Most University offices would be happy with 99.88 percent compliance to a departmental policy. But that figure has riled members of the Board of Regents and administrators in the University’s Purchasing Service, who say they won’t rest until they hit 100 percent.
The reason a .12 percent non-compliance rate upsets administrators is that it could mean up to $428,000 in unapproved spending.
“We have people making purchases over $10,000 without first getting a bid,” said Karen Triplett, executive assistant for the service. “Then they come to us worrying about getting their invoice paid, and we tell them that we have to report that as a violation.”
According to the Regent Purchasing Policy, any purchase more than $10,000 needs to be “bid,” or receive approval, from the purchasing department. Putting an item up for bid amounts to making a special pitch giving reasons for the purchase. Also, purchases of more than $250,000 need prior approval from the regents.
Purchases include construction and remodeling, professional services and other goods such as office supplies.
Triplett has participated in a departmental study during the past few months to see how many of these unapproved purchases have happened during the past year and also why the policy is being violated.
The department’s studies found 24 violations that occurred in 1996, opposed to only seven in 1995 and eight the year before.
With more than $342 million spent on University purchases, the unapproved violations constitute $427,426.
Officials said the violations average only $20,000 an incident. But it is the large increase that has administrators concerned.
“(The number) has been increasing,” said Regent William Peterson. “And that’s the real general concern.”
Triplett presented the findings on Thursday at the regents Financial Operations Committee meeting. At their March meeting, regents requested that another report and a plan to increase compliance be brought to them at the next meeting. Triplett’s report caused concern among regents.
“We have a policy,” said Board of Regents Chairman Tom Reagan. “By God, we expect people to live up to that policy.”
Triplett, however, said that the reason for many of the violations is that many people don’t understand the policy.
“The most often cited reason for an exception is that the person who authorized the vendor to supply goods or services was unaware of the bidding requirement,” she said.
Triplett also said this usually happens with people who are new to the University. The study found no particular department in which violations were concentrated.
Some regents also said they were concerned about another part of the policy that enables departments to make purchases less than $2,000 without making a bid.
Peterson said he was concerned that this would allow departments to purchase goods and services from outside instead of University sources.
According to the policy, purchases less than $2,000 do not need to be bid. Triplett said, however, that the University has contracts with several of the businesses that these purchases are made with. Also, though they don’t need a bid, purchases between $2,000 and $10,000 have to go to the purchasing department for review.
Triplett said the reason the policy only requires bids on purchases of more than $10,000 is to simplify what would be an overwhelming process if it required bids for all purchases.
The department found the violations by studying its total purchases. Although there are no definite figures, but Triplett said the 24 violations came out of about 375,000 purchases.
At the meeting, Regent Maureen Reed said she was unsure how much effort should be put into fixing the problem.”I’m concerned with the amount of resources spent to solve such a minor problem,” said Reed.
But Terry O’Connor, who also worked with the purchasing service on the study, said the violations could be reduced inexpensively with a plan the department presented.
Some of the strategies they outlined included a University-wide effort to increase awareness of the policy, a more detailed report to notify various departments of violations and periodic progress reports to the regents.
They also provided a list of restrictions and penalties they would enforce if violations continue to occur in a particular department.
After the first violation, employees would be required to undergo further policy training. The second violation would lead to a processing fee. Any violations thereafter could result in an “exceptional department” designation and a suspension of purchasing authority.
The purchasing department is scheduled to report back to the regents in the near future.
Regents said while this is not a major crisis, they want to make sure that their policies are followed.
“You want to try and nip (violations) in the bud before they get out of hand,” said Peterson.