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TO : Don Elliott cr, �`n• _ ,
FROM: E . Lawrence Hyland
SUBJECT: Audit Purchasing Department
As requested an audit was conducted of the Weld County
Purchasing Department during the week of November 14-18, 1983 .
Courtesy contacts were made with Commissioner Chuck Carlson
and Finance Director Don Warden prior to commencing the audit.
The audit consisted of a review of the Weld County Policies
and Procedures as they pertain to the Purchasing Department,
and a review of a representative number of Bid and Proposal
files , Particular attention was given to the area of speci-
fications assigned to products that might preclude otherwise
qualified vendors, as well as whether a particular vendor
was awarded an inordinate number of bids .
The Policy and Procedures Manual requires that all
purchases of $2,000 or more shall be accomplished by sealed
bid. For this purpose the Purchasing Department is required
to maintain a list of qualified suppliers for particular
products .
Purchases of goods ranging in price from $50 to $2,000
are handled by Purchasing Department requests, for price
quotes from three or more qualified suppliers .
The primary purpose of the audit was to determine if
qualified suppliers were being precluded from bidding due to
overly stringent specifications or if any particular vendor
received more than a fair share of bid awards. Mrs . Bette
Rhoden, Purchasing Director advised that specifications for
particular products were established by the Department that
requested the purchase . If a problem arose with the specifi-
cations such as their being so stringent as to preclude a
qualified vendor or product, a potential vendor complaint,
a lack of knowledge as to quality needed, etc. , a pre-bid
conference would be held wherein all potential vendors would
be invited to provide input to question or to establish the
specifications . It should be noted that several files con-
tained notices of a pre-bid conference which was attended by
several vendors on the qualified list.
During 1983 four carpet and/or drapery purchases were
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840847
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made . All four files were reviewed. Three purchases were
under $2,000 and required price quotes from the potential
suppliers . The following information was disclosed in the
files :
1. Proposal # 196-83 involved a purchase of carpet for
offices used by the Headstart Program. Three vendors
bid on the job as follows (1) $386 .21; (2 ) $358 .28;
and (3 ) $356 . 87 . The low bidder of $356 . 87 received
the bid.
2 . Proposal # 475-83 involved carpet for the Jury Commis-
sioner's office . Bids were received from Sherwin-
Williams for $276 .45; Rumar for $268 .65; and In Stock
for $243 .00. In Stock received the bid.
3 . Proposal # 478-83 was for draperies for the Jury Commi-
ssioner's Office . Bids were received from Westmoor
Interiors for $428 .00; Decorator's Delight for $427 .50;
and Decor Ltd. for $416 .65 . Devcor received the bid.
4. Bid #277-83 . This involved approximately 430 square
yards of commercial grade carpet for the Sheriff ' s
Office . Specifications were submitted by the Sheriff 's
Office, which in substance stated that the carpet must
be of comparable quality to three named commercial
brands . A pre-bid conference was held which included
a walk-through of the area involved. Eight potential
bidders participated in the pre-bid conference . No
complaints were noted with the specifications . Invi-
tations to bid were sent to 10 potential bidders . Eight
vendors submitted bids which ranged in price from $10,116
down to $5,980 .75 . The second lowest bid was $6 ,702 .66 .
The low bid of $5,980 .75 was accepted from In Stock.
On November 11, 1982 under file #001-83, bid requests were
sent to seven suppliers of Bituminous Pavement Mix and Asphalt,
to provide the 1983 supply of 1,000 tons of cold bituminous mix,
12,500 tons of hot bituminous mix, and 8,000 gallons of emulsi-
fied asphalt (CSS-1) . Five suppliers responded, Bestway Paving,
of Greeley, Flatiron Paving of Boulder, Flatiron Paving of
Greeley, Frontier Materials Inc. of Erie, and Sterling Paving of
Ft. Collins .
The bid request appeared to be one that would result in a
typical "low bidder takes all? contract. Nothing in the instru-
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citions indicated anything else . Item 5, under General Specifi-
cations stated that material could be purchased from different
bidders based on plant location. This doesn' t imply however
that four of the five bidders would be selected or that the
products listed in the bid request would be split among the
bidders according to the price quoted for each product.
The contracts awarded under this bid appear to be unusual
because :
1. Four of five bidders were awarded contracts which seems
to defeat the purpose of sealed bids .
2 . The products to be supplied were split among the bidders
although this was not provided for in the instructions .
Had this been known to suppliers, their bids may have
been computed differently.
3 . One bidder located in Ft. Collins was by far the highest
bidder for the two products he was chosen to supply.
This same bidder was not chosen to supply the only product
for which he was by far the lowest bidder. His selection
is contrary to the policy that Weld County suppliers
will be chosen, provided the price, quality, and service
are comparable to those bidders outside of Weld County.
In addition, it doesn't seem logical that transportation
costs from the plants of the Greeley bidders to job sites
anywhere in Weld County, would be so severe as to cause
the selection of a very high bidder outside of Weld.
4. A local firm (Bestway) was awarded a contract to supply
hot and cold bituninous mix under this bid. Another local
firm (Flatiron of Greeley) was chosen to supply 8,000
gallons of emulsified asphalt. In July of 1983 it was
determined that Road and Bridge personnel were buying the
asphalt from Bestway instead of Flatiron. It was then
learned (seven months after Flatiron was awarded the
contract) that Flatiron did not want to supply the asphalt
because it was not awarded the hot and cold bituminous
mix contract along with the asphalt.
5 . On the surface there is no logic to the way bidders were
selected in this case . It appears that suppliers were
selected at random without regard to price bid. This
sort of selection defeats the purpose of sealed bids and
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could lead to a serious breakdown of purchasing controls .
Proximity to job site is questionable since it would be
hard to justify transportation costs as a factor when
comparing suppliers in Ft. Collins and Greeley. Mrs .
Rhoden advised that in this bid she simply followed the
recommendation of the County Engineer when presenting
the bid award recommendations to the County Commissioners .
6 . If multiple products are listed in a bid request it should
be done with the express understanding that the entire
contract will be awarded to the low bidder. If this is
not advantageous to the county, separate bids should be
requested for each product that would be worthly of
splitting in the bid. In this case a separate bid should
have been requested for the asphalt.
7. Enclosed are pertinent documents pertaining to this file .
Over the period of the audit approximately 40 files were
reviewed. A variety of cases were selected for the years 1979
through 1981, including bid files ( $2,000 or over) , proposal
files ($50 to $2,000) , auction sales of R & B equipment, trash
collection contracts, etc. With the exception of file 001-83,
discussed in detail above, all purchases were handled entirely
in accordance with the policy and procedures of the department.
It should be noted that Purchasing has no control over the
product needs of a particular department, but only over the manner
in which the purchases are made . From the files reviewed it ap-
peared that purchasing procedures were followed meticulously. A
sufficient number of suppliers were always contacted and no
instances were found where a particular vendor appeared to be
favored with contracts .
Just as Purchasing has no control over the needs of a
department it likewise has no control over the surplus property.
It does however provide for the auctions to be held to dispose
of this property. The files were reviewed for several auctions,
generally for heavy equipment and motor vehicles . The auctions
were usually co-operative affairs with other counties . All auctions
were handled according to proper policy and procedures . Once again
Purchasing doesn' t decide what items are surplus and what should
go into the sales . This would have to be done by review of the
department itself .
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