A state audit of the way the University of Nebraska-Lincoln makes purchases and enters contracts found six-figure contracts that weren’t competitively bid, multi-million-dollar contracts that weren’t being reported to the Board of Regents and huge change orders that weren’t signed off on by the proper person.
State Auditor Mike Foley’s office recently released the results of its 2011 audit of UNL’s Procurement Services Department, which manages bidding for UNL contracts and purchases. The department is under the direction of the vice chancellor for business and finance, Christine Jackson.
Lots of money is at stake: Last year UNL paid $5,000 or more to 3,203 vendors, for a total of $298 million.
The audit found one “material weakness” or significant deficiency in internal controls: UNL’s Board of Regents policy was not being followed in that five out of the 34 contracts auditors tested weren’t approved by the correct person, Jackson. Among them were a $3 million Office Depot contract, a $748,247 Demma Fruit contract and a $548,628 Sysco contract.
Seven out of nine of those contracts were to have been reported to the Board of Regents, but were not. Among the contracts not properly reported to the board were a $4.2 million construction contract and several other million-dollar construction contracts.
In addition, 12 of the 34 contracts were supposed to be approved by the Board of Regents, and one was not. The audit also found that one of 11 change orders to the new Devaney Center Practice Facility – a $880,351 change — was not approved by Jackson as required.
In response to the findings, UNL said it has since assigned responsibility for reporting contracts from the Board of Regents to Procurement Services.
One other problem area the audit noted was in documenting the basis for choosing architecture and engineering vendors. In five of 15 contracts tested, UNL didn’t keep the individual scorecards that a judging committee used to support the summary scorecard, which determined the winning bidder. The individual scorecards were destroyed after the summary scorecard was compiled, and there was no indication the judging committee agreed the compilation was accurate.
Among the five contracts missing adequate justification was a $56 million contract with Sampson Construction. For one $470,600 contract, UNL had neither the individual scorecards nor summary scorecards.
In response, UNL told auditors it would require evaluators to sign the summary scorecards.
Jackson was unavailable for comment, but UNL spokeswoman Kelly Bartling said the university understands and appreciates the auditor’s point of view and found “nothing particularly alarming about any of his findings.”
“The bottom line is, we’re in agreement,” she said. “It’s a good report and we’ll be moving forward to make the necessary changes that he’s suggesting.”
Other findings in the audit:
• Any purchase of goods and services worth $150,000 or more must go to the lowest bidder, but two of 11 vendors tested were not competitively bid. They were $374,952 to Weldon, Williams and Lick for event tickets and $236,771 to Polygon Parking for parking. UNL said it will review its procurement procedures and strengthen its documentation procedures.
• UNL had no procedures to ensure it obtained the best price for purchases of science equipment and research materials made outside of the prime vendor.
• Four out of 28 purchases of more than $5,000 were not approved by the Procurement Services Department, as required.
• UNL has no policy regarding which individuals can sign amendments, addendums or extensions to contracts – which increases the risk of projects running longer and costing more, according to the auditors. UNL said it will clarify who is authorized to sign amendments, addendums and contract extensions.
• Auditors found that six of 57 new textbooks sold in UNL’s bookstores were overpriced by $1 to $23. The bookstores are leased by Follett Higher Education. A number of issues were identified in a 2009 review of Follett’s pricing, auditors noted, but there was no evidence any follow-up was done on those issues.
Reported by Deena Winter, firstname.lastname@example.org
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