law or supporting administrative code. If you intend to use the RFQ method, please obtain an opinion from your board attorney.


Notice of Intent

Purchase of Special EducationRelated Services

Letter to Executive CountySuperintendent

N.J.A. C. 6A:14-5.1 (d)


Sample Sample

Notice of Intent

Purchase of Special Education Related Services

To: Executive County Superintendent of Schools

Re: Approved Clinics and Agencies—Notice of Intent to Purchase Services

In accordance with N.J.A.C. 6A:14-5.1(d), I have been advised by the Director of Special Services that it is the intention of the Public School District to purchase the following related services from New Jersey Department of Education approved clinics and agencies for the 2016-2017 School Year. The services to be purchased are as follows:

Child Study Team Evaluations Occupational Therapy Physical Therapy Speech Language Supplementary Instruction

It has been determined by the Board Attorney, after consultation with the Director of Special Services, that the above services are professional services in accordance with N.J.S.A. 18A:18A-2(h). The services will be either procured through the request for proposal (RFP) process pursuant to N.J.A.C. 6A:23A-5.2(a) (5) or through the Competitive Contracting process. (N.J.S.A. 18A:18A 4.4) The district may also procure the services through a cooperative purchasing agreement or a shared services agreement.

Proposed Terms of Contract--AttachmentsPursuant to N.J.A.C. 6A:14-5.1 (d), (1), I provide to you, as prepared by the Department of Special Services copies of the terms and conditions of the proposed contracts.

Yours truly,

School Business Administrator Board Secretary


Enclosures—Terms of Contracts

Public Notices

Award of Contracts


Publication of Contract Award Notices

In accordance with the Public School Contracts Law, school districts have to place a “notice of award” in an official newspaper for the award of certain contracts. They are:

Contract Award CitationProfessional Services Contracts* N.J.S.A. 18A:18A-5 (a) (1)Competitive Contracting Contract Awards N.J.S.A. 18A:18A-4.5 (g)EUS Contract Awards* N.J.S.A. 18A:18A-5 (a) (2)

*The district shall publish a notice of award for contracts that exceed the bid threshold. Reference—Local Finance Notice 2010-3 Letter A.

Deadline for Publication—Twenty (20) DaysThe district shall publish a notice of award no later than twenty (20) days after the passage of the resolution awarding the contract.Reference—N.J.A.C. 5:34-9.5 (d).

Inclusion of Services—Meeting the Definition of Professional ServicesPurchasing agents are to review the definition of professional services to ensure the services listed in the public notice are indeed professional services.


Advertisement Requirements

Name of Vendor Nature of the contract Duration of the contract (term of contract) Description of services Amount of the contract (a) Statement that the contract is on file and available for public inspection

(a) Amount of Contract—Total Amount of Contract; No Hourly RateThe contract amount placed in the public notice shall be for the total amount of the contract. Hourly rate amounts are not acceptable. Whatever the total amount of the contract is on the purchase order has to match the total amount in the board resolution and in the public notice advertisement. Reference LFN 2010-3 Letter A.

Public Notice Board of Education

, New Jersey

Award of Contracts

Name Description Services Est. Amt. Term Nature of ContractImmedicenter Medical Inspector $60,000 July 1, 2015- RFP 21-15Clifton, NJ June 30, 2016

Greenhouse Therapy OT/PT Services $100,000 July 1, 2015- CC 04-15Passaic, NJ June 30, 2016

Brown & Brown Metro Broker of Record $101,000 July 1, 2015- EUS 01-15Florham Park, NJ Health Benefits June 30, 2016

The resolutions and contracts are on file in the Business Office and are available for public inspection.


Preparation of

Board Resolutions

Awarding Contracts for

Goods and Services


Preparing Board of Education Resolutionsfor Awarding Contracts - Goods and Services

Preface It will be universally agreed upon by all board members, all superintendents of schools and even many school business administrators that extensive, wordy board resolutions are not in the best interests in conducting an efficient board meeting.

Many school districts follow the course of providing to the board members an agenda listing the items and backup supporting materials. This is fine, however, certain board resolutions for the award of certain contracts for goods and services, require by law, certain information to be included in the resolution.

Guidance on how to prepare of resolutions for awarding contracts is provided as follows:

Award of Contracts-Bids-N.J.S.A. 18A:18A-21 (b)

It is noted in this citation that

"A proper record of the prices and terms shall be made in the minutes of the board.”

It appears that it would be in the best interests of the district to list all of the vendors who submitted bids and include their prices for all of the items they on which they bid. The award of contract resolution should have all bid prices from all bidders, and not solely mention the winning bidder.

Extreme Resolution-Athletic Equipment and Supplies Bid Yes, in Passaic I had an Athletic Equipment and Supplies bid that requested prices for over 175 different items. There were ten (10) bidders who submitted prices. The spread sheet was outrageous, however, every price from every bidder made the agenda and was


included in the board minutes.

Award of Transportation Contracts-N.J.A.C. 6A:27-9.10 (a) (1) It is noted in this citation that the board minutes authorizing the award of contracts shall include the following:

Contractor's name Route numbers Individual costs of all bidders who submitted bids

Award of Competitive Contracting Contracts-N.J.S.A. 18A:18A-4.5 (d) It is noted in letter (d) of the law that the Purchasing Agent shall prepare a report evaluating and recommending an award of contract.

The report at a minimum shall

List the names of all those vendors who submitted proposals; Summarize each proposal submitted; Rank vendors in order of evaluation; Provide reasons for the award; and Detail the terms, conditions, scope of service, fees and other

matters.

It is further noted in N.J.S.A. 18A:18A-4.5 (f), that the aforementioned report shall become part of the public record and shall reflect the final action of the board.

Public Record of an Action of the Board I think your board attorney will agree with me, that the public record of an action of the board would be recorded in the board minutes, ergo, the resolution for the contract award for Competitive Contracting should have at least the minimum items mentioned in N.J.S.A. 18A:18A-4.5 (d). NJASBO Presentation [33] February, 2016

ThePurchase Order Rationale

Form


An Argument for the Purchase Order Rationale Form

Genesis of the Rationale FormIn 2007, the NJDOE entered into a contract with KPMG, a professional firm, to conduct an audit of the Passaic Public Schools. This was part of a statewide audit of all Abbott School Districts. Part of the scope of the audit was to review expenditures of the school district over a two (2) year period.

Analysis of ExpendituresThe NJDOE asked KPMG to determine whether the expenditures were reasonable and if the expenditures were of an educational or operational value. Could they be linked to a district initiative or program? KPMG also had to determine if the expenditures were efficient or excessive.

KPMG Activity—March 2007 through June 2007KPMG over a four (4) month period reviewed 1808 individual purchase orders with me. They asked the following questions:

Why did you buy this? What is the educational value or operational value of the purchase? How did this purchase benefit the students? What district program was linked to the purchase? Then KPMG made their own determination whether the purchase was inefficient or

excessive.

In many cases we had to call district administrators at their offices or even at home to obtain the rationale of the purchase. I could not provide many of the answers as my job was to ensure the purchases were in compliance with the Public School Contracts Law.


Results of the Audit—Part 1

KPMG placed the expenditures into three (3) categories

Reasonable—expenditure supports the educational or operational activities of the district.

Discretionary—expenditures were not of educational value or they appeared to be excessive.

Inconclusive—expenditures appeared to be reasonable, however the purchases may appear to be excessive.

Summary of Purchases—total purchase orders reviewed, 1808 PO’s

Number of Purchase Orders Value of PurchasesReasonable 1701 $9,608,000Discretionary 23 26,000Inconclusive 84 229,000

Results of the Audit—Part 2

The school district instituted the requirement of the Purchase Order Rationale Form. District administrators and school principals who recommend purchases now had to explain in writing, the educational or operational need for the purchases.

Administrators now had to justify the need for the purchase and if so required, explain the purchase at a board or education meeting. A rationale form was prepared and instructions on the use of the form were provided to all.


The Argument!

It could happen to you!—The Best Argument

N.J.A.C. 6A:23A-5.1—Order to Show Cause to Withhold or Recover State Aid due to

Excessive Unreasonable Ineffective or Inefficient expenditures

“If the Department of Education identifies ineffective or inefficient expenditures… the Commissioner shall… provide the school district the opportunity to be heard as to why the amount of the ineffective or inefficient expenditures shall not be withheld from State aid or refunded to the Department.” N.J.A.C. 6A:23A-5.1 (a)

At any time the NJDOE may conduct an audit to determine if a school district’s expenditures are excessive, unreasonable, ineffective or inefficient and if identified so; may withhold state aid.

It gets worse!--School districts that receive over 50% in state aid:

N.J.A.C. 6A:23A-5.5—Expenditure and Internal Control AuditingSchool districts that receive over 50% of state aid in their general fund budget, pursuant to a schedule determined by the Commissioner, shall engage an accountant or auditing firm (other than the present one for the district) to conduct a “sampling of expenditures made” to determine the

“the educational value and/or reasonableness of the said expenditures.” Sound familiar?


PURCHASE ORDER RATIONALE FORM

Educational or Operational Rationale

A Purchase Order Rationale Form shall be attached to the top of each purchase order submitted (exceptions noted) to the __________________. This form asks for a written explanation as to the educational or operational need for the purchase.

Administrators who submit purchase orders have to put in writing why the purchase is essential to the school district. Administrators who sign off on purchase orders will now have to provide explanations on the following:

How students will learn or benefit from the purchase? What educational achievement or program may be linked to the purchase? How is the purchase of operational value to your school/office? Are the goods/services purchased useful for the long term rather than immediate

need? Have inventories been checked to determine whether there is a real need for the

purchase?

Administrators will now have to justify the need for the purchase and if so required, explain the need at a Board of Education meeting.

ReviewThe _____________________ will review each purchase order to ensure what is being requested is essential to the school district. The ___________________ will review the educational or operational need for each purchase and if he is satisfied, he will approve the purchase order.

Reminder!

The Purchase Order Rationale Form is to be submitted for all purchases with exceptions noted and shall be attached to the front of the purchase order (requisition form);

A detailed explanation of the educational or operational need is required for each form;


The firm is to be signed by the administrator or supervisor with an original signature (blue ink).

Exceptions for Purchase Order Rationale FormPurchase orders for the following items do not require a Purchase Order Rationale form:

Emergency Purchases (N.J.S.A. 18A:18A-7) Emergency purchases are regulated by state law. In order to approve an

emergency purchase, rationale must be first provided thus negating the need for a purchase order rationale form.

Field Trip Transportation Requisitions for field trip transportation do not need a rationale form. A copy

of the Approved “Field Trips” Resolution must be attached to each field trip transportation purchase order.

Pupil Transportation; Athletic Transportation Transportation of students to and from school is regulated by state law,

administrative code and the student’s IEP and do not require a rationale form. Transportation of athletes to and from athletic events does not require a rationale form.

Travel Reimbursement for Employees Travel reimbursement costs are regulated by state law, state administrative

code and board policy. All conditions and approvals for this reimbursement have been met in order for the requisition to have been prepared.

Tuition Contracts—Special Education Schools As with pupil transportation requisitions, tuition to special education schools

are regulate by federal and state law and no further justification is needed.

Tuition Reimbursement for Employees This employee contractual benefit needs no further explanation. All conditions

and approvals for tuition reimbursement have been met in order for the purchase order to have been prepared.


________________ BOARD OF EDUCATIONOFFICE OF THE SUPERINTENDENT

Purchase Order Rationale Form

A. Educational RationaleAs a result of this purchase, please explain what will students learn or how students will benefit. Note any educational achievement or program that may be linked to this purchase.

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

B. Operational RationaleProvide a brief explanation how this purchase is of operational value to your school/office. Note any particular benefits to the district. Explain whether any goods/services are being utilized on a regular basis and whether they are useful on a long term basis.

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

C. Light Meals; Refreshments—Student or Parent Activities -- N.J.A.C. 6A:23A-5.8(e)Provide a description and purpose of student or parent activity. Document the makeup of the group participating. Attach a list of employees or board members included in the group. (Use back if necessary).

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Name of School/Office_____________________________________________________

Administrator/Supervisor ___________________________________________________

Signature: _______________________________________ Date ___________________

Name of Vendor __________________________________________________________

Amount $ ________________ Account #______________________________________

----------------------------------------------------------------------------------------------------------------------------------------------------------

_________ Approved _________ Not Approved

Other:_________________________________________________________________________________________________________________________________________________________________________________________

________________________ Date _________ _________________________Date __________


Superintendent of Schools/Designee School Business Administrator/Designee

Please attach the Rationale Form to the front of the Purchase Order (Requisition Form) – One Form Per Purchase Order (Requisition Form). – Original signature required (blue ink).

You Are Being

Watched


You are Being Watched!

Purchasing involves financial transactions and if there is one truism in the Business Office this is it:

“All financial transactions are subject to auditor review!”

Audits You May Meet in the Purchasing Process

A. Affirmative Action—Public Contract ComplianceB. Annual Audit Program—Section I-5 Bids/Contracts/PurchasingC. Federal Fiscal Monitoring— Consolidated Monitoring Reports and

EDGAR and ARRA FundingD. KPMG/WISS AuditsE. Accountability Regulations Independent Audit

1. Ineffective or Inefficient Expenditures—N.J.A.C. 6A:23A-5.1 (a)2. Educational Value or Reasonableness—N.J.A.C. 6A:23A-5.5 (a)

F. New Jersey State Commission of Investigation G. New Jersey State Legislature—Office of the State AuditorH. New Jersey Office of the State ComptrollerI. OFAC from the NJDOE—Office of Fiscal Accountability and Compliance


Ethics in

Purchasing

“You must lead by example!”

Ethics in Purchasing

Financial Interest in any Contract; Direct or IndirectNo employee or board member may have a direct interest in any contract or agreement for the sale of goods and services to the Board of Education, nor


receive any benefit, compensation or reward from any contract for the sale of goods and services to the Board of Education. Reference—N.J.S.A. 18A:6-8.

Solicitation/Receipt of Gifts from Vendors -- ProhibitedSchool board members, school officials and employees, or members of their immediate family are prohibited from soliciting, receiving or agreeing to receive any compensation, reward, employment, gift, meal, honorarium, travel, reimbursement, favor, loan, service, or other thing of value from any person, firm, corporation, partnership, or business that is a recipient of a purchase order from the district, or a potential bidder, or an applicant for any contract with the district, based upon an understanding that what is solicited or offered was for the purpose of influencing the board member or school employee in the discharge of their official duties. This policy shall be consistent with the School Ethics Act—N.J.S.A. 18A:12-21 et seq.

Public School Responsibility – Recommendation of PurchasesSchool officials and employees who recommend purchases shall not extend any favoritism to any vendor. Each recommended purchase should be based upon quality of the items, service, price, delivery, and other applicable factors in full compliance with N.J.S.A. 18A:18A-1 et seq.

School officials and employees are to avoid recommending purchases from members of their families, businesses that employ members of their families and from businesses in which the official, employee or members of their immediate family have a direct financial interest.

School officials and employees who are authorized to sign off on purchase orders and/or to recommend purchases or business transactions by virtue of their signature on the purchase order certify that their actions are consistent with this policy and all applicable statutes.

Vendor Responsibility – Doing Business with the Board of Education


Any vendor doing business or proposing to do business with the Board of Education, shall neither pay, offer to pay, either directly or indirectly, any fee, commission, or compensation, nor offer any gift, gratuity, or other thing of value of any kind to any official or employee of the Board or to any member of the official’s or employee’s immediate family.No vendor shall cause to influence or attempt to cause to influence, any official or employee of the Board, in any manner which might tend to impair the objectivity or independence of judgment of said official or employee.

Vendor CertificationVendors will be asked to certify that no official or employee of the Board of Education or immediate family members are directly or indirectly interested in this request or have any interest in any portions of profits thereof. The vendor participating in this request must be an independent vendor and not an official or employee of the Board.

Violations of the PolicyIn accordance with N.J.S.A. 18A:6-8, any public school employee who violates the terms of this policy may be subject to withholding of annual increments, suspension, demotion, school ethics complaint, termination and/or revocation of license to teach or to administer.

CRIMINAL CODE CITATIONS

Title 2C -- Criminal Code

2C:27-9 Unlawful Official Business Transaction


“A public servant commits a crime of the fourth degree if, while performing his official functions on behalf of the government entity, the public servant knowingly transacts any business with himself, a member of his immediate family, or a business organization in which the public servant or an immediate family member has an interest.” (N.J.S.A. 2C:27-9)

2C:27-10 -- Acceptance or Receipt of Unlawful Benefit by Public Servant for Official Behavior

“A public servant commits a crime in the fourth degree…if the public servant directly or indirectly, knowingly solicits, accepts or agrees to accept any benefit, whether the benefit inures to the public servant on another person, to influence the performance of an official duty or to commit a violation of an official duty.”
