Internal Audit Department · Request for Proposal (RFP) Date Trustees approved bids Professional...

GARLAND INDEPENDENT SCHOOL DISTRICT Garland, Rowlett and Sachse

972.487.4651 PO Box 469026 Garland, TX 75046-9026

Phrases in (blue) are hyperlinks used by IA to review the audit and for the reader to know from where information came. This is IA Job # 15-39.

Internal Audit Department

Steven Martin, CPA/CFF, CGFM, CFE, CGMA, CIGI July 26, 2016 Director of Internal Audit

Independent Auditor’s Report

Performance Audit of the Bidding Process when Expending Bond Funds

from November 4, 2014, to October 31, 2015

To: Board of Trustees

Synopsis

On November 4, 2014, Garland ISD’s bond election passed with 62 percent of voters in favor

of funding a total proposed bond of $455,500,000. Accordingly, on the 2015 audit plan, the

District’s Board of Trustees included an audit of the bidding process conducted by the

Purchasing Department when expending bond funds (2015 Risk Assessment and Audit Plan).

Internal Audit (IA) reviewed five sources of data, including Bond Fund 681 purchases, to

capture bids under Bond Fund 681. Both bids entirely and partially funded by bond funds

were reviewed. Bids and bid renewals, along with payments from any of the sources of data,

are included in the following table:

Paid from Bond Fund 681

Administrative Recommendations

Board Minutes

From Deputy Superintendent

of Business Operations

Oracle Discoverer Reports ran by IA

From Purchasing Director

Bid Number, Suppliers, and Bid Amount Identified

by Request for Qualifications (RFQ) or Request for Proposal

(RFP)

Date Trustees approved

bids

Professional Services Spend - payments not specific to Fund

681

Comparison of Accounts

Payable Invoice Details to

Payables Fund 681

Accounts Payable

Payments Register for

Fund 681

Accounts Payable Invoice

Details Fund 681

Sole Funding Source: 2014 Bond Fund 681

1 RFQ for Bond Underwriting Services: no amount stated: 17 firms

12/9/14

2 RFP 1650-04: construction - softball and baseball improvements: not to exceed $9,828,260.00: two firms

5/12/15

2



Board Minutes







(RFP)


bids


681



Payables Fund 681

Accounts Payable


Fund 681


Details Fund 681

Potential Funding Source included 2014 Bond Fund 681 (names of suppliers that received payment from Fund 681 are listed)

3 RFP 34-15: classroom furniture: not to exceed $875,000: six suppliers

1/20/15

4 RFQ 323-15: roof consulting: not to exceed $90,000: two suppliers

1/20/15

RFQ 323-15: award increase: $711,700

10/13/15

5 RFP 240-14: computer workstations: not to exceed $7,699,920: Lenovo, Inc.

4/14/2015

11,437,783.00 10,617,873.00 7,612,659.00

RFP 240-14: renewal: not to exceed $6,997,320

7/28/2015

6 RFP 240-15: PC computer migration, configuration, deployment: not to exceed $562,947: three suppliers including Global Assets &

4/14/2015

371,183.80 373,556.70 368,810.90

Premier Logitech 178,706.08 178,706.08 178,706.08

RFP 240-15: increase: $329,483 *increase did not include Bond Fund 681

7/28/2015

7 RFP 248-15: printers/scanners: not to exceed $414,674: two suppliers including CDW

6/23/15

80,592.00 80,592.00 80,592.00

8 RFP 284-13: LAN equipment: not to exceed $1,500,000: two suppliers including Netsync

9/21/15

326,993.70 326,993.70 326,993.70

9 RFP 288-13: Metropolitan Area Network: not to exceed $547,000: Future Telecom

10/27/15

Funding not stated in Board Agenda or Minutes (names of suppliers that received payment from Fund 681 are listed)

10 RFQ 360-15: Architects: no amount stated: seven firms including Huckabee,

12/9/14

2,159,543.01 1,521,141.76 1,521,141.76 1,023,771.88

Corgan Associates, & 940,005.51 443,006.10 443,006.10 431,756.10

Page Southerland Page 144,370.50 144,370.50 144,370.50 144,370.50

3



Board Minutes







(RFP)


bids


681



Payables Fund 681

Accounts Payable


Fund 681


Details Fund 681

Funding not stated in Board Agenda or Minutes (continued)

11 RFQ 362-01-15: Engineers: no amount stated: eight firms including RLK engineering,

12/9/14

415,375.00 46,400.00 46,400.00 13,500.00

Terracon Consultants, 90,212.05 17,521.25 17,521.25 17,521.25

Alliance Architects, 34,900.00

EMA Engineering, and 53,584.33

PSI Professional Services 13,750.00

12 RFQ 494-15: construction program management: no amount stated: Jacobs Project Management Company

1/13/15

2,166,369.21 2,166,369.21 2,407,076.90 2,407,076.90

2014 Bond Fund 681 not included in Potential Funding (names of suppliers that received payment from Fund 681 are listed)

13 RFP 196-01-13: technology cabling services: $1,500,000: ComNet Communications

4/22/14

298,034.00 184,586.00 15,297.50

14 RFP 166-15: software: not to exceed $550,000: SHI Government Solutions &

2/24/15 149,023.30 148,229.18

Dell Marketing LP 48,801.33 48,801.33 14,826.33

15 Interlocal Contract 365-15: Active Directory migration, monitoring: not to exceed $99,150: Dallas County Schools dba Texserve

3/17/15

73,146.43 73,146.43 73,146.43

16 RFP 302-14: instructional material, equipment, service: not to exceed $2,200,000: 147 suppliers including Romeo Music

2/24/15

47,123.00 47,123.00 47,123.00

17 RFP 391-15: general trades, CTE merchandise: not to exceed $160,000: 16 vendors including Jamieson Fence

4/28/15

22,765.17 22,765.17

18 RFP 67-03-13: Windows 8 Tablets: not to exceed $200,000: five suppliers including Kynetic

5/28/13

3,496.00 3,496.00 920.00

4



Board Minutes







(RFP)


bids


681



Payables Fund 681

Accounts Payable


Fund 681


Details Fund 681

2014 Bond Fund 681 not included in Potential Funding (continued)

19 RFP 302-03-12: counseling/instructional material, equip., service: not to exceed $200,000: 48 suppliers including Centennial Steel

11/11/14

2,264.36 2,264.36 2,264.36

20 RFP 390-15: general trades transportation merchandise: Trustees’ approval per meeting minutes was not to exceed $175,000; administrative recommendation was not to exceed $1,750,000: 48 suppliers including Wedge

12/09/14

898.30 898.30 898.30

21 RFP 214-12: general trades, maintenance: 3- year contract for $2,000,000: 86 suppliers including Piper Weatherford

1/24/12

30.00 30.00 30.00

No Board Minutes (names of suppliers that received payment from Fund 681 are listed)

22 RFP 227-13: Paints and Special Tints: estimated budget $74,999: two suppliers including Sherwin-Williams

43.40 43.40

23 Alpha Testing, Inc. 70,000.00 70,000.00

24 City of Rowlett 16,189.93 16,189.93 16,189.93

25 City of Sachse 11,665.49 11,665.49 11,665.49

26 City of Garland 1,800.00 1,800.00 1,800.00

27 Amera C Shelton - Stewart 1.00 1.00 1.00

28 Employee Reimbursements: 16 Employees

4,420.73 4,420.73 4,420.73

29 Randy L Cooper Consulting 13,200.00

Total 6,031,309.61 17,483,769.84 16,792,698.31 12,794,341.38

5

There are no findings with regard to the bidding process. However, there are five findings with

regard to the Jacobs Project Management Company contract, missing documentation from

Jacobs and six other suppliers, and District employees bypassing Board policy by ordering

services without purchase orders. Board policy was further bypassed when invoices for those

services, totaling $811,312, were paid through check requests. Additionally, one supplier was

not approved by the Board of Trustees as a contracted supplier.

An observation is included regarding the Board of Trustees’ request for presentation of bid

funding sources in Administrative Recommendations for Board Approval that are submitted to

the Trustees for their consideration when approving bids.

(Director of IA note: Although there are no findings regarding the bidding process, findings

three and four show the administration disregarded the Campus and Department Accounting

Manual (CDAP), which includes purchasing policy, and hence Board policy CH (Local)

requiring administration adherence to the CDAP when making purchases.

$811,312 in bond related purchases were made directly with check requests instead of with

purchases orders and Purchasing Department oversight resulting in $70,000 paid to a

contractor with whom the District had no contract. Additionally, by bypassing the use of

purchase orders, TEA mandated encumbrance accounting was not used.

As noted in Appendix Three (page 33), Seventeen Principles of Internal Control, such

violation of administrative and Board policy, as well as the Texas Education Agency

Financial Accountability System Resource Guide (TEA FASRG) and thereby Title 19 of the

Texas Administrative Code, reflects negatively on the District’s internal control, specifically

regarding the control environment and its “tone at the top.” The Texas Education Agency and

the U.S. Department of Education General Administrative Regulations (EDGAR) mandate

internal control.)

Specifics of each finding along with IA’s recommendations, and the observation, are included

in the “Details” section of this report. Employee titles are as of the described event.

Table of Contents

Page

Synopsis ................................................................................................................................. 1

Table of Contents .................................................................................................................. 5

Details ................................................................................................................................... 6

Findings ................................................................................................................................. 8

Observation ............................................................................................................................ 23

Management’s Response ...................................................................................................... 26

Appendix One: Observation of the Public Bidding Process ....................................... 29

Appendix Two: Checks Paid for Professional Services without Purchase Orders ..... 31

Appendix Three: Seventeen Principles of Internal Control ........................................... 33

Appendix Four: Purchasing Department Risk Assessment ......................................... 41

Appendix Five: Criteria Table of Contents .................................................................. 47

6

Appendix Six: Criteria: Applicable Garland ISD Board Policies (Legal) ................ 48

Appendix Seven: Criteria: Applicable Garland ISD Board Policies (Local) ................ 70

Appendix Eight: Criteria: Applicable Parts of the Jacobs Project Management Company

Contract ................................................................................. 79

Appendix Nine: Criteria: Applicable Portions of the GISD CDAP Manual ............... 85

Appendix Ten: Criteria: TEA FASRG Module Three: Purchasing ........................... 93

Appendix Eleven: Criteria: Texas Statutes Education and Government Codes ............. 99

Appendix Twelve: Criteria: State of Texas Cooperative Purchasing Manual ................. 115

Appendix Thirteen: Management’s Response .................................................................... 116

Details

Pursuant to the Internal Audit Risk Assessment approved by the Board of Trustees on January

20, 2015, Internal Audit (IA) conducted a performance audit of bids funded by the November

4, 2014, bond election. IA reviewed bond fund bids, expenditures, contracts, purchase orders,

and other obligations paid or issued from November 4, 2014, to October 31, 2015, for

compliance with relevant portions of :

Garland ISD Board Policy

Jacobs Project Management Company Contract

Garland ISD Campus and Department Accounting Procedures (CDAP) Manual

Texas Education Agency Financial Accountability System Resource Guide (TEA

FASRG): Module Three: Purchasing

Texas Statutes: Texas Education Codes: Chapter 44-Fiscal Management and Chapter 45-

Bonds

Texas Government Codes: Chapter 2161-Historically Underutilized Businesses, Chapter

2254-Professional Services, and Chapter 2269-Construction Projects

Texas Administrative Code: Chapter 20-Texas Procurement and Support Services,

Subchapter B-Historically Underutilized Business Program

The State of Texas Comptroller of Public Accounts State of Texas Cooperative

Purchasing Manual

U.S. General Accounting Office Standards for Internal Control in the Federal Government

IA conducted this performance audit in accordance with Generally Accepted Government Auditing

Standards. Those standards require that IA plan and perform the audit to obtain sufficient,

appropriate evidence to provide a reasonable basis for our findings and conclusions based on our

audit objectives. IA believes that the evidence obtained provides a reasonable basis for our findings

and conclusions based on our audit objectives.

Garland ISD Bond Election

On August 18, 2014, a Notice of Bond Election was passed and approved by the Garland ISD

Board of Trustees to be held in the Garland Independent School District on November 4,

2014, “for the purpose of submitting the following measure:

"SHALL the Board of Trustees of the Garland Independent School District in Dallas

County, Texas be authorized to issue bonds of the District in the principal amount of

$455,500,000 for the construction, renovation, acquisition and equipment of school

buildings in the District; and shall there be pledged and levied, assessed and collected

7

annually ad valorem taxes on all taxable property in the District sufficient, without

limit as to rate or amount, to pay the principal of and interest on said bonds and the

costs of any credit agreements executed in connection with the bonds; said bonds to

mature serially or otherwise not more than forty (40) years from their date, to be

issued in one or more series at any price or prices, and to bear interest at such rate or

rates (fixed, floating, variable or otherwise and not to exceed the maximum rate

permitted by law at the time of issuance of the bonds) as in its discretion the Board of

Trustees shall determine?"

On November 17, 2014, the Board of Trustees approved the “Order Declaring Results of

the Bond Election held on Tuesday, November 4, 2014.”

Bonds Sold

On December 9, 2014, the Board of Trustees approved bond underwriting firms (Dec. 9,

2014, Board Meeting Minutes).

On May 19, 2015, the District sold the first series of 2014 Bonds. The sale included

$196,000,000 in new money as well as a refunding of $12,525,000, as reported to the

Board of Trustees on May 26, 2015 (May 26, 2015 Board Meeting Minutes).

(Director of IA note: District public announcements included spending $25 million for

one-to-one student devices in secondary schools. In Chief Financial Officer Rene

Barajas’ response to this audit, he indicated that it is the District’s intent to use General

Fund to replace the iPads but that is not certain. That decision, in 2019 or 2020, is left

to the Board and whether the dollars are available for that purpose. In an interview with

the Director of IA, he indicated that the iPads, now being purchased with bond funds,

could be replaced in three to four years.

Barajas also said that he is considering an Assigned Fund Balance (to replace the iPads)

and that technological purchases, which include the one-to-one student devices, of $75

million would be paid in principal payments over a period of seven years. Accordingly, it

is probable that the District will be paying seven years for assets lasting three to four

years. Additionally, it is unknown how many of the one-to-one devices will be returned

by high school students.)

IA’s Observation of the Public Bidding Process (detailed in Appendix One, page 29)

IA reviewed public bidding process information available at Jan. 27, 2016, webpage:

How To Do Business with Garland ISD and Jan. 27, 2016, webpage: GISD Bond

2014 Currently Bidding.

IA attended the September 24, 2015, Garland ISD Bond 2014 Community Outreach

presentation by Jacobs Project Management Company and the January 27, 2016, Pre-

proposal Meeting for BP #1.6 New Construction of a Natatorium.

IA interviewed the Jacobs Project Management Company Program Director, and

Jacobs Controls and Operations Manager, for a description of the process for the

opening and reading of competitive sealed proposals for 2014 bond bid packages

(Jan. 29, 2016 Jacobs interview). The process was described as follows:

8

The District provides the “front end” of the bid proposal documentation.

The GISD Purchasing Director and Construction Bond Specialist are over the

internal process noted on the GISD website.

The bidding process is GISD’s “standard process.” As bid “boxes” are received, a

label is assigned, and the bid “boxes” are logged and date stamped.

At the public reading, the Purchasing Director checks that the “bid bond” is in the

package, reads the total bid price three times, then moves on to the next bid.

The Jacobs Project Management Company notes the bid prices and posts them on

the Bond website.

The Jacobs Project Manager for a particular bid is part of the bid evaluation team

made up of GISD personnel.

IA attended the public opening and reading of Bid Packages 1.2 on February 9, 1.4 on

February 18, and 1.6 on February 25, 2016.

IA attended the February 9, 2016, meeting of the GISD Board of Trustees with

agenda items that included approval of Bid Packages 1.1 and 1.7 (Feb. 9, 2016, report

of Board Meeting).

IA visited two offsite locations to verify availability of bid project manuals and

drawings as advertised on the bond webpage provided by Jacobs Project Management

Company.

IA interviewed the Purchasing Director for information on how the District

encourages Historically Under-utilized Business (HUB) participation in the

procurement process pursuant to Garland ISD Board Policy CH (Local) (CH (Local)

Purchasing and Acquisition: Page No. 3: Historically Underutilized Business Program);

(July 26, 2016 Purchasing Director interview).

Finding One: Documents unavailable at Dallas Black Chamber of Commerce and

Fort Worth Hispanic Chamber of Commerce

Information on the GISD Bond 2014 webpage created by Jacobs Project Management

Company was misleading in that Bid Package Plan Room documents for Bid Package

(BP) 1.6 were unavailable for viewing at the Fort Worth Hispanic Chamber of Commerce

and the Dallas Black Chamber of Commerce. Neither location received the documents as

advertised (Jacobs contract).

Criteria

Pursuant to Garland ISD Board Policy CAA (Local): Fiscal Management Goals and Objectives:

Financial Ethics, page No. 1:

All Trustees, employees, vendors, contractors, agents, consultants, volunteers, and any

other parties who are involved in the District’s financial transactions shall act with

integrity and diligence in duties involving the District’s fiscal resources.

Pursuant to the District’s contract with Jacobs Project Management Company: Item 4.10.3 Bid

Advertisements, Items 4.10.3.2, page No. 18 (pdf page No.24):

Program Manager will provide a link off of the main District Web-site to post bid

information relating to specific Project opportunities.

9

Pursuant to the Jacobs Management Company linked GISD Bond 2014 webpage: Plan Rooms

(as of February 17, 2016):

Project manuals and drawings may be viewed free of charge or purchased for download

or printing at www.garlandisdplanroom.com . Documents are also available for viewing

at the following plan rooms.

Black Contractors Association

Builders Exchange of Texas

CMD Group

Dallas Black Chamber of Commerce

DFW Planroom

DFW Minority Business Development Council

Dodge Data & Analytics

Fort Worth Hispanic Chamber of Commerce

Fort Worth Metropolitan Black Chamber of Commerce

Hispanic Contractors Association of DFW

Pursuant to a statement by the Jacobs Project Manager who presented the January 27,

2016, Pre-proposal Meeting for Bid Package (BP) 1.6 – Natatorium, the “owner likes

MWBE HUB subcontractors” (Jan. 27, 2016, report of Pre-proposal Meeting).

(Auditor’s note: owner is the District; HUB is Historically Underutilized Business.

Garland ISD Board Policy CH (Local) Purchasing and Acquisition: Page No. 3:

Historically Underutilized Business Program:

The Board supports a historically under-utilized business program that ensures that

the District will promote and encourage the participation of minority-owned

businesses, women-owned businesses, and small businesses in the purchasing of all

goods and services, including all construction services. The Superintendent and/or

staff shall implement a business program to ensure that small, women-owned, and

minority businesses are informed of current and future purchasing activities and that

goals of this program are achieved.)

Condition

On February 9, 2016, IA requested and received a portable memory device containing the

BP 1.6 Plan Room documents from Jacobs Management Company (BP 1.6 Plan Room

docs). Competitive Sealed Proposals (CSPs) for BP 1.6 were scheduled to be opened and

read publicly on February 25, 2016. On February 19, 2016, IA visited the Fort Worth

Hispanic Chamber of Commerce, and on February 22, 2016, IA visited the Dallas Black

Chamber of Commerce to ask to view project manuals and drawings for BP 1.6 –

Natatorium as noted on the Jacobs Management Company Feb. 17, 2016, GISD Bond

2014 webpage. The bid package documents were not available at either location.

During the February 19 visit to the Fort Worth Chamber of Commerce, IA witnessed the

Director of Events look for the requested documents in the Plan Room. The documents

were not there. The Director of Events then called 972-487-6801, noted in the footer of

the GISD Bond 2014 webpage, and asked if the Plan Room documents for BP 1.6 were

sent to the Fort Worth Hispanic Chamber of Commerce. The person answering the call

http://www.garlandisdplanroom.com/

10

told the Director of Events that the documents were not received until “last night”

(February 18), so the documents should arrive at the Fort Worth Hispanic Chamber of

Commerce by courier on Monday (Auditor’s Note: February 22 for bids scheduled to be

read publicly on Wednesday, February 25).

At IA’s request, the Director of Events then asked the person she was speaking with about the

Plan Room documents for BP 1.2 and 1.4. The Director of Events stated to the person who

answered the call that the Fort Worth Hispanic Chamber of Commerce also did not have those

documents. The person who answered the call said that the documents may be viewed at

www.garlandisdplanroom.com (Auditor’s Note: On February 9 and 18, 2016, respectively,

CSPs for BP 1.2 and 1.4 had been publicly opened and read).

During IA’s February 22 visit to the Dallas Black Chamber of Commerce, the President

of the Dallas Black Chamber of Commerce stated that shipment arrivals of plans, bids

and other public information are logged in a ledger. He stated no physical plans were

received for the Natatorium.

Cause

In accordance with the GISD Bond 2014 webpage, Plan Room documents for BP 1.6

were not sent to the Fort Worth Hispanic Chamber of Commerce as of February 19,

2016, nor did the Fort Worth Hispanic Chamber of Commerce have Plan Room

documents for BP 1.2 and 1.4. The Dallas Black Chamber of Commerce did not receive

BP 1.6 Plan Room documents as of February 22.

Effect

Information on the GISD Bond 2014 webpage was misleading to the public, inclusive of

historically underutilized business (HUB) subcontractors, with regard to availability of

project manuals and drawings for BP 1.6 at the Dallas Black Chamber of Commerce, and

BP 1.2, 1.4, and 1.6 at the Fort Worth Hispanic Chamber of Commerce.

Recommendation

IA recommends that Jacobs Project Management Company provide accurate information

on the GISD Bond 2014 webpage in order to comply with Board Policy CAA (Local),

and provide project manuals and drawings as advertised to support Board Policy CH (Local)

in promoting and encouraging HUB participation in construction services.

Finding Two: Suppliers’ Criminal History certification and Certificates of

Insurance (COI) coverage, including applicable Workers’

Compensation coverage, were unavailable

The Purchasing Department was unable to provide the following documents pursuant to

CJA (Legal), RFP/RFQ, or CDAP Manual requirements:

• Criminal History Certification for Dallas County Schools dba Texserve

• COIs of Professional Liability and Error and Omissions coverage for two suppliers

• COIs, including Workers’ Compensation coverage, for four suppliers

http://www.garlandisdplanroom.com/

11

On July 26, 2016, IA met with the Purchasing Director to provide an audit update and

request documentation or an explanation of why documentation was not required (July

26, 2016, interview). On August 9, IA received a response from Purchasing that included

the following statement, “The purchasing department has revised the processing sheets to

verify the insurance certificate is on file prior to finalizing the award” (160809 email).

The table below includes comments included in the response:

Missing Documentation Supplier Name Amount invoiced

and paid from Bond Fund 681 Jan. 1, 2015 - October 31, 2015

Criminal History Certification on file?

COI, to include Workers' Compensation coverage, as applicable

Purchasing Department's response (August 9, 2016, email)

Dallas County Schools dba Texserve: (Interlocal) Shared Service Agreement 365-15 for School District Active Directory Migration and Monitoring

73,146.43

no n/a Item A: "We concur with your findings regarding no COI or Criminal History for Dallas County Schools dba Texserve."

RLK Engineering: RFQ

362-01-15 for Engineering and Related Professional Services

46,400.00

yes

COI not available for timeframe of invoices -Jan and July 2015

Item B: "No COI for audit period. Current certificate is on file covering 8/20/15 to 8/20/16."

Terracon Consultants: RFQ 362-01-15 for Engineering and Related Professional Services

17,521.25

yes

no Item B: "We concur with your findings regarding no COI on file."

Jacobs Project Management Company: RFQ 494-15 for Construction Program Management Services

2,166,369.21

yes

COI, including Workers’ Comp., not available for timeframe of invoices - January through June 2015

In an email dated July 13, 2016, a Purchasing Department employee commented, “It is my understanding that when we receive a new certificate we get rid of the expired one. Moving forward I will keep the expired certificates on file” (7/13/16 email).

Piper Weatherford: RFP

214-12 General Maintenance Merchandise Services

30.00

yes

COI, including Workers’ Comp., not available for invoice date of March 2015

Item F: "We do not have the previous certificate (requested) because when the new one arrived the previous was deleted. We do have their current insurance certificate on file which would have replaced the previous one."

Premier Logitech dba

Premier Fulfillment: RFP

240-15 Project 1 New PC Deployment and Project 2 Image Existing PCs

178,706.08

yes

no COI, including Workers’ Compensation coverage

Item G: "We concur with your findings regarding no COI on file for Premier Logitech dba Premier Fulfillment."

Technology Assets dba

Global Assets: RFP 240-

15 Project 1 New PC Deployment and Project 2 Image Existing PCs

371,183.80

yes

no Workers’ Compensation COI

Item G: "The COI on file was approved by Risk Management." *Please note the comment to IA from Risk Management Director below:

July 13, 2016 email to IA from

Risk Management Director:

“I cannot say if Worker’s Compensation insurance was a requirement under the bid specifications as I am not provided the specifications when I am asked to review the certificate of insurance. Sometimes workers compensation is not necessary if the company has few actual employees or its employees do not come on-site at GISD locations. I review the certificate to verify that it is valid, current, and the insurer has at least an A- AM Best rating. Sometimes, if a company has workers compensation through another agent, a separate certificate is provided by that agent reflecting the work comp coverage.”

12

Criteria

Pursuant to GISD Board Policy CJA (Legal): Contracted Services Criminal History:

page Nos. 2 and 3: Certification to the District:

The entity and any subcontractor of the entity shall certify to the District that it

received all of the criminal history record information required

A contracting entity and any subcontractor of the entity shall provide the District, at

its request, the information necessary for the District to obtain criminal history record

information for all covered contract employees

page No. 3: Certification from Contractor:

The District shall ensure that each of its service contractors certify that the

service contractor has obtained all required criminal history record information

for covered contract employees

RFQ and RFP documentation requirements for Certificates of Insurance (COI), inclusive

of Workers’ Compensation coverage as applicable.

Examples of requirements (bids from Missing Documentation table above):

RFQ 362-01-15 for Engineering and Related Professional Services page Nos. 6-7:

Item 4. Insurance Requirements

4.1 The Firm shall purchase and maintain, in a company or companies licensed

to do business in the State of Texas, such insurance as will protect the Firm and

the district from claims set forth below, which may arise out of, or result from, the

operations under the contract. The Firm shall file with the Director of

Purchasing, before work is begun, certificates of such insurance which shall be

subject to approval by the District as to the company providing insurance and the

manner and adequacy of insurance protection. The Firm shall, during the

performance of this Agreement, keep in force the following insurance:

a. Professional Liability

b. Error & Omissions

RFP 240-15 Project 1 New PC Deployment and Project 2 Image Existing PCs page

No. 17:

Applicable portions of Attachment E: Insurance Requirements

The Proposer shall purchase and maintain, in a company or companies licensed

to do business in the State of Texas, such insurance as will protect the Proposer

and the District from claims set forth below, which may arise out of, or result

from, the operations under the contract. The Proposer shall be a subscriber to the

Texas Workers’ Compensation Act for Workers’ Compensation Insurance. The

proposer shall file with the Director of Purchasing, before work is begun,

certificates of such insurance which shall be subject to approval by the district as

to the company providing insurance and the manner and adequacy of insurance

protection. The Proposer shall, during the performance of this Agreement, keep in

force the following insurance:

a. Comprehensive General Liability

b. Comprehensive Automobile Liability

c. Workers’ Comp.

d. Employer’s Liability

13

Garland ISD (CDAP) Manual

Section 1: General Information, page No. 1 (pdf page No. 5)

1.7 Record Retention, page No. 4 (pdf page No. 8)

All financial-related records should be kept current and in good order for a period of

seven years at which time they should be destroyed.

Condition

The requested documentation was not available for IA’s review.

Cause

The Purchasing Department did not have the following documentation:

• Criminal History Certification for Dallas County Schools dba Texserve

• COIs of “Professional Liability and Error and Omissions” coverage for two suppliers:

RLK Engineering and Terracon Consultants

• No COI of any type of insurance for three suppliers: Jacobs Project Management

Company, Piper Weatherboard, and Premier Logitech dba Premier Fulfillment (The

Purchasing Department did not retain the expired certificates for Jacobs and Piper-

Weatherford upon filing new certificates)

• Workers’ Compensation COI for one supplier: Technology Assets dba Global Assets:

IA determined that Workers’ Compensation coverage was not included in the COI on

file for Technology Assets dba Global Assets and contacted the Risk Management

Director to ask if there was a reason Workers’ Compensation coverage was not

required for the contract with the supplier. The Risk Management Director responded,

“I cannot say if Workers’ Compensation insurance was a requirement under the bid

specifications as I am not provided the specifications when I am asked to review the

certificate of insurance…I review the certificate to verify that it is valid, current, and

the insurer has at least an A-AM Best rating.” However, the Purchasing Department’s

response to IA was, “The COI on file was approved by Risk Management.”

Effect

The District risks liability for claims, which may arise out of, or result from, the

operations under these contracts.

Recommendation

The District should comply with GISD Board Policy CJA (Legal) and “ensure that each

of its service contractors certify that the service contractor has obtained all required

criminal history record information for covered contract employees.” Additionally, the

Purchasing Department should obtain and maintain COIs, not only during the suppliers’

performance of agreement, but also “for a period of seven years” in compliance with the

CDAP Manual, so the COIs may be audited.

14

Finding Three – Services ordered from non-contracted supplier

District Policy was circumvented when services were ordered from a non-contracted

supplier without formal solicitation or sole source provider determination from the

Purchasing Department. The GISD Architectural Project Coordinator gave written

approval of seven invoices for services rendered by the non-contracted supplier, Alpha

Testing, Inc., from January through May 2015, for geotechnical exploration of seven

softball fields. From these invoices, seven check requests totaling $70,000 were paid

from Bond Fund 681 to Alpha Testing, Inc.

Criteria

Pursuant to GISD Board Policy CH (Local): Purchase Commitments, page No. 3:

All purchase commitments shall be made by the Superintendent or purchasing director on

a properly drawn and issued purchase order, procurement card, or a check request in

accordance with administrative procedures located in the Purchasing and Campus

Accounting Manual.

Pursuant to the CDAP Manual: Section 10: Purchasing Policies/Procedures:

10.3 Selecting Suppliers, page No. 2:

Each employee should ensure that one of the 1,200 approved/contracted suppliers

cannot provide a product or service which meets the intended purpose before

submitting a requisition to use a non-approved/contracted supplier.

10.9 Sole Source, page No. 6:

The Purchasing Department is responsible for determining if a supplier qualifies as a

sole source provider.

Condition

Seven check requests totaling $70,000 were paid from Bond Fund 681 to Alpha Testing,

Inc. for geotechnical exploration of seven softball fields because the GISD Architectural

Project Coordinator gave written approval of seven invoices for services rendered from

January through May 2015. Alpha Testing Inc. did not have a contract with GISD during

that time and formal solicitation or sole source provider determination from the

Purchasing Department was not obtained prior to ordering those services:

Alpha Testing, Inc. check requests

Chk# Vendor Name Chk Amt Check Date Invoice# Invoice Date Account

40329951 ALPHA TESTING INC 11,800.00 26-Feb-2015 213596 02-Feb-2015 681.81.6200.009.66217.99.00000.681996.00.0000

40330432 ALPHA TESTING INC 7,400.00 04-Mar-2015 213588 03-Feb-2015 681.81.6200.008.66217.99.00000.681996.00.0000




40330435 ALPHA TESTING INC 6,500.00 04-Mar-2015 213576 29-Jan-2015 681.81.6200.002.66217.99.00000.681996.00.0000

40332877 ALPHA TESTING INC 9,500.00 06-Apr-2015 213769 19-Mar-2015 681.81.6200.010.66217.99.00000.681996.00.0000

70,000.00

15

Cause

During February and March 2015, the GISD Architectural Project Coordinator gave written

approval of seven invoices for payment to Alpha Testing, Inc. for services rendered from

January through May 2015.

In a February 18, 2016, email, the Assistant Purchasing Director said that he did not

locate a professional services contract between Alpha Testing, Inc. and the District from

January through May 2015 (Feb. 18, 2016, email).

Effect

Bypassing this criteria excluded the Purchasing Department from these expenditures. In

an April 26, 2016, email, a Purchasing Department Buyer stated, “It is my understanding

that there is no formal procedure in place to advise Purchasing of these payments.” These

type payments “are not tied to a contract and therefore cannot be tracked against the

Purchasing Department’s contract spend reports” (Apr. 26, 2016, email). The purchaser

and approver are not expert in purchasing policies and laws. Consequently, they placed

themselves in jeopardy of violating policy and law when purchasing through a non-

contracted supplier without obtaining sole source determination approval.

Recommendation

IA recommends employee training and adherence to District purchasing policies and

procedures with regard to procuring professional services.

Finding Four: Purchase orders not issued for services totaling $811,312 (see

Appendix Two, page 31)

District Policy was circumvented when the Facilities and Technology Departments did

not enter requisitions for purchase orders prior to ordering services. Payments for

services totaling $811,112 were funded from Bond Fund 681 by check requests instead of

purchase orders as required in Section 9 of the CDAP Manual. Additionally, the check

requests were not submitted for advance approval as required.

Criteria

Pursuant to GISD Board Policy CH (Local): Purchase Commitments, page No. 3:

All purchase commitments shall be made by the Superintendent or purchasing director on

a properly drawn and issued purchase order, procurement card, or a check request in

accordance with administrative procedures located in the Purchasing and Campus

Accounting Manual.

Pursuant to the CDAP Manual Section 9: Procurement Methods:

9.1 General Information, page No. 1 (pdf page No. 27):

All tangible items and services, except those excluded in Section 9.4, must be

ordered using a Purchase Order (PO) or a Purchasing Card (P-Card). Issuance of

the Purchase Order must precede the ordering of such goods and services. Ordering

using any other method is considered a violation of policy and may result in personal

liability for the purchase or non-reimbursement.

16

9.4 Payment Methods – External Suppliers, page No. 5 (pdf page No. 31):

Check Requests may be used to pay for the items/services listed below. Exceptions to

this list require advance approval of the Asst. Director of Finance.

• Field-trip payments • Scholarships

• On-site instructional programs 1 • Certifications/licenses

• Competition judges • Postage

• Accompanists • Courier services

• Refunds to parents/students • Building permits

• Donations • Physical exam/drug-testing fees

• Game officials (non-GISD employees) • Attorney fees

• Facility deposits2 • Tuition reimbursements

• Hotel deposits2 • Insurance deductibles

• Conference registrations • Notary applications/renewals

• Memberships2 • Interpreters 1 On-site instructional programs include: magicians; puppeteers; jugglers; speakers/presenters 2 These items/services should be procured using a PO or P-Card when accepted by the

vendor

9.7 Appropriate Procurement/Payment Method Reference Guide, Page No.7 (pdf Page No.

33): To provide a practical reference for assisting principal/department heads in making

decisions regarding appropriate procurement/payment methods, the following contains

guidance on the most commonly questioned expenditures.

Description of Expenditure Purchase

Order

(PO)

P-Card Petty

Cash

Check

Request

Exp.

Reimb.

Most tangible items & services > $100 YES YES NO NO NO

Condition

During IA’s review of the Oracle report, Comparison of Discoverer AP Invoice Details to

Payables Fund, IA observed that some invoices for tangible goods and services were

submitted through Check Requests instead of Purchase Orders. An Oracle report, GISD AP

Payments Register for Bond Fund 681 from September 1, 2014, through October 31, 2015,

was reviewed to obtain check numbers for those invoices and request documentation from the

Finance Department.

Between November 4, 2014, and October 31, 2015, GISD received invoices for the

following check requests. The check requests were not approved in advance by the

Assistant Director of Finance per the CDAP Manual Section 9.4 (Checks paid for

services from Bond Fund 681 for professional services are detailed in Appendix Two,

page 31:

17

A. Thirty-five check requests totaling $574,253 paid to Huckabee and Associates, Inc.

for bidding and negotiation services, reimbursable expenses, construction documents,

and design services for softball/baseball fields

B. Five check requests totaling $90,000 paid to Corgan Associates Incorporated for

architectural services and architectural design services

C. Seven check requests totaling $70,000 paid to Alpha Testing, Inc. for geotechnical

exploration reports for seven softball fields, from January through April 2015

D. Two check requests paid to Dallas County Schools dba Texserve: $38,475 in May

2015 for professional services related to the migration from Novell to Microsoft

Systems, and $1,484 in November 2015 for Verizon FIOS for the Bond Office

E. Two check requests totaling $37,100 paid to RLK Engineering for topographical

surveys of the seven District high school campus baseball and softball fields

Cause

District policy was circumvented by the submission of check requests instead of

requisitions for purchase orders prior to ordering services.

A. Huckabee and Associates, Inc. check requests

Between February 4, 2015, and August 21, 2015, the Facilities Administrative

Assistant submitted 35 check requests from Bond Fund 681 totaling $574,253 for

payments to Huckabee and Associates, Inc.

Pursuant to instruction from the Project Accountant, the Facilities Administrative

Assistant submitted check requests for the first and second set of seven invoices, for a total

of 14 invoices (January 29 through February 11, 2015, email conversations and

requisitions). From the Project Accountant to the Facilities Administrative Assistant:

“Will you please enter check requests for those invoices” (Jan. 29, 2015)

“Any services (Huckabee or Alpha Testing) that have already been rendered must be

done on a check request” (Feb. 11, 2015)

During February 2015, the Facilities Administrative Assistant then entered seven

requisitions in Oracle for the “Remaining Contract Balance” on each second set of

invoices. However, all seven requisitions were returned by the Assistant Purchasing

Director with the note: “Per our discussion, we don’t have proper approval and ranking

forms to process this request” (April 27, 2016, interview of Facilities Administrative

Assistant); (April 21, 2016, interview of Facilities Administrative Assistant). The

Purchasing Department acted in compliance with CDAP Manual Section 10.3 that states,

“Purchasing Department reserves the right to approve or reject/return requisition(s) based

on information provided.”

The Facilities Administrative Assistant continued entering check requests as invoices were

delivered to her.

18

The following documentation was submitted with the final seven of the 35 check requests:

The Director of Purchasing stated in an email dated June 25, 2015, “A blanket was not

created for the softball fields due to the amount of expenditures that were created with

check request. Dr. Barajas concurred that we should complete the architect portion of

this project utilizing check request.” The email was addressed to the Jacobs Project

Management Company Program Director, the Executive Director of Facilities and

Maintenance Operations, the Construction Environmental Services Administrator, and

cc’d to the Deputy Superintendent of Business, the Director of Finance, and the

Facilities Administrative Assistant.

B. Corgan Associates Incorporated check requests

Between March 2, 2015, and August 4, 2015, the Facilities Administrative Assistant

submitted check requests from Bond Fund 681 totaling $90,000 for payments to Corgan

Associates Incorporated.

C. Alpha Testing, Inc. check requests

The Architectural Project Coordinator approved seven invoices totaling $70,000 from

Alpha Testing, Inc. for geotechnical exploration reports dated between January 29

and March 19, 2015. Written approval dates on the invoices were from February 13 to

March 26, 2015.

On February 10, 2015, the Facilities Administrative Assistant sent an email to the Project

Accountant asking if purchase orders should be created for Alpha Testing proposals

received from the Architectural Project Coordinator. On February 11, 2015, the Project

Accountant sent an email to the Facilities Administrative Assistant with the following

instruction (Feb. 10 and 11, 2015, emails, page No. 2):

“Yes, please create POs for any professional services that have not yet been rendered

… Any services (Huckabee or Alpha Testing) that have already been rendered must

be done on a check request.”

According to the Director of Finance, the District had a liability to the company to make

payment for ordered and completed professional services (February 12, 2016, interview,

page No. 2).

D. Dallas County Schools dba Texserve check requests

On May 1, 2015, the Assistant Director of IT Operations submitted check request 46036

for payment of $38,475 to Dallas County Schools dba Texserve for an invoice dated April

28, 2015. Payment was made from Bond Fund 681 for Professional and Monitoring

Services related to the migration from Novell to Microsoft Systems.

According to the Director of IT Operations, Assets and Budget:

“While the Dallas County Schools contract agreement was previously approved by the

Board, the standard procedure of issuing a purchase order was not completed by the

Technology Department prior to initial engagement of services for two specific

projects on this invoice. Justification for this exception was the aggressive timeline

19

required for a) the requested monitoring services and b) completion of the Novell to

Microsoft software migration project. These special circumstances allowed the District

to initiate the projects immediately, preventing any delays. Doing so resulted in

successful completion of the projects according to the schedule allotted during

summer months (outside the instructional calendar).

Due to these circumstances provided, the Technology Department Director authorized

issuance of the Check Request and the Business Office subsequently authorized

funding/payment of the initial invoice by Check Request, until the Technology

Department was afforded the appropriate lead time to issue a Purchase Order. All

subsequent expenditures/invoices related to these projects under this contract adhered

to standard procedure, through issuance of Purchase Order” (April 21, 2016 email).

On May 5, 2016, the Director of Purchasing said that waiting for issuance of a Purchase

Order might take an extra day (May 5, 2016, interview).

On October 23, 2015, the Facilities Administrative Assistant submitted check request

50310 for payment of $1,483.93 to Dallas County Schools dba Texserve for invoice

9544804 dated April 17, 2015. The invoice was stamped as received in School Facilities

on September 29, 2015.

On July 7, 2015, and again on September 17, 2015, a Technology Instructional

Coordinator employed by Dallas County Schools dba Texserve contacted the Assistant

Director of Purchasing and the Accounts Payable Supervisor regarding the status of

invoice 9544804. On September 17, 2015, the Accounts Payable Supervisor contacted the

Assistant Director of Purchasing and inquired about a purchase order for the invoice (cc:

ECG System Engineer and Assistant Director of IT Operations). On that same date, the

ECG System Engineer stated, “We don’t have a PO for this.”

On September 29, 2015, the GISD Environmental Services Administrator wrote in an

email to the Director of that he was “just now” receiving the invoice, was “never provided

an estimate for this work,” and Technology “ran with this for the renovation of the Bond

Office. We should pay for it and the services are complete” (April 20, 2016, chain of

email from Facilities Administrative Assistant). Payment was made from Bond Fund 681

for Verizon FIOS Internet for the Bond offices from July 1, 2014, through June 30, 2015.

E. RLK Engineering check requests

On January 29, 2015, the Architectural Project Coordinator approved invoice 7540,

dated January 20, 2015, which was addressed to him from RLK Engineering in the

amount of $32,900 for topographic surveys of the baseball and softball fields at the

seven GISD high schools. According to the Facilities Administrative Assistant,

“funding was not provided for this project until after an invoice was received” (April

26, 2016, email). The Project Accountant instructed the Facilities Administrative

Assistant to enter a check request for the invoice (Jan. 29, 2015, email).

20

On July 15, 2015, RLK Engineering submitted invoice 7725, addressed to the

Facilities Administrative Assistant/Accounts Payable in the amount of $4,200 for a

topographic survey of the Naaman Forest softball field. The invoice was stamped

“Received July 27, 2015, School Facilities.” The Jacobs Project Manager signed a GISD

Bond 2014 Professional Services Invoice on August 6, 2015, and the invoice was initialed

as “Logged in Prolog” on August 7, 2015. Additionally, the Jacobs document was

stamped “Received Aug 17 2015 School Facilities.”

According to the Facilities Administrative Assistant, “approval for this proposal was

signed after the date on invoice.” She “never got the proposal to create a purchase

requisition” (April 26, 2016, email).

A Jacobs Project Management Company GISD Bond 2014 Assignment of Work for

Professional Services form was sent to Garland ISD on July 28, 2015, naming RLK

Engineering as the vendor to perform “Topographic Surveying Services” for “Project

Name: Naaman Forest High School New Softball Field Location.” The Deputy

Superintendent of Business signed the document on August 3, 2015:

“Signature above by the District will serve as acceptance of the attached proposal and

as authorization to the vendor to commence work associated with this contract.”

However, the service was completed as of the invoice date of July 15, 2015, which was 19

days before the Deputy Superintendent of Business authorized the vendor to commence

work.

Both invoices were paid from Bond Fund 681 via check requests entered by the Facilities

Administrative Assistant.

Effect

Bypassing this criteria excluded the Purchasing Department from these expenditures. In

an April 26, 2016, email, a Purchasing Department Buyer stated, “It is my understanding

that there is no formal procedure in place to advise Purchasing of these payments.” These

type payments “are not tied to a contract and therefore cannot be tracked against the

Purchasing Department’s contract spend reports” (Apr. 26, 2016, email). The purchaser

and approver are not expert in purchasing policies and laws. Consequently, they placed

themselves in jeopardy of violating policy and law when purchasing directly through check

requests.

Recommendation

IA recommends training for employees and Jacobs Project Managers and adherence to

District purchasing policies and procedures with regard to authorizing professional

services.

21

Finding Five: Reconciliations of project expenditures to District accounting and

financial system not performed per Jacobs Project Management

Company’s contract with the District

Pursuant to the Garland ISD Contract for Construction Program Management Services with

Jacobs Project Management Company, reconciliations of project expenditures to the District

accounting and financial system on a monthly basis were not performed as of January 29,

2016. According to the Jacobs Controls and Operations Manager, “the process needs to be set

up” (Jan. 29, 2016, Jacobs interview).

Criteria

Garland ISD Contract for Construction Program Management Services #494-15 with Jacobs

Project Management Company as of January 27, 2015: Article V – Program Manager’s

services: Part 2: Project Control: Item 5.3.3.1: page No. 22 (pdf page No. 28):

5.3.3 Reconciliation:

5.3.3.1. Reconciliations of Project expenditures to the District accounting and financial

system on a monthly basis done to date – Program Manager will be responsible

for reconciling their respective Project expenditures to the District accounting and

financial system on a monthly basis.

Condition

On January 29, 2016, IA interviewed the Jacobs Program Director and Jacobs Controls

and Operations Manager and conducted an analysis of certain Jacobs documents in

relation to Jacobs Project Management Company’s contract with Garland ISD (Jan. 29,

2016, Jacobs interview and Feb. 3, 2016, Analysis).

Previously, on January 27, 2016, IA requested that Jacobs Project Management Company

provide documentation by Friday afternoon, January 29, for the following items listed in

the contract, Article IV – Program Manager Services: Part 1: Coordination, Scheduling,

Budgeting, Planning, and Article V – Program Manager’s services: Part 2: Project

Control:

4.1.1 Management Plan

4.1.2 Program Master Schedule

4.1.3 List of Critical Dates

4.5.1 District provided Project service, materials and property costs and

expenses not known directly by the Program Manager

4.10.1 Bidding Procedures

4.10.3 All Bid Advertisements to date

5.3.1 Cost control reports to date

5.3.2.1 Cost accounting reports to date

5.3.3.1 Reconciliations of Project expenditures to the District accounting and

financial system on a monthly basis done to date

On January 27, the Jacobs Project Management Company Operations and Controls

Manager responded via email, “Sure, but we need some clarification on the documents

22

requested below and time to compile them. If we could please discuss this during our

meeting on Friday and then proceed accordingly, that would be helpful” (Jan 27 2016

email from Jacobs Operations and Controls Manager). The fact the documents might not

be available was an issue.

On January 28, the Jacobs Project Manager stated in an email, “We will provide the

documents you requested below. There will be some discussion on the last item. There

are some items on GISD’s side that have to get cleared up” (Jan. 28, 2015 email).

On January 29, the Jacobs Project Management Company Operations and Controls

Manager provided most of the requested documents to address IA’s request (Jacobs

documents). However, with regard to the Jacobs contract item: 5.3.3.1: Reconciliations of

Project expenditures to the District accounting and financial system on a monthly basis,

according to the Jacobs Project Management Company Operations and Controls Manager,

Jacobs will be “visiting (monthly reconciliation) later in the program,” adding that the GISD

Finance Director said because of the level of detail Jacobs is tracking, he feels there are good

internal controls.

The Jacobs Project Management Company Operations and Controls Manager said it

would be “preferable” to reconcile per item 5.3.3.1 “every three or six months,” and that the

“process needs to be set up,” continuing that the process can be set up now that they have gone

through the Design Phase One, once the current bids are awarded. Two bid packages were out

so far – 1.1 and 1.7, and should be presented at the February 9, 2016, Board of Trustees

meeting. If approved, contract negotiation should take “three or so weeks.” The goal then

would be to begin monthly reconciliations because there would be enough data to reconcile.

The Jacobs Project Management Company Operations and Controls Manager added that a

template is needed “between Oracle and Jacobs’ Prolog” programs, and reiterated that

currently the feeling between Jacobs and GISD’s Finance Director is that good internal

controls are in place. The reconciliation process “needs to be formalized” (Jan. 29, 2016,

Jacobs report of interview).

On April 6, 2016, IA interviewed the GISD Director of Finance who agreed that he feels there

are good internal controls and stated that he has sent a project detail report to Jacobs Project

Management Company. The Director of Finance stated that at the end of each project, GISD

will get data from the Jacobs system. He said that working with a project management

company is “new to all of us” and that the contractors are not entering any information in

GISD’s Oracle system. Only GISD employees are entering information in Oracle (April 6,

2016, interview).

Cause

The Jacobs Project Management Company’s reconciliation process was not implemented.

Effect

Reconciliations were not done.

23

Recommendation

Internal Audit recommends that Jacobs Project Management Company comply with the

terms of the Garland ISD Contract for Construction Program Management Services #494-15

with Jacobs Project Management Company with regard to Article V – Program Manager’s

services: Part 2: Project Control: Item 5.3.3.1, by reconciling Project expenditures to the

District accounting and financial system on a monthly basis: Program Manager will be

responsible for reconciling their respective Project expenditures to the District accounting

and financial system on a monthly basis.

Observation: Bond Fund 681 not included as a potential source of funding in

Administrative Recommendations for Board Approval On March 30, 2016, the Director of Purchasing told IA that “Potential Funding Sources”

are fund sources that “might” be used to procure a good or service. Stating “Potential

Funding Sources” in Administrative Recommendations for Board Approval is not in

Board Policy but is included in the Administrative Recommendations, because the

Trustees ask for bid funding sources when approving bids. Potential Funding Sources are

not an exhaustive list, do not preclude use of another fund not listed, and “all contracts

are open to all departments” (Mar. 30, 2015 interview).

Bond Fund 681 was not a “potential funding source” in the Administrative

Recommendations for Board Approval for Dallas County Schools dba Texserve, Comnet

Communications, or SHI Governments Solutions, Inc. However, requisitions and check

requests for payment from Bond Fund 681 totaled the following percentages of the

amounts awarded to the above suppliers respectively:

• 73.8 percent of the estimated total amount not to exceed $99,150



Additionally, specific potential funding sources other than Bond Fund 681 for ten

vendors were approved by the Trustees, as can be seen in the following tables:

Vendors Paid $75,000 or More in the Aggregate

(November 4, 2014, through October 31, 2015) from Bond Fund 681

Supplier Name Sum of Amount paid from Fund 681

Board Approval of Potential Funding

Source: Bond Expenditure Fund 681?

List of Potential Funding Sources

per Board Minutes

Lenovo United States Inc 11,437,783.00 Yes 2014-2015 General Fund (199) 2014-2015 Bond Funds (681)

Jacobs Project Management Company 2,166,369.21 No Potential Funding Sources Listed

Huckabee and Associates Inc 1,521,141.76 No Potential Funding Sources Listed

24

Supplier Name Sum of Amount paid from Fund 681

Board Approval of Potential Funding

Source: Bond Expenditure Fund 681?

List of Potential Funding Sources

per Board Minutes

Corgan Associates Incorporated 443,006.10 No Potential Funding Sources Listed

Technology Assets LLC DBA Global Asset

371,183.80 Yes 2014-2015 General Fund 199 2014-2015 Bond Funds

Netsync Network Solutions 326,993.70 Yes 2015-2016 (199 General Fund) 2015-2016 (681 Bond Series

2014) E-Rate Reimbursable at 75%

Comnet Communications LLC 298,034.00 No 2014-2015 General Fund (199) 2014-2015 ESEA Title I Part A -

Improving Basic Programs (211)

Premier Logitech DBS Premier Fulfillment

178,706.08 Yes 2014-2015 General Fund 199 2014-2015 Bond Funds

SHI Government Solutions 149,023.30 No 2014-2015 General Fund (199) 2014-2015 Campus Activity

Funds (461)

Page Southerland Page Incorporated 144,370.50 No Potential Funding Sources Listed

CDW Government Inc 80,592.00 Yes 2014-2015 General Fund (199) 2015-2016 General Fund (199)

2014-2015 Bond Series 2014 (681)

2015-2016 Bond Series 2014 (681)

17,117,203.45

Vendors Paid $50,000 or more and less than $75,000 in the Aggregate

(November 4, 2014, through October 31, 2015) from Bond Expenditures Fund 681

Supplier Name Sum of Amount paid

from Fund 681

Board Approval of Potential Funding Source: Bond Expenditure Fund

681?

List of Potential Funding Sources per Board Minutes

DALLAS COUNTY SCHOOLS DBA TEXSERVE

73,146.43

No 2014-2015 General fund (199)

ALPHA TESTING INC 70,000.00 No Contract Per Assistant Purchasing Director – see Finding Three

143,146.43

25

Vendors Paid Less than $50,000 in the Aggregate

(November 4, 2014, through October 31, 2015) from Bond Expenditures Fund 681

Supplier Name Sum of Amount Paid from Fund 681

Board Approval of Potential Funding Source: Bond Expenditure Fund 681?

List of Potential Funding Sources per Board Minutes

DELL MARKETING L P 48,801.33 No 2014-2015 General Fund (199); 2014-2015 Campus Activity Funds (461)

ROMEO MUSIC 47,123.00 No 2014-2015 General Fund (199); 2014-2015 ESEA Title I Part A – Improving Basic Programs (211); 2014-2015 ESEA Title II, Part A – Teacher & Principal (255); 2014-2015 Title III, Part A, English Language Acquisition (263)

RLK ENGINEERING 46,400.00 No Potential Funding Sources Listed

JAMIESON FENCE AND SUPPLY 22,765.17 No 2014-2015 (199 General fund); 2014-2015 (244 Vocational Education-Basic Grant)

TERRACON CONSULTANTS INCORPORATED

17,521.25 No Potential Funding Sources Listed

KYNETIC TECHNOLOGIES LLC 3,496.00 No 2014-2015 General Fund (199)

CENTENNIAL STEEL 2,264.36 No 2014-2015 General Fund 199 and Print Shop Fund 752

WEDGE SUPPLY INC 898.30 No 2014-2015 General Fund (199)

SHERWIN WILLIAMS 43.40 N/A Board approval of RFP not required because contract was $74,999 (less than $75,000); however fund source as determined by Assistant Maintenance Director was 199 General Fund

PIPER WEATHERFORD CO 30.00 No 2011-2012 General Fund (199-Local); 2011-2012 Bond Interest Income (697-Bond/Capital Project)

Grand Total 189,342.81

Internal Control

Pursuant to Generally Accepted Government Auditing Standards, Internal Control, 6.16,

“Auditors should obtain an understanding of internal control that is significant within the context

of the audit objectives.”

Accordingly, internal controls were reviewed only within the context of the audit objectives

(Appendix Three, page 33).

Management’s Response

Management’s response in its entirety, 32 pages, is included as Appendix Thirteen, page 116. The

time and effort expended by management in its response is appreciated. Management’s response

includes a memorandum from Chief of Staff Dr. Linda Chance, which addresses each finding.

Internal Audit’s comments regarding Dr. Chance’s response are included below.

Dr. Chance’s response is supported by exhibits one and two. Exhibit one is a memorandum from

Chief Financial Officer Dr. Rene Barajas, which includes supporting memorandum from Directors of

Finance and Purchasing, David Pate and Mark Booker, respectively. Exhibit two is a memorandum

from Executive Director of Facilities and Maintenance Joel E. Falcon. Internal Audit comments for

exhibits one and two are included in the applicable sections of Appendix Thirteen.

Finding One- It is unclear whether management agrees with Finding One or not, although it does

state “procedures have been amended.” Pursuant to the Jacob’s Company managed bond site, it

provided project manuals and drawings to the Fort Worth Hispanic Chamber of Commerce and Dallas

Black Chamber of Commerce when it did not. Accordingly, the finding stands.

Finding Two- Management agrees with Finding Two and states, “current procedures have been

updated.”

Finding Three- Management disagrees with Finding Three stating that “Services provided to (sic) the

vendor in question, Alpha Testing, Inc. is considered a contract for professional engineering services

pursuant to §2254.004 of the Texas Government Code. Accordingly, the District issued a Request for

Qualification (RFQ) for engineering services utilizing RFQ #362, in which Alpha Testing was

selected from several firms.” This statement is nonsensical in that both the Director of Purchasing and

Assistant Director of Purchasing state that the RFQ in effect from January through May, 2015, RFQ#

362-01-15, when $70,000 in check requests were issued for Alpha Testing, did not include Alpha

Testing.

The Director of Purchasing stated in his audit response herein, “Although Alpha Testing was not

issued an award on subsequent RFQ# 362-01-15 which was approved on December 9, 2014, the firm

was used for selected projects base on demonstrated competence.” The Assistant Purchasing Director

stated that he did not locate a professional services contract between Alpha Testing, Inc. and the

District from January through May 2015. Accordingly, Finding Three stands.

27

Finding Four- Management does not disagree with Finding Four, but attempts to minimize

its action by stating that there is a conflict between Board Policy and the CDAP manual.

Management states it is unsure what the following sentence means, “All purchase

commitments shall be made by the Superintendent or purchasing director on a properly drawn

and issued purchase order, procurement card, or a check request in accordance with

administrative procedures located in the Purchasing and Campus Accounting Manual.”

Internal Audit has to audit by the plain language in policy. This sentence means that purchase

orders, procurement card purchases and check requests have to be issued pursuant to the

CDAP. The CDAP does not allow for purchases included in Finding Four to be made with

check requests, accordingly, Finding Four stands. Management does state it, “will review

noted conflicts between Board Policy and the CDAP manual…” and present such review to

the Board of Trustees.

Furthermore, the Chief Financial Officer in his response references the Director of Finance’s

memorandum in stating that no violation of TEA mandated encumbrance accounting occurred

related to the transactions in the report. As can be seen in IA’s comments to the DoF’s

memorandum inserted behind it, IA stands by its assertion that the District violated TEA

mandated encumbrance accounting.

The DoF’s position is that TEA only requires encumbrance accounting for budgeted funds,

and because a budget is not required for the Capital Projects Fund, then encumbrance

accounting is not required for it. However, the Board appropriated funds in a budget for the

Capital Projects Fund, as described in the District’s last two financial statements. Because the

Capital Projects Fund has a budget, and TEA mandates encumbrance accounting for budgeted

funds, encumbrance accounting is therefore mandated for the Capital Projects Fund.

Because the administration paid $811,312 in check requests instead of Purchase Orders for

bond fund 681 expenditures, it violated the TEA’s mandated use of encumbrance accounting

for budgeted funds. Check requests create encumbrances but only as the checks are written, in

effect nullifying the usefulness of any encumbrance. Purchase Orders written before goods

are ordered or services received sets aside funds to ensure payment when the bill comes due.

The use of check requests does not do this and in fact bypasses the internal control provided

by the Purchasing Department.

Finding Five- Management agrees with Finding Five and instituted corrective action.

Observation- Management and Internal Audit agree that the listing of potential sources of

funding is “an administrative decision to give the Board of Trustees a general sense of which

funding sources may be used…” Internal Audit included the observation for the Board to be

aware of how indefinite such listing of potential sources of funding is.

This report is intended solely for the information and use of GISD and is not intended to be,

and should not be, used by anyone other than the specified parties. We appreciate the

cooperation of the Purchasing and Finance Departments during this audit.

29

Appendix One

Observation of the Public Bidding Process

IA reviewed bid information on the Garland ISD and Bond 2014 websites.

Staff Auditor Donna Paltjon (auditor-in-charge) interviewed Jacobs Program Director

and Jacobs Controls and Operations Manager to obtain a description of the process

for the opening and reading of competitive sealed proposals for 2014 bond bid

packages (Jan. 29, 2015 Interview). The process was described as follows:

The District provides the “front end” of the bid proposal documentation.

The GISD Purchasing Director and Construction Bond Specialist are over the

internal process noted on the GISD website.

The bidding process is GISD’s “standard process.” As bid “boxes” are received, a

label is assigned, and the bid “boxes” are logged and date stamped.

At the public reading, the Purchasing Director checks that the “bid bond” is in the

package, reads the total bid price three times, then moves on to the next bid.

The Jacobs Project Management Company notes the bid prices and posts them on

the Bond website.

The Jacobs Project Manager for a particular bid is part of the bid evaluation team

made up of GISD personnel.

Paltjon reviewed “Garland ISD Plan Room” project manuals and drawings online.

Staff Auditor Phyllis Williams and Paltjon visited two offsite locations to verify

availability of the documents as stated on the GISD Bond 2014 “Currently Bidding”

webpage.

Paltjon attended the following:

September 24, 2015, Garland ISD Bond 2014 Community Outreach presentation

January 27, 2016, “Pre-proposal Meeting for Bid Package 1.6 – New Construction

of a Natatorium”

Senior Staff Auditor Gilbert Chiquito and Paltjon attended the following:

February 9, 18, and 25, 2016, public opening and reading of competitive sealed

proposals (CSPs) for Bid Packages (no issues noted):

1.2 Naaman Forest High School – Campus Addition and Renovations

1.4 Lakeview Centennial High School – Campus Addition and Renovations

1.6 – Natatorium

Williams and Paltjon attended the February 9, 2016, Garland ISD Board of Trustees

Work Session: Board approval of the recommended contractors for Bid Packages 1.1

– The Career Technology Education Center, and 1.7 – Multiple School Renovations

30

IA Director Steve Martin and Paltjon interviewed the Purchasing Director for

information on how the District supports a Historically Underutilized Business

(HUB) Program pursuant to Garland ISD Board Policy CH (Local):

“The Board supports a historically under-utilized business program that ensures that

the District will promote and encourage the participation of minority-owned

businesses, women-owned businesses, and small businesses in the purchasing of all

goods and services, including all construction services.

The Superintendent and/or staff shall implement a business program to ensure that

small, women owned, and minority businesses are informed of current and future

purchasing activities and that goals of this program are achieved” (CH (Local)

Purchasing and Acquisition: Page No. 3: Historically Underutilized Business

Program).

The Purchasing Director responded as follows:

“Listed below are purchasing department procedures to encourage HUB participation in

the Garland ISD procurement process.

1. All HUB suppliers are identified during the registration process

2. All registered suppliers are emailed notifications of available RFP’s based on the

commodity codes selected by the supplier

3. Director of Purchasing and Buyer staff attend annual vendor expo’s sponsored by

the DFW Minority Business Development Council in Dallas and Ft. Worth

4. Garland ISD Purchasing and the City of Garland cooperatively host a vendor fair

each year

5. The director of Purchasing has served and currently serves on the Dallas ISD

MWBE Advisory Board to stay abreast of new initiatives”

(July 26, 2016, email from Purchasing Director); (July 26, 2016, report of interview)

31

Appendix Two – Finding Four

Check Requests without POs for Professional Services from Bond Fund 681

November 4, 2014 through October 31, 2015

1. Huckabee and Associates, Inc. check requests

32

2. Corgan Associates Incorporated check requests

3. Alpha Testing, Inc. check requests

4. Dallas County Schools dba Texserve check requests

5. RLK Engineering check requests


40330864 CORGAN

ASSOCIATES

INCORPORATED

1,710.00 06-Mar-2015 15012.00

00-1

18-Feb-2015 681.81.6200.000.66215.99.00000.681012.00.0000

40334416 CORGAN

ASSOCIATES

INCORPORATED

2,790.00 17-Apr-2015 15012.00

00-2

19-Mar-2015 681.81.6200.000.66215.99.00000.681012.00.0000

40335196 CORGAN

ASSOCIATES

INCORPORATED

6,750.00 29-Apr-2015 15012.00

00-3

16-Apr-2015 681.81.6200.000.66215.99.00000.681012.00.0000

40341374 CORGAN

ASSOCIATES

INCORPORATED

33,750.00 11-Aug-2015 15012.00

00-4

13-May-2015 681.81.6200.012.66215.99.00000.681012.00.0000

40341373 CORGAN

ASSOCIATES

INCORPORATED

45,000.00 11-Aug-2015 15012.00

00-5

08-Jun-2015 681.81.6200.012.66215.99.00000.681012.00.0000

90,000.00


40328731 RLK ENGINEERING 32,900.00 10-Feb-2015 7540 20-Jan-2015 681.81.6200.002.66217.99.00000.681996.00.0000

40342053 RLK ENGINEERING 4,200.00 27-Aug-2015 7725 15-Jul-2015 681.81.6200.008.66217.99.00000.681996.00.0000

37,100.00

33

Appendix Three

Seventeen Principles of Internal Control

(FASRG Ch. 4 - Auditing pdf page 54) (GAO Standards for Internal Control in the Federal

Government pdf page 76)

(Director’s note: The Texas Education Agency includes in the FASRG Audit chapter the five

components of internal control including control environment, risk assessment, control

activities, information and communication, and monitoring. GAO (GAGAS) following COSO

includes and expands upon these same components with the 17 principles listed below.)

Control Environment (District-Wide)

Oversight Body and Management

1) The oversight body and management should demonstrate a commitment to integrity and

ethical values.

Internal Control begins with “Tone at the Top.” Unless the oversight body and

management demonstrate a commitment to internal control and express this commitment

to district employees, a system of internal control will not be fully successful, may be

noted in the District’s financial audits, and may result in additional scrutiny by TEA and

the U.S. Department of Education. Less than adequate internal control if reflected in the

District’s financial statements may also affect the interest rates at which the District’s

bonds are sold.

To this end, the board posts videos of its bi-monthly meetings on the District’s website

(videos of GISD Board Meetings). The board has employed Internal Audit Director

Steven Martin pursuant to Texas Education Code Section 11.170 (2) which states, “the

internal auditor shall report directly to the board” (TX Ed Code 11.170 Internal Auditor).

(Auditor’s note: On June 7, 2016, the District launched a new website (160607 website

notification email). The videos of bi-monthly board meetings have not changed (videos of

GISD Board Meetings).

The District has policies including CAA (Local), which states, “All Trustees, employees,

vendors, contractors, consultants, volunteers, and any other parties who are involved in the

District’s financial transactions shall act with integrity and diligence in duties involving

the District’s fiscal resources.”

CAA (Local) references the following policies regarding conflicts of interest, ethics, and

financial oversight (CAA (Local):

Code of ethics:

o for Board members - BBF

o for employees - DH

34

Financial conflicts of interest:

o for public officials - BBFA

o for all employees - DBD

Financial conflicts involving federal funds: CBB

Systems for monitoring the District’s investment program: CDA

Budget planning and evaluation: CE

Compliance with accounting regulations: CFC

Activity fund management: CFD

Criminal history record information for employees: DC

Disciplinary action for fraud by employees: DCD, DCE, and DF series

Additionally CH (Local) regarding Purchasing and Acquisition is included in Board

policy.

However, CH (Local) was repeatedly violated as described in finding four. CH (Local)

states “All purchase commitments shall be made by the Superintendent or purchasing

director on a properly drawn and issued purchase order, procurement card or a check

request in accordance with administrative procedures located in the Purchasing and

Campus Accounting Manual (CDAP), which mandates the use of purchase orders for

certain purchases. The administration bypassed the Purchasing Department resulting in 51

check requests for major purchases totaling $811,312.

As a result of bypassing the Purchasing Department, Alpha Testing, Inc. (finding three)

was paid $70,000 without a District contract. The contract it previously had with the

District had expired. Whereas the Purchasing Department likely would have caught this

error, the work was ordered and payments made without benefit of Purchasing’s oversight.

The material use of check requests violates State requirements for encumbrance

accounting and the District’s Note 1 in its fiscal year ended August 31, 2015 financial

statements stating that the District uses encumbrance accounting. Budgets and

encumbrance accounting are tied together.

Title 19 Of the Texas Administrative Code (19 TAC), Chapter 109, establishes the State

Board of Education rule for school district budgeting, accounting, and financial reporting.

The detailed requirements of the financial accounting system adopted by the SBOE are

published in TEA’s FASRG (Financial Accountability System Resource Guide,), adopted

and incorporated by reference as TEA’s official rule (GISD's Federal Grant Policies and

Procedures Manual).

FASRG section 1.1 mandates the use of encumbrance accounting, stating, “Certain

requirements have been established requiring school districts to maintain proper budgeting

and financial accounting and reporting systems. In addition, principles and policies to

insure uniformity in accounting have been developed.” Such principles and policies

include encumbrance accounting (FASRG Module 1). Making $811,312 in payments

directly with check requests instead of through the Purchasing Department with purchase

35

orders makes an end run around encumbrance accounting and consequently violates Title

19 of the Texas Administrative Code.

Furthermore, the District’s Financial Statements for the year ended August 31, 2015,

includes in Note 1, Summary of Significant Accounting Policies, “Encumbrance

accounting, which is used in all government fund types, utilizes purchase orders, contracts,

and other commitments to reserve the applicable appropriation” (GISD CAFR FYE Aug

31, 2015). The District is stating to all parties who rely upon the District’s financial

statements, including bondholders, that it uses encumbrance accounting when it did not

for $811,312 in bond fund purchases paid directly with check requests.

Such violation of TEA’s financial accounting system and Board policy demonstrates a

lack of “tone at the top” (Control Environment) as described by the Committee on

Sponsoring Organizations and required by the Texas Education Agency and the U.S.

Department of Education General Administrative Regulations (EDGAR).

2) The oversight body should oversee the entity’s internal control system.

The board has empowered the Superintendent to maintain a system of internal controls to

deter and monitor for fraud or financial impropriety in the District (CAA (Local).

Additionally, The Board delegates to the Superintendent or purchasing director the

authority to make budgeted purchases for goods or services.

However, any single, budgeted purchase of goods or services that costs, in the aggregate,

$75,000 or more, regardless of whether the goods or services are competitively purchased,

shall require Board approval before a transaction may take place (CH (Local)).

The oversight body is responsible for overseeing the remediation of deficiencies as

appropriate and for providing direction to management on appropriate time frames for

correcting these deficiencies.

To this end, IA audit selection shall be based on the Director of Internal Audit’s

professional judgment, augmented by the direction of the Board acting as a whole. A

written report shall be prepared and issued by the Director of Internal Audit following the

conclusion of each audit and shall be distributed as appropriate. A copy of each audit

report and a summarization shall be forwarded to the Superintendent and the Board (IA

Charter).

All final audit reports may include the administration’s response and corrective action

taken or to be taken in regard to the specific findings and recommendations.

Administration’s response should include a timetable for anticipated completion of action

to be taken and an explanation for any recommendations not addressed.

36

Management Only

3) Establish an organizational structure, assign responsibility, and delegate authority to

achieve the entity’s objectives.

The District has on its website an organizational chart, which shows that the Director of

Purchasing is subordinate to the Deputy Superintendent of Business Operations, who is

subordinate to the Superintendent (Organizational Chart).

(Auditor’s Note: As previously noted, on June 30, 2016, the 2016-2017 school year

GISD Organizational Chart was distributed. The Chief Financial Officer is

subordinate to the Chief of Staff, who is subordinate to the Superintendent.)

4) Demonstrate a commitment to recruit, develop, and retain competent individuals.

District policy states: The District shall provide a system of central administration and

supportive services for the coordination, technical assistance, logistical support, and

administrative direction for the educational program and for the economic and efficient

operation of the District.

Each school shall be staffed with a principal, teachers, and other professional and auxiliary

employees as are required to operate the school effectively. A principal shall be in charge

of each campus, its buildings and equipment, and its staff.

In order to maintain an effective and efficient educational program, an orderly personnel

management system that includes a personnel manual shall be established. Decisions

reached by the Board, like those of administrators and teachers, have lasting effects on the

lives of the students in the District. Therefore, personnel management decisions shall be

based upon four priorities:

1. The welfare and benefit of the students.

2. The welfare and benefit of the total staff.

3. The welfare and benefit of individual staff members.

4. The welfare and benefit of the community (DA (Local)).

5) Evaluate performance and hold individuals accountable for their internal control

responsibilities.

District policy states: All District employees shall be periodically appraised in the

performance of their duties. The District’s employee evaluation and appraisal system

shall be administered consistent with the general principles set out below.

The employee’s performance of assigned duties and other job-related criteria shall provide

the basis for the employee’s evaluation and appraisal. Employees shall be informed of the

criteria on which they will be evaluated (DN (Local)).

37

IA obtained certification and continuing education documentation for Purchasing

Department employees (Oct 30 2015 email from Purchasing Director with attached

department certifications and continuing ed).

Additionally, the Business Office, to include the Finance and Purchasing Departments, has

responded to every IA request for documents and interviews of its employees.

Risk Assessment (Bidding Process when Expending Bond Funds Specific)

6) Define objectives clearly to enable the identification of risks and define risk tolerances.

The Purchasing Department completed a Risk Assessment (Garland ISD Procurement

Risk Assessment Rev 060616 – see Appendix Four, page 41).

7) Identify, analyze, and respond to risks related to achieving the defined objectives.

Purchasing Department Risk Assessment: Identified “Risks,” “Likely Consequences,” and

“Actions” (column labels in table format)

8) Consider the potential for fraud when identifying, analyzing, and responding to risks.

Purchasing Department Risk Assessment: Considered under “Likely Consequences”

column

9) Identify, analyze, and respond to significant changes that could impact the internal control

system.

The Purchasing Department completed a Risk Assessment

Control Activities (Bidding Process when Expending Bond Funds Specific)

10) Design control activities to achieve objectives and respond to risks.

Purchasing Department Risk Assessment: Described under “Action” column

11) Design the entity’s information system and related control activities to achieve objectives

and respond to risks.

Oracle includes several control operations within the iProcurement module

12) Implement control activities through policies.

GISD Board Policies address control activities:

38

GISD Board Policy CH (Local) -purchasing and acquisition

GISD Board Policy CH (LEGAL) purchasing and acquisition

GISD Board Policy CHE (LEGAL) purchasing and acquisition vendor relations

GISD Board Policy CVB (LEGAL) facilities construction competitive sealed proposals

GISD Board Policy CVB (LOCAL) facilities construction competitive sealed proposals

GISD Board Policy CVC (LEGAL) facilities construction construction manager-agent

GISD Board Policy CVD (LEGAL) facilities construction construction manager-at-risk

GISD Board Policy CVE (LEGAL) facilities construction design-build

GISD Board Policy CVF (LEGAL) facilities construction job order contracts

GISD Board Policy CJA (LEGAL) contracted services - criminal history

GISD Board Policy CV (LEGAL) facilities construction

GISD Board Policy CV (LOCAL) facilities construction

GISD Board Policy CV (XHIBIT) (1) required workers' compensation coverages

Information and Communication (Bidding Process when Expending Bond Funds

Specific)

13) Use quality information to achieve the entity’s objectives.

Presentations to Board of Trustees:

Bond Program updates presented by Jacobs Program Director Herschel Acosta

and Executive Director of Facilities and Maintenance Joel Falcon

Purchases presented by Purchasing Director Mark Booker

Monthly Financial Statements presented by Finance Director David Pate

14) Internally communicate the necessary quality information to achieve the entity’s

objectives.

The Purchasing Department provides internal purchasing policy and training through the

CDAP, classes, and a monthly newsletter sent to all GISD A-Locations via email.

15) Externally communicate the necessary quality information to achieve the entity’s

objectives.

The District communicates State required information to the Texas Education Agency

through the Public Education Information Management System (PEIMS), per State law

annually issues audited financial statements, and has websites for the District as a whole as

well as individual schools. Additionally, Internal Audit posts its audit reports on its

publicly available webpage.

39

Monitoring (Bidding Process when Expending Bond Funds Specific)

16) Establish and operate monitoring activities to monitor the internal control system and

evaluate the results.

GISD Organizational Chart

The Chief Financial Officer provided the following document with regard to monitoring

the Finance, Facilities, and Purchasing Departments (Monitoring of Selected

Departments):

As the Chief Financial Officer (formerly the Deputy Superintendent of Business) my main

areas of responsibility for the three departments listed below are resource management,

adherence to federal, state and local laws, and the department’s affect on the

instructional programs of the District. In addition I have to ensure that funding, both from

the state and local taxes, is sufficient enough to cover all planned (and unplanned)

40

expenditures throughout the year. In other words, to make sure the District is always in a “liquid” state. Below I have listed how I monitor, or monitored, the departments.

Finance

• Require updates on the status of bank reconciliations. • Randomly review bank reconciliations.

• Review monthly list of check requests to determine if chronic check requests can be converted to a purchase order. (List of checks is prepared independently of Finance.)

• Run a trial balance from Oracle to review status of revenue received in relation to adopted budget.

• Have monthly payroll numbers run and sent to several individuals to determine if payroll targets (payroll represents 80%+ of the General Fund budget) are on track.

• Meet with Director of Finance and Financial Advisor no less than six times a year to review bonded debt structure vis-á-vis any planned bond sales.

• Meet with District Treasurer on investment program. (Treasurers also prepares required quarterly reports that are provided to the Board.)

• Approve any purchase requisition from Finance (i.e., Business Operations ) over $5,000.

• Approve any expense reports for Finance over $25,000

• Meet with external auditors privately on their assessment of the finance department. Facilities

• Review(ed) requests for facilities funding (e.g., local capital projects). • Review(ed) status of bond projects with Facilities and Jacobs.

• Have/had Budget department monitor progress of Facilities budget throughout the

year.

• Met with Facilities quarterly on status of all construction projects to plan for needed funding in the future.

Purchasing

• Anytime a new vendor is created I receive a Oracle Workflow Mailer. I review the vendors for anything that looks out of the ordinary. If I find one I ask for details on why that vendor was created.

• Review monthly all bids to be taken to the Board for consideration • Review with Director of Purchasing the number of bids processed per year.

• Approve any purchase requisition from Purchasing over $50,000.

• Approve any expense reports for Purchasing over $25,000

17) Remediate identified internal control deficiencies on a timely basis.

This is the first internal control audit conducted on the bidding process when expending

bond funds by the Internal Audit Department

41

Appendix Four

Garland ISD Procurement Risk Assessment June 21, 2016 - Steve Martin received Garland ISD Procurement Risk Assessment from Purchasing Director Mark

Booker -DLP

1. Identifying the need and planning the purchase

2. Specification Development

3. Selecting the purchasing method

4. Purchasing documentation

5. Bid/RFP Process

6. Evaluating offers

7. Negotiations

8. Contract management

1. Identifying the need and planning the purchase

Risk Likely consequences Action

1.1 User needs not properly identified

Unacceptable purchase or less than suitable product or service

Time lost

Improve communication and training with end users to develop clear statement of work and definition of need

1.2 Insufficient funding Delay in making the purchase

Verify funding source and availability of funds

1.3 Impractical timeframe Inadequate responses from suppliers

Increased procurement cost

Develop procurement schedule which allow suppliers and end users sufficient time through the process

2. Specification Development


2.1 Restrictive specifications(e.g. use of brand name)

Fewer alternatives

Most suitable product or service may not be obtained

Increased costs

Define the specification in terms of required outputs

Use performance, design, technical, and combinations of specifications

Buyers provide a template too provide guidance

42

2.2 Biased specification Inadequate number of responses from suppliers

Vendor Protest

Avoid overly restrictive specifications

Prohibit use of supplier provided specifications

Implement a control mechanism to review specification before release

2.3 Vague or insufficient specifications

Variety of offers

Insufficient responses

Products offered not meeting needs

Difficult to evaluate due to wide price ranges and various product quality levels

Be familiar with requirements and develop specifications which provide sufficient information for suppliers to respond.

Use functional and performance specifications

Incorporate needs analysis provided by the end user

3. Selecting the purchasing method


3.1 Failure to identify potential sources

Lack of offers from capable suppliers

Improve procurement planning processes

Identify sources outside current database for specialty purchases

3.2 Selecting inappropriate method

May result in rejection of all bids

Vendors may protest

May violate procurement law

Develop a form to assist buyers in selecting appropriate method

Provide staff with appropriate training

4. Purchasing documentation


4.1 Terms and conditions unacceptable to suppliers

Reduced number of supplier responses

Increase number of deviations

Use standard documentation prepared by Purchasing Department

Select appropriate documentation for purchase type (i.e. goods, services, goods and

43


services, or information technology related)

4.2 Providing inadequate information

Variations in offers

Having to provide clarifying information, causing delays in bid/RFP closing

Additional costs

Ensure staff have appropriate training

Improve planning and preparation

Develop and use standard forms

4.3 Inadequate file management

Missing forms could result in increased risk to district

Suppliers not held to standards in the contract document

Create checklist for completion

Develop standard filing practices

5. Bid/RFP Phase


5.1 Failure to adequately address questions from suppliers

Claims of unfair practices

Offers with qualifications by suppliers

Withdrawal of offers

Implement procedures for responding to questions

Provide staff with appropriate training regarding bid/RFP management training and experience

Respond in a timely manner to enquiries

Allow adequate time for suppliers to respond

5.2 Actual or perceived favouritism

Complaints from suppliers

Withdrawal of offers

Potential litigation

Provide training to end users regarding contact with suppliers and biased actions

Answer questions in writing and provide copies to all potential suppliers by issuing addenda

5.3 Actual or perceived breach of confidentiality


Mistrust by suppliers

Establish formal security procedures

Train staff in their obligations

44


5.4 Insufficient number of responses

Need to undertake process again

Increased costs

Use appropriate notification process to increase competition

Allow sufficient time for suppliers to respond

6. Evaluating offers


6.1 Failure to follow effective evaluation procedures

Inconsistent evaluations

Possible complaints from suppliers

Subjective not objective evaluation of offers

Provide staff with appropriate assessment and evaluation training

Improve Bid/RFP assessment and evaluation processes

Maintain, audit and review evaluation procedures

Ensure that Evaluation Committee members declare any conflicts of interest

6.2 Breaches of security Claims of unethical or unfair practices

Provide staff with appropriate training and monitor performance

Ensure that Evaluation Committee members understand and sign Confidentiality Agreements

6.3 Offers fail to meet needs Need to rebid

Additional costs

Delay in delivery

Develop clear concise scope of work and specifications

Develop functional and performance specifications

6.4 Decision made on subjective grounds

Claims of unethical and unfair behaviour


Reduced response for future bids/RFP’s

Ensure evaluation criteria contains the critical factors

Ensure evaluation criteria are appropriate and measurable when possible

45


Ensure that Evaluation Committee members sign Declaration of Conflict and Confidentiality Agreements

7. Negotiations


7.1 Lengthy negotiation process

Delivery delays, deadlines not met

Inefficient use of resources

Improve communication, including ensuring that Terms and Conditions are part of the Request for RFP or Bid

Provide staff with training in contract planning and management

Define terms carefully

Clarify all uncertainties in the evaluation process

8. Contract management


8.1 Use of unapproved suppliers

Supplier protest

Receive inferior product or service

Increased cost

Litigation

Ensure end users are aware of approved suppliers and local policy

Monitor decentralized purchasing methods, P-Card and check request for compliance with policy

8.2 Failure of either party to fulfil the conditions of the contract

Contract disputes

Failure to satisfy needs

Delays in delivery

Downtime

Legal action

Ensure good contract administration and performance management

Ensure all staff know responsibilities and conditions

Ensure good record keeping and documentation

8.3 Inadequately administering the contract

Cost increases

Failure of contract

Full benefits not achieved

Ensure all staff are suitably trained and experienced in contract planning and management

46


Delivery of unsatisfactory product

Contract/supply disputes

8.4 Commencement of work by the supplier before contract is executed or purchase order issued

Potential liability to pay for unauthorised work

Possibility of legal action for perceived breach of contract

Ensure approvals are received before allowing work to start

Confirm contract execution prior to commencement of work

Enforce local policy regarding unauthorized purchases

8.5 Unauthorized increase in scope of work

Unanticipated cost increases

Contract disputes

Ensure all contract amendments are issued in writing

47

Appendix Five

Criteria Table of Contents

Applicable portions of the following criteria are included page

Appendix Six: Garland ISD Board Policies (Legal) ............................................... 48

Appendix Seven: Garland ISD Board Policies (Local) ............................................... 70

Appendix Eight: Jacobs Project Management Company Contract ........................... 79

Appendix Nine: GISD CDAP Manual ....................................................................... 85

Appendix Ten: TEA FASRG Module Three: Purchasing ...................................... 93

Appendix Eleven: Texas Statutes Education and Government Codes ........................ 99

Appendix Twelve: State of Texas Cooperative Purchasing Manual ............................ 115

48

Appendix Six

Applicable Portions of GISD Board Policies (Legal)

Garland ISD Board Policy CCA (Legal) Local Revenue Sources Bond Issues

BONDS AND BOND

TAXES

A board may obtain funds to construct, acquire, or equip school

buildings, to purchase necessary sites for school buildings, to

purchase new school buses, or to acquire or refinance property

financed under a contract entered under the Public Property

Finance Act by issuing bonds and assessing annual ad valorem

taxes sufficient to pay the principal and interest on the bonds as

or before they come due. Bonds may only be issued if approved

in a bond election. [See BOND ELECTIONS, below]

Education Code 45.001(a)

All bonds shall be issued in accordance with the Public Security

Procedures Act. Gov’t Code Ch. 1201

USE OF BOND

PROCEEDS FOR

UTILITIES

The proceeds of bonds issued by school districts for the

construction and equipment of school buildings in a district and

the purchase of the necessary sites for school buildings may be

used, among other things, to pay the cost of acquiring, laying,

and installing pipes or lines to connect with the water, sewer, or

gas lines of a municipality or private utility company, whether

or not the water, sewer, or gas lines adjoin the school, so that the

school district may provide its public school buildings the

water, sewer, or gas services. Education Code 45.101

INSTRUCTIONAL

FACILITY

ALLOTMENT

Except as provided by Education Code 46.005 and 46.006, a

district that issues bonds to construct, acquire, renovate or

improve an instructional facility may obtain state funding to pay

principal and interest on eligible bonds under the Instructional

Facilities Allotment program, Education Code Chapter 46,

Subchapter A. Education Code 46.003; 19 TAC 61.1032

Garland ISD Board Policy CH (Legal) Purchasing and Acquisition, page Nos. 1-14

BOARD AUTHORITY The Board may adopt rules and procedures for the acquisition

of goods and services. Education Code 44.031(d)

PURCHASES

VALUED

AT OR ABOVE

$50,000

All District contracts for the purchase of goods and services,

except contracts for the purchase of produce or vehicle fuel,

valued at $50,000 or more in the aggregate for each 12-month

period, shall be made by the method that provides the best value

for the District:

1. Competitive bidding for services other than construction

services.

49

2. Competitive sealed proposals for services other than

construction services.

3. A request for proposals for services other than construction

services.

4. An interlocal contract.

5. The reverse auction procedure as defined by Government

Code 2155.062(d).

6. The formation of a political subdivision corporation under

Local Government Code 304.001.

Education Code 44.031(a)

Note: Regarding construction of school facilities, see CV

generally; CVA for competitive bidding; CVB for competitive

sealed proposals; CVC and CVD for contracts using a

construction manager; CVE for design/build contracts; and CVF

for job order contracts for minor repairs/alterations.

FACTORS In awarding a contract, the District shall consider:

1. Purchase price.

2. The reputation of the vendor and of the vendor’s goods and

services.

3. The quality of the vendor’s goods or services.

4. The extent to which the goods or services meet the

District’s needs.

5. The vendor’s past relationship with the District.

6. The impact on the ability of the District to comply with laws

relating to historically underutilized businesses.

7. The total long-term cost to the District to acquire the goods

or services.

8. For a contract that is not for goods and services related to

telecommunications and information services, building

construction and maintenance, or instructional materials,

whether the vendor or the vendor’s ultimate parent company

or majority owner has its principal place of business in this

state or employs at least 500 persons in this state.

9. Any other relevant factor specifically listed in the request for

bids or proposals.

Education Code 44.031(b)

In awarding a contract by competitive sealed bid under

Education Code 44.031, a district that has its central

administrative office located in a municipality with a population

of less than 250,000 may consider a bidder’s principal place of

business in the manner provided by Local Government Code

271.9051. This section does not apply to the purchase of

telecommunications services or information services, as those

50

terms are defined by 47 U.S.C. Section 153. Education Code

44.031(b-1)

(Auditor’s note: The Garland ISD Harris Hill Administration

Building is located at 501 S Jupiter, Garland, Texas. According

to the US Census Bureau, the population estimate for 2014 was

235,501.)

OUT-OF-STATE

BIDDERS

The Board shall not award a contract for services or for

purchase of supplies, materials, or equipment to a bidder whose

principal place of business is not in this state, unless the

nonresident underbids the lowest bid submitted by a responsible

resident bidder by an amount that is not less than the greater of

the amount by which a resident bidder would be required to

underbid a nonresident bidder to obtain a comparable contract

in the state in which the nonresident’s principal place of

business is located, or a state in which a majority of the

manufacturing relating to the contract will be performed.

Gov’t Code 2252.001–.002

NOTICE

PUBLICATION

Notice of when and where bids or proposals or the responses to

a request for qualifications will be received and opened shall be

published in the county where the District’s central

administrative office is located, once a week for at least two

weeks prior to the deadline for receiving bids, proposals, or

responses to a request for qualifications. If there is no

newspaper in that county, the advertising shall be published in a

newspaper in the county nearest the county seat of the county in

which the District’s central administrative office is located. In a

two-step procurement process, the time and place where the

second-step bids, proposals, or responses will be received are

not required to be published separately. Education Code

44.031(g)

ELECTRONIC BIDS

OR PROPOSALS

The District may receive bids or proposals through electronic

transmission if the Board adopts rules to ensure the

identification, security, and confidentiality of electronic bids or

proposals and to ensure that the electronic bids or proposals

remain effectively unopened until the proper time. An electronic

bid or proposal is not required to be sealed. A provision of

Education Code Chapter 44 that applies to a sealed bid or

proposal applies to a bid or proposal received through electronic

transmission in accordance with the rules adopted by the Board.

Education Code 44.0313

51

PROFESSIONAL

SERVICES

The purchasing requirements of Education Code 44.031 do not

apply to a contract for professional services rendered, including

the services of an architect, attorney, certified public accountant,

engineer, or fiscal agent.

The District may contract for professional services rendered by

a financial consultant or a technology consultant in the manner

provided by Government Code 2254.003, in lieu of the methods

provided by Education Code 44.031.

Education Code 44.031(f)

Competitive bids shall not be solicited for professional services

of any licensed or registered certified public accountant,

architect, landscape architect, land surveyor, physician,

optometrist, professional engineer, state-certified or state-

licensed real estate appraiser, or registered nurse. Contracts for

these professional services shall be made on the basis of

demonstrated competence and qualifications to perform the

services and for a fair and reasonable price. Gov’t Code

2254.002, .003(a)

An interlocal contract between the District and a purchasing

cooperative may not be used to purchase engineering or

architectural services. Gov’t Code 791.011(h)

[See also CV]

COMPUTERS The District may acquire computers and computer-related

equipment, including computer software, through the

Department of In-formation Resources (DIR) under contracts

with the DIR in accordance with Government Code Chapter

2054 or 2157. Education Code 44.031(i)

COMPETITIVE

BIDDING

Except to the extent prohibited by other law and to the extent

consistent with Education Code Chapter 44, Subchapter B, the

District may use competitive bidding to select a vendor as

authorized by Education Code 44.031(a)(1).

The District shall award a competitively bid contract at the bid

amount to the bidder offering the best value for the District. In

determining the best value for the District, the District is not

restricted to considering price alone but may consider any other

factors stated in the selection criteria. The selection criteria may

include the factors listed in Education Code 44.031(b) [see

FACTORS, above].

Except as provided below, Local Government Code Chapter

271, Subchapter B does not apply to a competitive bidding

process under this policy. Education Code 44.0351

52

OPENING BIDS Bids may be opened only by the Board at a public meeting or

by an officer or employee of the District at or in an office of the

District. A bid that has been opened may not be changed for the

purpose of correcting an error in the bid price. Local Gov’t

Code 271.026

The Board shall have the right to reject any and all bids. Local

Gov’t Code 271.027(a)

COMPETITIVE

SEALED PROPOSALS

In selecting a vendor through competitive sealed proposals as

authorized by Education Code 44.031(a)(2), the District shall

follow the procedures prescribed below.

REQUEST FOR

PROPOSALS

The District shall prepare a request for competitive sealed

proposals that includes information that vendors may require to

respond to the request. The District shall state in the request for

proposals the selection criteria that will be used in selecting the

successful offeror.

OPENING

PROPOSALS

The District shall receive, publicly open, and read aloud the

names of the offerors and, if any are required to be stated, all

prices stated in each proposal. Not later than the 45th day after

the date on which the proposals are opened, the District shall

evaluate and rank each proposal submitted in relation to the

published selection criteria.

SELECTION The District shall select the offeror that offers the best value for

the District based on the published selection criteria and on its

ranking evaluation. The District shall first attempt to negotiate a

contract with the selected offeror. The District may discuss with

the selected offeror options for a scope or time modification and

any price change associated with the modification. If the

District is unable to negotiate a satisfactory contract with the

selected offeror, the District shall, formally and in writing, end

negotiations with that offeror and proceed to the next offeror in

the order of the selection ranking until a contract is reached or

all proposals are rejected.

BEST VALUE

DETERMINATION

In determining the best value for the District, the District is not

restricted to considering price alone but may consider any other

factors stated in the selection criteria.


INTERLOCAL

AGREEMENTS

To increase efficiency and effectiveness, the District may

contract or agree with other local governments and with state

53

agencies, including the comptroller, to perform some of its

purchasing functions.

Gov’t Code 791.001, .011, .025

An interlocal contract must be authorized by the Board and the

governing body of each contracting party; must state the

purpose, terms, rights, and duties of the contracting parties; and

must specify that each party paying for the performance of

governmental functions or services shall make those payments

from current revenues available to the paying party. An

interlocal contractual payment must be in an amount that fairly

compensates the performing party for the services or functions

performed under the contract. The contract may be renewed and

may have a specified term of years.

Gov’t Code 791.011(d)–(f), (i)

The District may agree with another local government,

including a nonprofit corporation that is created and operated to

provide one or more governmental functions and services, or

with the state or a state agency, including the comptroller, to

purchase goods and services reasonably required for the

installation, operation, or maintenance of the goods. Such an

agreement may not, however, apply to services provided by

firefighters, police officers, or emergency medical personnel. A

district that purchases goods and services by agreement with

another local government or with the state or state agency

satisfies the requirement to seek competitive bids for the

purchase of goods and services.

Gov’t Code 791.025(b)–(c); Atty. Gen. Op. JC-37 (1999)

“Purchasing cooperative” means a group purchasing

organization

that governmental entities join as members and the managing

entity

of which receives fees from members or vendors.

Gov’t Code 791.011(j)

CHANGE ORDERS If a change in plans or specifications is necessary after the

performance of a contract is begun or if it is necessary to

decrease or increase the quantity of work to be performed or of

materials, equipment, or supplies to be furnished, the District

may approve change orders making the changes. The District

may grant general authority to an administrative official to

approve the change orders.

54

The total contract price may not be increased because of the

changes unless additional money for increased costs is approved

for that purpose from available money or is provided for by the

authorization of the issuance of time warrants.

A contract with an original contract price of $1 million or more

may not be increased by more than 25 percent. If a change order

for a contract with an original contract price of less than $1

million increases the contract amount to $1 million or more, the

total of the subsequent change orders may not increase the

revised contract amount by more than 25 percent of the original

contract price.


RECYCLED

PRODUCTS

The District shall give preference in purchasing to products

made of recycled materials if the products meet applicable

specifications as to quantity and quality. The District shall

regularly review and

revise its purchasing procedures and specifications for purchase

of goods, supplies, equipment, and materials in order to:

1. Eliminate procedures and specifications that explicitly

discriminate against products made of recycled materials.

2. Encourage the use of products made of recycled materials.

3. Ensure to the maximum extent economically feasible that

the District purchase products that may be recycled when they

have served their intended use.

Health and Safety Code 361.426

RIGHT TO WORK While engaged in procuring goods and services or awarding a

contract, the District:

1. May not consider whether a vendor is a member of or has

another relationship with any organization; and

2. Shall ensure that its bid specifications and any subsequent

contract or other agreement do not deny or diminish the

right of a person to work because of the person’s

membership or other relationship status with respect to any

organization.


Garland ISD Board Policy CHE (Legal), Purchasing Acquisition Vendor Relations, page Nos. 1-

2

REQUIRED VENDOR

DISCLOSURE

The Texas Ethics Commission shall adopt a conflict of interest

questionnaire that requires disclosure of a vendor’s business

relationships with the District.

55

A vendor to the District shall file any required conflict of

interest

questionnaire if the person has a business relationship with the

District and:

1. Has an employment or other business relationship with an

officer of the District, or a family member of the officer,

described by Local Government Code 176.003(a)(2)(A); or

2. Has given an officer of the District, or a family member of

the officer, one or more gifts with the aggregate value specified

by Local Government Code 176.003(a)(2)(B), excluding any

gift described by Local Government Code 176.003(a-1).

The completed conflict of interest questionnaire must be filed

with the appropriate records administrator not later than the

seventh business day after the date that the vendor:

1. Begins discussions or negotiations to enter into a contract

with the District;

2. Submits to the District an application, response to a request

for proposals or bids, correspondence, or another writing

related to a potential contract with the District; or

3. The date the person becomes aware:

a. Of an employment or other business relationship with a

local government officer, or a family member of the officer;

or

b. That the person has given one or more gifts.

Local Gov’t Code 176.006

DEFINITION OF

BUSINESS

RELATIONSHIP

“Business relationship” means a connection between two or

more parties based on commercial activity of one of the parties.

The term does not include a connection based on:

1. A transaction that is subject to rate or fee regulation by a

federal, state, or local governmental entity or an agency of a

federal, state, or local governmental entity;

2. A transaction conducted at a price and subject to terms

available to the public; or

3. A purchase or lease of goods or services from a person that

is chartered by a state or federal agency and that is subject

to regular examination by, and reporting to, that agency.

ELECTRONIC FILING The required questionnaire, including signature requirements,

may be filed electronically in a form approved by the

Commission. Local

Gov’t Code 176.008

LIST OF LOCAL

GOVERNMENT

OFFICERS

The records administrator for each district shall maintain a list

of local government officers of the entity and shall make that

list available to the public and any person who may be required

to file a conflict of interest questionnaire. Local Gov’t Code

176.007 [See BBFA]

56

INTERNET POSTING The District shall provide access on the District’s Internet Web

site to the required conflict of interest statements and

questionnaires filed with the records administrator. Local Gov’t

Code 176.009

Garland ISD Board Policy CJA (Legal) Contracted Services Criminal History, page Nos. 1-4

CRIMINAL HISTORY

— IN GENERAL

Before entering into a contract with the District, a person or

business must give notice to the District if the person or an

owner or operator of the business has been convicted of a

felony. The District may terminate a contract with a person or

business if the District determines that the person or business

failed to give such no-tice or misrepresented the conduct

resulting in the conviction. The District must compensate the

person for services performed before the contract terminated.


DEFINITIONS

“CONTINUING

DUTIES RELATED

TO CONTRACTED

SERVICES”

“COVERED

CONTRACT

EMPLOYEE”

“DIRECT CONTACT

WITH STUDENTS”

“Continuing duties related to contracted services” are work

duties that are performed pursuant to a contract to provide

services to the District on a regular, repeated basis rather than

infrequently or one-time only.

A “covered contract employee” is an individual who:

1. Is employed or offered employment by a service contractor

or a subcontractor of a service contractor, is an individual

independent contractor of the District, or is an individual

subcontractor of a service contractor;

2. Has or will have continuing duties related to the contracted

services;

3. Has or will have direct contact with students; and

4. Is not a student of (or enrolled in) the District for which the

services are performed.

“Direct contact with students” is the contact that results from

activities that provide substantial opportunity for verbal or

physical interaction with students that is not supervised by a

certified educator or other professional District employee.

Contact with students that results from services that do not

provide substantial opportunity for unsupervised interaction

with a student or students, such as addressing an assembly,

officiating a sports contest, or judging an extracurricular event,

is not, by itself, direct contact with students. However, direct

contact with students does result from any activity that provides

substantial opportunity for unsupervised contact with students,

57

“CONTRACTING

ENTITY”

“SUBCONTRACTING

ENTITY”

which might include, without limitation, the provision of

coaching, tutoring, or other services to students.

A “contracting entity” is an entity that contracts directly with

the District to provide services to the District. However, when

conducting an investigation or intervention regarding an alleged

crime or act of child abuse on a school campus, a law

enforcement agency or the Department of Family and

Protective Services is not a contracting entity, and the

investigator or intervener is not a covered contract employee.

A “subcontracting entity” is an entity that contracts with

another entity that is not a district to provide services to a

school district, open-enrollment charter school, or shared

services arrangement. Education Code 22.0834(p); 19 TAC

153.1101(2)–(3), (7), (10)

CONTRACTOR

RESPONSIBILITIES

EMPLOYED

BEFORE

JANUARY 1, 2008

EMPLOYMENT

OFFERED ON OR

AFTER JANUARY 1,

2008

An entity that contracts with the District to provide services and

any subcontractor of the entity shall obtain from any law

enforcement or criminal justice agency or a private entity that is

a consumer reporting agency governed by the Fair Credit

Reporting Act (15 U.S.C. Section 1681 et seq.), all criminal

history record information that relates to an employee of the

entity who is employed before January 1, 2008, and who is not

subject to a national criminal history record information review

under Education Code 22.0834(b) if:

1. The employee has continuing duties related to the

contracted services; and

2. The employee has direct contact with students.

A person who, on or after January 1, 2008, is offered

employment

by an entity that contracts with the District or any subcontractor

of

the entity must submit to a national criminal history record

information

review if:

1. The employee or applicant has or will have continuing

duties related to the contracted services; and

2. The employee or applicant has or will have direct contact

with students.

The person must submit to the review before being employed o

serving in a capacity described above.

An entity contracting with the District and any subcontractor of

the entity shall obtain all criminal history record information

58

that relates to a person described above through the criminal

history clearinghouse as provided by Government Code

411.0845.

A contracting entity shall require that a subcontracting entity

obtain all criminal history record information that relates to a

person described above.

CERTIFICATION TO

DISTRICT

The entity and any subcontractor of the entity shall certify to

the District that it received all of the criminal history record

information required above. The entity and any subcontractor

of the entity shall also certify that it will take reasonable steps to

ensure that the conditions or precautions that have resulted in a

determination that any person is not a covered contract

employee continue to exist throughout the time that the

contracted services are provided.

A subcontracting entity must certify to the District and the

contracting entity that the subcontracting entity has obtained all

criminal history record information that relates to an employee

described above at CONTRACTOR RESPONSIBILITIES—

EMPLOYMENT OFFERED ON OR AFTER JANUARY 1,

2008, and has obtained similar written certifications from the

subcontracting entity’s sub-contractors.

A contracting entity and any subcontractor of the entity shall

provide the District, at its request, the information necessary for

the District to obtain criminal history record information for all

covered contract employees.

A contracting entity complies with the requirements of this

section if the contracting entity obtains a written statement from

each sub-contracting entity certifying that the subcontracting

entity has obtained the required criminal history record

information for employees of the subcontracting entity and the

subcontracting entity has obtained certification from each of the

subcontracting entity’s subcontractors.

DISQUALIFYING

CONVICTION

A contracting or subcontracting entity may not permit a person

de-scribed above at CONTRACTOR RESPONSIBILITIES—

EMPLOYED BEFORE JANUARY 1, 2008, to provide

services at a school if the employee has been convicted of a

felony or misdemeanor offense that would prevent a person

from being employed under Education Code 22.085(a).

A contracting entity shall not permit a covered contract

employee to provide services at the District if the employee has

a disqualifying conviction under Education Code 22.085.

59

DISTRICT

RESPONSIBILITIES

EMPLOYED

BEFORE

JANUARY 1, 2008

EMPLOYMENT

OFFERED ON OR

AFTER JANUARY 1,

2008

CERTIFICATION

FROM

CONTRACTOR

DISQUALIFYING

CONVICTION

The District may obtain from any law enforcement or criminal

jus-tice agency all criminal history record information that

relates to a person described above at CONTRACTOR

RESPONSIBILITIES— EMPLOYED BEFORE JANUARY

1, 2008.

The District may obtain the criminal history record information

of a person described above at CONTRACTOR

RESPONSIBILITIES— EMPLOYMENT OFFERED ON OR

AFTER JANUARY 1, 2008, through the criminal history

clearinghouse as provided by Government Code 411.0845.

The District shall ensure that each of its service contractors

certify that the service contractor has obtained all required

criminal history record information for covered contract

employees.

The District may not allow a covered contract employee to

serve at the District if the District obtains information through a

criminal history record information review that the covered

contract employee has a disqualifying conviction under

Education Code 22.085. The District may adopt a stricter

standard.

Garland ISD Board Policy CV (Legal) Facilities Construction

BOARD AUTHORITY

DELEGATION OF

AUTHORITY

The District may adopt rules as necessary to implement

Government Code Chapter 2269. Gov’t Code 2269.051

The Board may delegate its authority under Government Code

Chapter 2269 regarding an action authorized or required by

Chapter 2269 to a designated representative, committee, or

other person.

The Board shall provide notice of the delegation, the limits of

the delegation, and the name or title of each designated person

by rule or in the request for bids, proposals, or qualifications or

in an addendum to the request.


CONTRACTS VALUED

AT OR ABOVE $50,000

All District contracts valued at $50,000 or more in the

aggregate for each 12-month period shall be made by the

method that provides the best value for the District [see also

CH]:

1. An interlocal contract. [See CH]

2. Competitive bidding. [See CVA]

3. Competitive sealed proposals. [See CVB]

60

4. Construction manager-agent method. [See CVC]

5. Construction manager-at-risk method. [See CVD]

6. Design-build method. [See CVE]

7. Job order contract. [See CVF]

8. The reverse auction procedure as defined by Government

Code 2155.062(d). [See CH]

Education Code 44.031(a), Gov’t Code 2269

[For information on contract-related fees, see CH]

SELECTING A

CONTRACTING

METHOD

If the Board considers a construction contract using a method

authorized by Government Code Chapter 2269 other than

competitive bidding, the Board must, before advertising,

determine which method provides the best value for the

District. Gov’t Code 2269.056(a)

EXCEPTIONS

CONTRACTS

REQUIRING A

BOND

A reverse auction procedure, whether the same or similar to

that described by Government Code 2155.062, may not be

used to obtain services related to a public work contract for

which a bond is required under Government Code 2253.021

[see PAYMENT AND PERFORMANCE BONDS, below].

Gov’t Code 2253.021(h)

PUBLIC NOTICE Notice of the time by when and place where the bids or

proposals, or the responses to a request for qualifications, will

be received and opened shall be published in the county in

which the District’s central administrative office is located,

once a week for at least two weeks before the deadline for

receiving bids, proposals, or responses to a request for

qualifications. If there is not a newspaper in that county, the

advertising shall be published in a newspaper in the county

nearest the county seat of the county in which the District’s

central administrative office is located. In a two-step

procurement process, the time and place where the second-step

bids, proposals, or responses will be received are not required

to be published separately. Education Code 44.031(g); Gov’t

Code 2269.052(a)–(b)

CONTRACT

SELECTION CRITERIA

In determining the award of a contract, the District shall

consider and apply:

1. Any existing laws, including any criteria, related to

historically underutilized businesses; and

2. Any existing laws, rules, or applicable municipal charters,

including laws applicable to local governments, related to

the use of women, minority, small, or disadvantaged

businesses.

61

OUT-OF-STATE

BIDDERS

PUBLISHING

CRITERIA

In determining the award of a contract, the District may

consider:

1. Price.

2. The offeror’s experience and reputation.

3. The quality of the offeror’s goods or services.

4. The impact on the ability of the District to comply with

rules relating to historically underutilized businesses.

5. The offeror’s safety record.

6. The offeror’s proposed personnel.

7. Whether the offeror’s financial capability is appropriate to

the size and scope of the project.

8. Any other relevant factor specifically listed in the request

for bids, proposals, or qualifications.


The Board shall not award a contract for general construction,

improvements, services, or public works projects or for

purchase of supplies, materials, or equipment to a bidder

whose principal place of business is not in this state, unless the

nonresident underbids the lowest bid submitted by a

responsible resident bidder by an amount that is not less than

the greater of the amount by which a resident bidder would be

required to underbid a nonresident bidder to obtain a

comparable contract in the state in which the non-resident’s

principal place of business is located or a state in which a

majority of the manufacturing relating to the contract will be

per-formed. Gov’t Code 2252.001–.002

This requirement shall not apply to a contract involving federal

funds. The District shall rely on information published by the

comptroller in evaluating the bids of a nonresident bidder.

Gov’t Code 2252.003–.004

The District shall publish in the request for proposals or

qualifications the criteria that will be used to evaluate the

offerors and the applicable weighted value for each criterion.

Gov’t Code 2269.056(b)

SUBMISSION A person who submits a bid, proposal, or qualification to a

governmental entity shall seal it before delivery. Gov’t Code

2269.059

SELECTION The District shall base its selection among offerors on

applicable criteria listed for the particular method used. Gov’t

Code 2269.056(b)

62

MAKING

EVALUATIONS

PUBLIC

The District shall document the basis of its selection and shall

make the evaluations public not later than the seventh day after

the date the contract is awarded. Gov’t Code 2269.056(c), .105

CHANGE ORDERS If a change in plans or specifications is necessary after the

performance of a contract is begun or if it is necessary to

decrease or increase the quantity of work to be performed or of

materials, equipment, or supplies to be furnished, the District

may approve change orders making the changes. The District

may grant general authority to an administrative official to

approve the change orders.

The total contract price may not be increased because of the

changes unless additional money for increased costs is

approved for that purpose from available money or is provided

for by the authorization of the issuance of time warrants.

A contract with an original contract price of $1 million or more

may not be increased by more than 25 percent. If a change

order for a contract with an original contract price of less than

$1 million increases the contract amount to $1 million or more,

the total of the subsequent change orders may not increase the

revised contract amount by more than 25 percent of the

original contract price. Education Code 44.0411

INSPECTION,

VERIFICATION AND

TESTING

Independently of the contractor, construction manager-at-risk,

or design-build firm, the District shall provide or contract for

the construction materials engineering, testing, and inspection

services and the verification testing services necessary for

acceptance of the facility by the District. The District shall

select the services for which it contracts in accordance with

Government Code 2254.004. Gov’t Code 2269.058

PROFESSIONAL

SERVICES

ARCHITECTS AND

ENGINEERS

An architect or engineer required to be selected or designated

under Government Code Chapter 2269 has full responsibility

for complying with Occupations Code Chapter 1051 or 1001,

as applicable.

If the selected or designated architect or engineer is not a full-

time employee of the District, the District shall select the

architect or engineer on the basis of demonstrated competence

and qualifications as provided by Government Code 2254.004

[see PROCURING PROFESSIONAL SERVICES, below].


63

REGISTERED

ARCHITECT

REGISTERED

ENGINEER

An architectural plan or specification for any of the following

may be prepared only by an architect registered in accordance

with Occupations Code, Title 6, Chapter 1051:

1. A new building constructed and owned by the District that

will be used for education, assembly, or office occupancy

when the total projected construction costs at the

commencement of construction exceed $100,000.

2. Any alteration or addition to an existing building owned by

the District that is, or will be, used for education, assembly,

or office occupancy when the total projected construction

costs of alteration or addition at the commencement of

construction exceed $50,000 and the alteration or addition

requires the removal, relocation, or addition of any walls or

partitions or the alteration or addition of an exit.

This section does not prohibit the District from choosing a

registered architect or a registered professional engineer as the

prime design professional for a building construction,

alteration, or addition project. Designation as the prime design

professional does not expand, limit, or otherwise alter the

scope of a design professional’s practice nor does it allow a

design professional to prepare an architectural plan or

specification described above.

Occupations Code 1051.703; 22 TAC 1.212

Electrical or mechanical engineering plans, specifications, and

estimates for a District construction project whose

contemplated cost at completion is more than $8,000 and that

involves public health, welfare, or safety must be prepared by a

registered professional engineer, and the engineering

construction executed under the supervision of such an

engineer. Occupations Code 1001.053; Atty. Gen. Op. C-791

(1966)

The District is not required to secure the services of a

registered professional engineer to prepare plans for or

supervise a construction project that does not involve electrical

or mechanical engineering and for which the contemplated

cost does not exceed $20,000. Occupations Code 1001.053

PROCURING

PROFESSIONAL

SERVICES

The purchasing requirements of Education Code 44.031 do not

apply to a contract for professional services rendered,

including the services of an architect. The District may contract

for professional services rendered by a financial consultant or a

technology consultant in the manner provided by Government

Code 2254.003, in lieu of the methods provided by Education

Code 44.031. Education Code 44.031(f)

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Competitive bids shall not be solicited for professional services

of any architect, landscape architect, land surveyor,

professional engineer, or state-certified or state-licensed real

estate appraiser.

Contracts for these professional services shall be made on the

basis of demonstrated competence and qualifications to

perform the services and for a fair and reasonable price. Gov’t

Code 2254.002, .003(a)

In procuring architectural, engineering, or land-surveying

services, the District shall:

1. First select the most highly qualified provider on the basis of

demonstrated competence and qualifications; and

2. Then attempt to negotiate a contract with that provider at a

fair and reasonable price.

If a satisfactory contract cannot be negotiated with the most

highly qualified provider of architectural, engineering, or land-

surveying services, the District shall formally end negotiations

with that provider, select the next most highly qualified

provider, and attempt to negotiate a contract with that provider

at a fair and reasonable price. The District shall continue this

process until the parties enter into a contract.


An interlocal contract between the District and a purchasing

cooperative may not be used to purchase engineering or

architectural services. Gov’t Code 791.011(h)

RIGHT TO WORK While engaged in procuring goods or services, awarding a

contract, or overseeing procurement or construction for a public

work or public improvement under Government Code Chapter

2269, the District:

1. May not consider whether a person is a member of or has

another relationship with any organization; and

2. Shall ensure that its bid specifications and any subsequent

contract or other agreement do not deny or diminish the right of

a person to work because of the person’s membership or other

relationship status with respect to an organization.


PAYMENT AND

PERFORMANCE

BONDS

When the Board makes a public work contract for

constructing, altering, or repairing a public building or carrying

out or completing any public work, it shall require the

contractor, before beginning the work, to execute payment

65

FAILURE TO

OBTAIN PAYMENT

BOND

NO BOND FOR

DESIGN SERVICES

ONLY

BOND FOR

INSURED LOSS

and/or performance bonds as specified below. The bonds shall

be executed by a corporate surety in accordance with Insurance

Code 7.19-1. The bond shall be payable to the Board and in a

form approved by the Board. Gov’t Code 2253.021(a), (d)–(e)

For a contract in excess of $100,000, a performance bond shall

be executed in the amount of the contract conditioned on the

faithful performance of the work according to the plans,

specifications, and contract documents. The bond is solely for

the protection of the District. Gov’t Code 2253.021(b)

For a contract in excess of $25,000, a payment bond shall be

executed in the amount of the contract solely for the protection

and use of payment bond beneficiaries who have a direct

contractual relationship with the prime contractor or a

subcontractor to supply public work labor or material. Gov’t

Code 2253.021(c)

If the Board fails to obtain a payment bond covering a contract

in excess of $25,000 from the prime contractor, it is subject to

the same liability as a surety would be, and a payment bond

beneficiary is entitled to a lien on money due to the prime

contractor in the same manner and to the same extent as if the

contract were subject to Subchapter J, Chapter 53, Property

Code. Gov’t Code 2253.027

A payment or performance bond is not required and may not

pro-vide coverage for the design portion of the design-build

contract with the design-build firm. Gov’t Code 2269.311(a)

[See CVE for more information on design/build contracts,

including bond amounts]

The Board shall ensure that an insurance company that is

fulfilling its obligation under a contract of insurance by

arranging for the replacement of a loss, rather than by making

a cash payment directly to the governmental entity, furnishes

or has furnished by a contractor:

1. A performance bond for the benefit of the District, as

described above; and

2. A payment bond, as described above. If the payment bond is

not furnished, the District is subject to the same liability that

a surety would have if the surety had issued the payment

bond and the District had required the bond to be provided.

These bonds shall be furnished before the contractor begins

work. It is an implied obligation under a contract of insurance

for the insurance company to furnish these bonds.

66

EXCEPTION TO

BOND

REQUIREMENT

The requirement that the District secure a performance or

payment bond from an insurance company, above, does not

apply when a surety company is complying with an obligation

under a bond that had been issued for the benefit of the

District. Gov’t Code 2253.022

PREVAILING WAGE

ON PUBLIC WORKS

A worker, laborer, or mechanic employed on a public work,

exclusive of maintenance work, by or on behalf of the District

shall be paid not less than the general prevailing rate of per

diem wages. The general prevailing rate of per diem wages is

the rate of per diem wages for work of a similar character in

the locality in which the work is performed, and also includes

the rate of per diem wages for legal holiday and overtime

work. A worker is employed on a public work if the worker is

employed by a contractor or subcon-tractor in the execution of

a contract for public work with the Dis-trict. Gov’t Code

2258.001, .021

The Board shall determine, as a sum certain, the general

prevailing rate of per diem wages in the District for each craft

or type of worker needed to execute the contract and also for

legal holiday and overtime work. To ascertain the general

prevailing rate of per diem wages, the Board shall either

conduct a survey of the wages received by classes of workers,

laborers, and mechanics employed on projects of a character

similar to the contract work in the District or adopt the

prevailing wage rate as determined by the U.S. Department of

Labor. The Board shall specify the prevailing rate of per diem

wages in the call for bids and in the contract itself. The Board’s

determination of the general prevailing rates of per diem wages

shall be final. Gov’t Code 2258.001, .022

REQUIRED

WORKERS’

COMPENSATION

COVERAGE

When the District enters into a building or construction

contract on a project, it shall fulfill the following requirements

regarding required workers’ compensation coverages. A

project includes the provision of all services related to a

building or construction contract for the District. The District

shall:

1. Include in the bid specifications all the duties and

responsibilities of contractors pertaining to required

workers’ compensation coverages. [See CV(EXHIBIT)]

2. As part of the contract, using the language required by 28

Administrative Code 110.110(c)(7), require the contractor to

perform the duties and responsibilities pertaining to required

workers’ compensation coverages. [See CV(EXHIBIT)]

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EXCEPTION

3. Obtain from the contractor a certificate of coverage for each

person providing services on the project, prior to that

person’s beginning work on the project. This provision

includes all persons or entities performing all or part of the

services the contractor has undertaken to perform on the

project, regardless of whether that person contracts directly

with the contractor and regardless of whether that person

has employees. This includes, but is not limited to,

independent contractors, subcontractors, leasing companies,

motor carriers, owner operators, employees of any such

entity, or employees of any entity furnishing persons to

perform services on the contract. Services include, but are

not limited to, providing, hauling, or delivering equipment

or materials, or providing labor, transportation, or other

services related to a project. Services do not include

activities unrelated to the project, such as food/beverage

vendors, office supply deliveries, and delivery of portable

toilets.

4. Obtain from the contractor a new certificate of coverage

showing extension of coverage:

a. Before the end of the coverage period, if the contractor’s

current certificate shows that the coverage period ends

during the duration of the project; and

b. No later than seven days after the expiration of the

coverage for each other person providing services on the

project whose current certificate shows that the

coverage period ends during the duration of the project.

5. Retain certificates of coverage on file for the duration of the

project and for three years thereafter.

6. Provide a copy of the certificate of coverage to the Texas

Department of Insurance upon request and to any person

entitled to a copy by law.

7. Use the prescribed language for bid specifications and

contracts without any additional words or changes, except

those required to accommodate the specific document in

which they are contained or to impose stricter standards of

documentation. [See CV(EXHIBIT) for prescribed

language]

Labor Code 406.096; 28 TAC 110.110(a)(7)(8), (c)

This coverage requirement does not apply to sole proprietors

or partners of a covered business entity or corporate officers, if

the sole proprietor, partner or officer is explicitly excluded

from the coverage of their business entity through an

68

endorsement to the insurance policy or certificate of authority

to self-insure. Labor Code 406.097; 28 TAC 110.110(i)

CRIMINAL HISTORY For provisions pertaining to criminal history record

information on contractors, see CJA (LEGAL).

Garland ISD Board Policy CVB (Legal) Facilities Construction; Competitive Sealed Proposals

“Competitive sealed proposals” is a procurement method by

which the District requests proposals, ranks the offerors,

negotiates as prescribed, and then contracts with a general

contractor for the construction, rehabilitation, alteration, or

repair of a facility. Gov’t

Code 2269.151

If the District uses the competitive sealed proposals method as

described

in this policy, it must comply with applicable legal requirements

in this policy as well as other applicable legal requirements

[see CV(LEGAL)], which include the following steps:

1. SELECTING A CONTRACTING METHOD;

2. Giving PUBLIC NOTICE of the project;

3. Publishing CONTRACT SELECTION CRITERIA;

4. MAKING EVALUATIONS PUBLIC after the contract is

awarded; and

5. Providing for INSPECTION, VERIFICATION, AND

TESTING necessary for acceptance of the facility by the

District.

Education Code 44.031(g); Gov’t Code 2269.052, .055,

.056(a),

(c), .058

Note: Terms in all capital letters, above, point to margin notes

in the referenced policy.

REQUEST FOR

PROPOSALS

ARCHITECT/

ENGINEER

The District shall prepare a request for competitive sealed

proposals that includes construction documents, selection

criteria and the weighted value for each criterion, estimated

budget, project scope, estimated project completion date, and

other information that a contractor may require to respond to

the request. Gov’t Code 2269.153

The District shall select or designate an architect or engineer to

prepare construction documents for the project. Gov’t Code

2269.152 [See CV]

69

OPENING PROPOSALS The District shall receive, publicly open, and read aloud the

names of the offerors and any monetary proposals made by the

offerors. Not later than the 45th day after the date on which the

proposals are opened, the District shall evaluate and rank each

proposal submitted in relation to the published selection

criteria. Gov’t Code 2269.154

SELECTION The District shall select the offeror that submits the proposal

that offers the best value for the District based on the selection

criteria in the request for proposal and the weighted value for

those criteria in the request for proposal and on its ranking

evaluation. The District shall first attempt to negotiate a

contract with the selected offeror. The District and its architect

or engineer may discuss with the selected offeror options for a

scope or time modification and any price change associated

with the modification. If the District is unable to negotiate a

satisfactory contract with the selected offeror, the District

shall, formally and in writing, end negotiations with that

offeror and proceed to the next offeror in the order of the

selection ranking until a contract is reached or all proposals are

rejected. Gov’t Code 2269.155

70

Appendix Seven

Applicable Portions of Garland ISD Board Policy (Local)

Garland ISD Board Policy CAA (Local) Fiscal Management Goals and Objectives: Financial

Ethics, page Nos. 1 and 2

All Trustees, employees, vendors, contractors, agents,

consultants, volunteers, and any other parties who are involved

in the District’s financial transactions shall act with integrity

and diligence in duties involving the District’s fiscal resources.

FRAUD AND

FINANCIAL

IMPROPRIETY

The District prohibits fraud and financial impropriety, as

defined below, in the actions of its Trustees, employees,

vendors, contractors, agents, consultants, volunteers, and other

s seeking or maintaining a business relationship with the

District

DEFINITION Fraud and financial impropriety shall include but not be

limited to:

3. Misappropriation of funds, securities, supplies, or other

District assets, including employee time.

Garland ISD Board Policy CH (Local) Purchasing and Acquisition, page Nos. 1-4

PROCUREMENT GOAL In all procurement activities, agents of the Board shall:

1. Consider first the interest of the school system and the

betterment of its educational program.

2. Endeavor to obtain the greatest value for every tax dollar

expended.

3. Give all responsible bidders equal consideration and

assurance of unbiased judgment in determining whether

their product meets specifications and the educational

needs of the school system.

PURCHASING

AUTHORITY

The Board delegates to the Superintendent or purchasing

director the authority to make budgeted purchases for goods

or services.

However, any single, budgeted purchase of goods or services,

in

the aggregate, that costs $75,000 or more, regardless of

whether

the goods or services are competitively purchased, shall

require

Board approval before a transaction may take place.

EXCEPTIONS Renewal of contracts shall not require Board approval unless

material changes occur after the initial approval.

71


director authority to accept or reject all bids for the purchase

of food items.

A purchase utilizing an interlocal contract, or a cooperative or

state purchasing program approved by the Board, shall be

approved by the Superintendent or purchasing director.

PURCHASING

METHOD


director the authority to determine the method of

purchasing in accordance with CH(LEGAL).

PURCHASES VALUED

AT OR ABOVE $50,000

All District contracts and purchases of goods and services

except

contracts for the purchase of produce or vehicle fuel,

valued at

$50,000 or more in the aggregate for each 12-month

period, shall

be made by the method that provides the best value for the

District:

[See CH(LEGAL)]

1. Competitive bidding.

2. Competitive sealed proposals.

3. A request for proposals for services other than


4. A catalog purchase as provided by Government Code

Chapter

2157, Subchapter B.

5. An interlocal contract.

6. The reverse auction procedure as defined by

Government Code 2155.062(d).

7. The formation of a political subdivision corporation

under Local Government Code 304.001.

ELECTRONIC

TRANSMISSION AND

SUBMISSION OF

COMPETITIVE

SOLICITATIONS

The purchasing department may utilize Oracle iSourcing to

transmit and receive electronic solicitations. Solicitation is

defined as any bid, request for proposal, request for

competitive sealed proposal, request for quotation, or

reverse auction procedure. Suppliers and vendors shall

retain the ability to submit a hard copy if they choose to do

so.

COMPETITIVE

BIDDING

If competitive bidding is chosen as the purchasing method,

the Superintendent or purchasing director shall prepare bid

specifications. All bids shall be submitted in sealed

envelopes, plainly marked with the name of the bidder and

72

the time of opening. All bidders shall be invited to attend

the bid opening. Any bid may be withdrawn prior to the

scheduled time for opening. Bids received after the

specified time shall not be considered. The District may

reject any and all bids.

COMPETITIVE

SEALED

PROPOSALS

If competitive sealed proposals are chosen as the

purchasing method, the Superintendent or purchasing

director shall prepare the request for proposals and/or

specifications for items to be purchased. All proposals

shall be submitted in sealed envelopes, plainly marked

with the name of the proposer and the time of opening.

Proposals received after the specified time shall not be

considered. Proposals shall be opened at the time specified,

and all proposers shall be invited to attend the proposal

opening. Proposals may be withdrawn prior to the

scheduled time for opening. Changes to a responsive

proposal in the content of a proposal, and in prices, may be

negotiated after proposals are opened. The District may

reject any and all proposals.

UNSEALED

COMPETITIVE

PROPOSALS

A request for proposals may also be used as a procurement

option to generate an unsealed competitive proposal. In

this instance, the District may open the proposal upon

receipt and begin the negotiation process for the goods or

services. Results of such negotiations shall be made public

after the contract has been awarded.

PURCHASE

COMMITMENTS

All purchase commitments shall be made by the

Superintendent or purchasing director on a properly drawn

and issued purchase order, procurement card, or a check

request in accordance with administrative procedures

located in the Purchasing and Campus Accounting Manual.

HISTORICALLY

UNDER-UTILIZED

BUSINESS PROGRAM

IMPLEMENTATION

The Board supports a historically under-utilized business

program that ensures that the District will promote and

encourage the participation of minority-owned businesses,

women-owned businesses, and small businesses in the

purchasing of all goods and services, including all


The Superintendent and/or staff shall implement a business

program to ensure that small, women owned, and minority

businesses are informed of current and future purchasing

activities and that goals of this program are achieved.

73

DEFINITIONS

Nothing herein shall be construed to authorize or require

expenditure of funds for goods and services apart from

normal statutory purchasing processes.

For the purpose of this action plan:

“Small business” is defined as a concern that is

independently owned and operated and that is not

dominant in its field of operation. The business

employs fewer than 50 employees and/or has less than

$3 million in annual business volume from this local

operation.

“Minority business” is a business concern that is at

least 51 percent owned by one or more minority

individual(s) or, in the case of any publicly owned

business, at least 51 percent of the stock is owned by

one or more of the minority individual(s) and whose

management and daily business operations are

controlled by one or more of the minority individual(s)

who own it. “Minority individuals” means residents of

the United States who are members of the following

groups: African Americans, Hispanics, American

Indians, Asian Americans, Alaska natives, Pacific

Islanders, and other individuals found to be

economically and socially disadvantaged by the Small

Business Administration under section (a) of the Small

Business Act.

“Women business enterprise” means a business

concern that follows the same guidelines as a minority

business enterprise but that is owned by women.

“Certification.” Any business wishing to be identified

by the District as a small, women-owned, or minority

business shall be certified as such by either the state of

Texas or the North Central Texas Regional

Certification Agency.

Garland ISD Board Policy CE (Local) Annual Operating Budget, page No. 2

CONSTRUCTION

BUDGET

The Superintendent, assisted by the assistant superintendent for

business operations, in conjunction with central office

administrators and other staff members, shall prepare a tentative

construction schedule and a budget for the use of construction

funds. The preliminary schedule shall include proposed projects,

anticipated costs for each project, a schedule for soliciting bids

74

for each project, an anticipated completion date for each project,

and the approximate date for selling bonds with which to

finance those projects approved. The preliminary schedule shall

be submitted to both the facilities committee and the finance

and audit committee prior to presentation to the Board for

approval. [See CV series]

Garland ISD Board Policy CV (Local) Facilities Construction, page Nos. 1 and 2

CONSTRUCTION

CONTRACTS

Prior to advertising, the Board shall determine the project

delivery/ contract award method to be used for each

construction contract valued at or above $50,000. To assist the

Board, the Superintendent shall recommend the project

delivery/contract award method that he or she determines

provides the best value to the District. [See CV series]

For construction contracts valued at or above $75,000, the

Superintendent shall also submit the resulting contract to the

Board for approval. Lesser expenditures for construction and

construction related materials or services shall be at the

discretion of the Superintendent and consistent with law and

policy. [See also CH]

CHANGE ORDERS

CONSTRUCTION

CONTINGENCY

FUNDS

Change orders permitted by law shall be approved by the

Board or its designee prior to any changes being made in the

approved plans or the actual construction of the facility.

A change order may involve an extra amount of funds due to

the contractor, a credit due to the District, or a change requiring

no additional funds in the contractual agreement. Funding for

change orders shall be provided from a general contingency

fund that is approved for each project.

Construction contingency funds shall be provided for the

correction of design errors or omissions, the implementation of

minor functional changes, the initiation of changes that create a

betterment of the design, the rectification of concealed

conditions, and the adjustment of construction due to delays

caused by changes in the availability of materials due to

strikes, natural disasters, and the like.

Contingency funds are obligated through the issuance of

contract change orders. A contingency fund shall be

established for all capital projects. The contingency fund for

projects that include only new construction shall be two

percent of the final estimated project cost. On projects that

include substantial renovation of an existing building, the

75

CHANGE ORDER

PROCEDURES

amount of the contingency fund shall be based on the

complexity and extent of the renovation. When circumstances

dictate that a higher percentage of contingency will be

necessary for a project, the administration shall submit a

recommendation to the Board at the time the project is

submitted for final approval. Any increase of contingency

funds following the award of a construction project shall be

approved by the Board.

The following guidelines have been established by the Board for

the District to implement change orders:

1. In accordance with Board policy and approval of the

contingency fund for the project, the administration shall be

authorized to approve change orders and payments.

2. Change orders to initiate work covered by a specific purpose

allowance may be authorized by the administration.

3. Change orders of an emergency nature, where there is a

construction budget for such funds, shall be authorized by

the administration up to an amount required to eliminate

the emergency condition. The change orders of an

emergency nature shall be submitted to the Board for

ratification.

PROJECT

ADMINISTRATION

CONSTRUCTION

SUPERVISORY

RESPONSIBILITIES

PROJECT ON-SITE

REVIEWS

All construction projects shall be administered by the

Superintendent or designee.

The office of school facilities shall be responsible for

representing the District during the construction of all facilities.

The architect/engineer who designs a facility shall be

responsible for construction administration during the

construction and warranty period for that facility. A

representative of the office of school facilities shall act as the

architect’s/engineer’s point of contact for the District.

The architect/engineer shall be responsible for on-site reviews

of the work in progress to determine compliance with the

design in-tent and quality of construction in accordance with

the contract documents. The architect/engineer shall make

periodic visits to the site as required by the “Agreement

Between the Architect and the Garland Independent School

District” (latest revision).

The Superintendent shall keep the Board informed concerning

construction projects and shall also provide information to the

general public.

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FINAL PAYMENT The District shall not make final payments for construction or

the supervision of construction until the work has been

completed and the Board has accepted the work.

CONSTRUCTION

ALLOWANCES

Specific purpose allowances are funds designated in contract

specifications for special equipment, repairs, furnishings, and

the like that may not be finally determined at the time of the

contract signing. The estimated allowances shall become a part

of the bid by the contractor and shall be approved by the Board

when a contract is awarded. Any unused funds shall revert to

the District by an approved change order.

Garland ISD Board Policy CVB (Local) Facilities Construction Competitive Sealed Proposals

SPECIFICATIONS The Superintendent or designee shall prepare a request for

proposals for any construction project for which competitive

sealed proposals are sought.

PROCESS

WITHDRAWAL AND

LATE PROPOSALS

PROPOSAL

ACCEPTANCE

All proposals shall be submitted in sealed envelopes, plainly

marked with the name of the proposal and the time of the

deadline for submission. Proposals shall be opened at the time

specified. All offerors shall be invited to attend the proposal

opening. Changes in the content of a proposal, and in prices,

may be negotiated after proposals are opened.

Any proposal may be withdrawn prior to the scheduled time for

opening. Proposals received after the specified time shall not be

considered.

The District may reject any and all proposals.

SAFETY RECORD If the safety record of offerors is considered in selecting a

proposal, the record shall be defined as an offeror’s OSHA

(Occupational Safety and Health Administration) inspection logs

for the last three years, a loss analysis from the offeror’s

insurance carrier, and a loss history covering all lines of insurance

coverage carried by the offeror.

Garland ISD Board Policy CV (XHIBIT) (1) Required Workers’ Compensation Coverages

REQUIRED WORKERS’ COMPENSATION COVERAGES

28 TAC 110.110(c) (7), adopted to implement Texas Labor Code 406.096

The District shall use the following language for bid specifications and contracts for building

or construction, without any additional words or changes, except those required to

accommodate the specific document in which they are contained or to impose stricter

standards of documentation.

77

A copy of a certificate of insurance, a certificate of authority to self-insure issued by the Texas

Department of Insurance (TDI), or a coverage agreement (DWC-81, DWC-82, DWC-83, or

DWC-84), showing statutory workers’ compensation insurance coverage for the person’s or

entity’s employees providing services on a project is required for the duration of the project.

Duration of the project includes the time from the beginning of the work on the project until

the contractor’s/person’s work on the project has been completed and accepted by the

governmental entity.

Persons providing services on the project (“subcontractor” in Texas Labor Code 406.096)

include all persons or entities performing all or part of the services the contractor has

undertaken to perform on the project, regardless of whether that person contracted directly

with the contractor and regardless of whether that person has employees. This includes,

without limitation, independent contractors, subcontractors, leasing companies, motor carriers,

owner operators, employees of any such entity, or employees of any entity that furnishes

persons to provide services on the project.

Services include, without limitation, providing, hauling, or delivering equipment or materials,

or providing labor, transportation, or other service related to a project. Services do not include

activities unrelated to the project, such as food/beverage vendors, office supply deliveries, and

delivery of portable toilets.

The contractor shall provide coverage, based on proper reporting of classification codes and

payroll amounts and filing of any coverage agreements, which meets the statutory

requirements of Texas Labor Code 401.011(44) for all employees of the contractor providing

services on the project for the duration of the project.

The contractor must provide a certificate of coverage to the governmental entity prior to being

awarded the contract.

If the coverage period shown on the contractor’s current certificate of coverage ends during

the duration of the project, the contractor must, prior to the end of the coverage period, file a

new certificate of coverage with the governmental entity showing that coverage has been

extended.

The contractor shall obtain from each person providing services on a project, and provide to

the governmental entity:

1. A certificate of coverage, prior to that person beginning work on the project, so the

governmental entity will have on file certificates of coverage showing coverage for all

persons providing services on the project; and

2. No later than seven days after receipt by the contractor, a new certificate of coverage

showing extension of coverage, if the coverage period shown on the current certificate of

coverage ends during the duration of the project.

The contractor shall retain all required certificates of coverage for the duration of the project

and for one year thereafter.

The contractor shall notify the governmental entity in writing by certified mail or personal

delivery, within ten days after the contractor knew or should have known, of any change that

materially affects the provision of coverage of any person providing services on the project.

78

The contractor shall post on each project site a notice, in the text, form, and manner prescribed

by the TDI, informing all persons providing services on the project that they are required to be

covered, and stating how a person may verify coverage and report lack of coverage.

The contractor shall contractually require each person with whom it contracts to provide

services on a project, to:

1. Provide coverage, based on proper reporting of classification codes and payroll amounts

and filing of any coverage agreements, which meets the statutory requirements of Texas

Labor Code 01.011(44) for all of its employees providing services on the project for the

duration of the project;

2. Provide to the contractor, prior to that person beginning work on the project, a certificate of

coverage showing that coverage is being provided for all employees of the person

providing services on the project for the duration of the project;

3. Provide the contractor, prior to the end of the coverage period, a new certificate of coverage

showing extension of coverage, if the coverage period shown on the current certificate of

coverage ends during the duration of the project.

4. Obtain from each other person with whom it contracts, and provide to the contractor:

a. A certificate of coverage, prior to the other person beginning work on the project; and

b. A new certificate of coverage showing extension of coverage, prior to the end of the

coverage period, if the coverage period shown on the current certificate of coverage ends

during the duration of the project;

5. Retain all required certificates of coverage on file for the duration of the project and for one

year thereafter;

6. Notify the governmental entity in writing by certified mail or personal delivery, within ten

days after the person knew or should have known, of any change that materially affects the

provision of coverage of any person providing services on the project; and

7. Contractually require each person with whom it contracts to perform as required by items

1–6, with the certificates of coverage to be provided to the person for whom they are

providing services.

By signing this contract or providing or causing to be provided a certificate of coverage, the

contractor is representing to the governmental entity that all employees of the contractor who

will provide services on the project will be covered by workers’ compensation coverage for

the duration of the project, that the coverage will be based on proper reporting of classification

codes and payroll amounts, and that all coverage agreements will be filed with the appropriate

insurance carrier or, in the case of a self-insured, with the TDI’s Division of Self-Insurance

Regulation. Providing false or misleading information may subject the contractor to

administrative penalties, criminal penalties, civil penalties, or other civil actions.

The contractor’s failure to comply with any of these provisions is a breach of contract by the

contractor that entitles the governmental entity to declare the contract void if the contractor

does not remedy the breach within ten days after receipt of notice of breach from the

governmental entity.

The coverage requirement recited above does not apply to sole proprietors, partners, and

corporate officers who are excluded from coverage in an insurance policy or certificate of

authority to self-insure that is delivered, issued for delivery, or renewed on or after January 1,

1996. 28 TAC 110.110(i

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Appendix Eight

Applicable Portions of Jacobs Project Management Company Contract with the District

Agreement between Garland Independent School District and Jacobs Project Management

Co. as of January 27, 2015, page Nos. 9, 13, 17-19, and 22

Article IV: Program Manager Services

Part 1: Coordination, Scheduling, Budgeting, Planning

4.1 Program Wide Requirements:

4.1.1. Management Plan:

4.1.1.1. Program Manager will prepare a Management Plan establishing the

basis for sequencing of the assigned Projects.

4.1.1.2. The Plan will include evaluation of local market conditions, district

resources, schedule and budget constraints. It will take into account

and consider various delivery approaches and rationales, as well as

purchasing and packaging strategies.

4.1.1.3. A Provisional Master Schedule will be included defining the overall

duration of the Project from start to finish. The final Plan will be

submitted to District for approval.

4. I .2. Program Master Schedule:

4.1.2.1. Program Manager will assist in the development of a Program

Master Schedule as a part of the Management Plan. The Program

Master Schedule will contain key milestones to be accomplished by

the Project participants.

4.1.2.2. Once the Program Master Schedule is defined, a more comprehensive

List of Critical Dates will be prepared.

4.1 .3. List of Critical Dates:

4.1.3.1. Program Manager will develop based on the Program Master

Schedule a List of Critical Dates for the design phase.

4.1.3.2. This List of Critical Dates will indicate the various activities critical

for the success of the overall schedule, the last acceptable

completion date for each task, and the party responsible for

accomplishing the task.

4.1.3.3. This document will be the basis for Program Manager to monitor the

progress.

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4.5 Budgets:

4.5.1. Obtain from District all Project service, materials and property costs and

expenses not known directly by the Program Manager, such costs to

include, without limitation, District's personnel costs, work force account

labor and special consultants;

Item 4.10: Bidding / Procurement Procedures:

4.10.1 Develop and Expedite Bidding Procedures:

To the extent reasonably feasible, consistent with state and federal

law, District policy and procedures, Program Manager will assist in

developing and expediting bidding procedures for bid document

issuance, and receipt of proposals.

4.10.2 Generate Bidder Interest:

4.10.2.1 Program Manager will maintain contact with potential

bidders on a regular basis throughout the bid period,

including major subcontractors and suppliers as well as

General Contractors.

4.10.2.2 Program Manager will assist in preparing lists of possible

bidders for each bid package and assist District in

analyzing the information.

4.10.2.3 This activity shall entail the preparation and transmission

of questionnaires; receiving, and analyzing completed

questionnaires.

4.10.3 Bid Advertisements:

4.10.3.l Program Manager will assist District in preparing and

placing notices and advertisements to solicit bids on

assigned Projects.

4.10.3.2. Program Manager will provide a link off of the main

District web site to post bid information relating to

specific Project opportunities.

4.10.4 Expedite Bid Document Delivery:

4.10.4.1 Program Manager will assist District in coordinating and

expediting the delivery of bid documents to the bidders.

4.10.4.2 This task will be performed in conjunction with District

and A/E.

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4.10.5 Pre-Bid Conference(s):

4.10.5.1 In conjunction with District and the A/E, Program

Manager will conduct pre bid conference(s). These

conferences will be a forum for District, the Program

Manager, and A/E to present the Project requirements to

the bidders.

4.10.5.2 Program Manager will document and distribute

results of meeting to District.

4.10.5.3 A/E will issue required clarification in the form

of an Addendum.

4.10.6 Coordination And Inquiries:

4.10.6.1 Program Manager will coordinate communications

related to Bidder inquiries and seek resolution from the

appropriate party and timely forward such information to

A/E firms for inclusion in addenda.

4.10.6.2 Program Manager will review Addenda prior to

A/E's issuance to prospective bidders.

4.10.7 Bid Evaluation:

Upon receipt of bids, Program Manager will assist District in the

bid opening, evaluate the bids for completeness, full responsiveness

and price, including alternate prices and unit prices, and will make

a formal recommendation to District in regard to the award of a

contract.

4.10.8 Construction Contract Negotiations:

Program Manager will negotiate with the Contractor on behalf of

District when negotiation for added or deleted scope is necessary

prior to award of contract.

4.10.9 Construction Contract(s):

4.10.9.1 Program Manager will assist District in the preparation of

the construction contract(s).

4.10.9.2 Program Manager will also provide the Notice of

Conditional Award and Notice to proceed on behalf of

District to help assure a proper start of the construction.

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4.10.10 Pre-Construction Conference(s):

Program Manager will conduct, in conjunction with District and

the A/E, a pre-construction orientation conference(s) for the

benefit of the successful Contractor(s) and will serve to orient the

Contractor(s) to the various reporting procedures and site rules

prior to the commencement of actual construction.

4.10.11 Pre-Purchase Transfers:

In the event that materials or equipment have previously been

identified or purchased for the use by any contractor, Program

Manager will assist in the preparation for the transfer of this

equipment or materials concurrently with the bid/award of the

appropriate contract.

4.10.12 Bonds, Insurance, and Other Required Items:

Subsequent to the District's award of the Construction Contracts

obtain information/documents (as described in the Project

Manual) from the Construction Contractors necessary for

District's execution of the Construction Contracts and if such

information or documents are not available, the Program Manager

shall recommend the appropriate course of action to the District

with respect to any such Construction Contractors which cannot

provide the information/documents.

4.10.13 Permits. Fees. Agency and Code Reviews:

4.10.13.1 The PM will monitor the efforts of the A/E Firm(s) in

obtaining all required permits from the government

authorities having jurisdiction over the Project.

4.10.13.2 To that end, the PM may establish contacts with such

government agencies to facilitate the permitting

process, as needed.

4.10.13.3 The PM will verify payment of applicable fees and

assessments.

4.10.13.4 Assist the District, the appropriate Construction

Contractor, the appropriate Architect/Engineer or

consultant, in obtaining all applicable risk

management, code, and regulatory agency reviews and

approvals for the Project or any portion thereof

including, without limitation, the Texas Education

Agency, the Texas Department of Licensing and

Regulation, the City Fire Department, and Factory

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Mutual Engineering, a wholly owned subsidiary of the

Factory Mutual System;

4.10.13.5 Testing Laboratories:

Advise District of any tests to be performed, and assist District in

selecting testing laboratories and consultants, without assuming

direct responsibility for the work of such laboratories and

consultants.

Article V: Program Manager’s Services:

Part 2: Project Control, Construction

In implementation of the responsibilities and duties of the Program Manager herein, the

Program Manager will also provide, at a minimum, the following Project Management

services:

5.3 Cost Control, Accounting, and Reconciliation:

5.3.1. Cost Control: Develop and monitor an effective system of Project costs

control, and provide regular reports to the other members of the

Construction Team;

5.3.1.1. Identify variances between actual and budgeted or estimated costs

and advise the other members of the Construction Team whenever

projected costs exceed, or could be reasonably anticipated to

exceed, budgets or estimates;

5.3.1.2. Revise and refine the initially approved Project Budget with the

assistance of the other members of the Construction Team;

5.3.1.3. Present the revised Project Budget to the District for approval;

5.3.2. Accounting:

5.3.2.1. Maintain cost accounting records in good form on expenditures and

materials, or for any other expenditures requiring accounting

records; and

5.3.2.2. Afford the District access to these records and preserve them for a

period of four (4) years after final payment is made by the District

to the Program Manager at Program Manager's final completion.

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5.3.3. Reconciliation:

5.3.3.1. Program Manager will be responsible for reconciling their

respective Project expenditures to the District accounting and

financial system on a monthly basis.

5.3.3.2. Program Manager will be responsible for recommending in a

timely manner closing all Project purchase orders, or other District

internal fund commitments as soon as the Work is completed and

accepted, and all billings are received.

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Appendix Nine

Applicable Portions of Garland ISD CDAP Manual

Garland ISD Campus and Department Accounting Procedures (CDAP) Manual, June 30, 2015

Revision

Auditor’s note: We compared criteria from four revisions of the CDAP Manual in effect from

November 4, 2014, through September 2, 2015, and found no substantive differences.

Section 1: General Information, page No. 1 (pdf page No. 5)

1.2 Government Accounting Overview

Governmental accounting systems are organized and operated using funds segregated for

the purpose of carrying on specific activities or attaining certain objectives.

Government Funds must comply with State purchasing guidelines.

1.7 Record Retention, page No. 4 (pdf page No. 8)

All financial-related records should be kept current and in good order for a period of seven

years at which time they should be destroyed.

Section 9: Procurement Methods,

9.1 General Information, page No. 1 (pdf page No. 27)

All tangible items and services, except those excluded in Section 9.4, must be ordered

using a Purchase Order (PO) or a Purchasing Card (P-Card). Issuance of the Purchase

Order must precede the ordering of such goods and services. Ordering using any other

method is considered a violation of policy and may result in personal liability for the

purchase or non-reimbursement.

9.2 Purchase Orders, page Nos. 2, 3 (pdf page Nos. 28, 29)

The diagram below illustrates the Purchase Order process:

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The PO process begins when a requisition is submitted through Oracle iProcurement. The

following information should be noted while submitting a requisition:

• Provide a detailed description of product/service (even when a quote is present)

• $0.00 lines should not be entered when using Federal or Project funds. These items

should be added to the description of a value line using “to include at no additional

cost”

• The “Note to Buyer” section should be used to provide contract information and any

special instructions/notes

• Similar items with different prices must have different descriptions to prevent Oracle

from combining like-items

• Internal Requisitions require the “shopping cart method and will generate an Internal

Sales Order. See Section 9.3 for more information

• Changes (after submission) can be requested according to the following guidelines:

o Quantity changes for tangible items must be made within seven days of issuance

o Price changes for tangible items may be requested until the PO is closed

o Any changes for services may be requested until the PO is closed but must be

approved prior to delivery of service.

As information is entered, the system automatically creates an encumbrance which

reduces the available budget in the account codes being used. This encumbrance remains

until a matching invoice is input or the purchase order is finally closed.

Requisitions approvals are determined by the HR hierarchy and the nature of items being

ordered. Once approved at the initial campus/department level, requisitions are

automatically routed to the next level. The Purchasing Department has final approval of all

requisitions and will notify the submitter if one is not approved.

Once a requisition has been finally approved, a purchase order number is assigned and the

purchase order is sent directly to the supplier. Items/services ordered should be delivered

to the site indicated on the purchase order. If a site does not receive the order within a

reasonable time, the vendor should be contacted regarding the status of the purchase order

and shipment.

Within 24 hours of receiving items/services ordered, the requisition submitter must use

Oracle to mark the order as “received.” To avoid problems and/or financial penalties, the

following should be verified during the receiving process:

• Site – ensure all packages are addressed to the site which ordered them

• Number of Packages – ensure number of packages received agrees to packing slip

• Contents – match items received against those orders and check for any damages

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Only the items (and quantities) actually received should be indicated as such in Oracle. If

the order has issues (overages, damage, wrong products, etc.), contact the supplier to

coordinate return. Contact the Purchasing Department with any vendor shipment/return

issues.

Once a purchase order has been received on in Oracle and an invoice is received, the

Business Office matches the charges to the items received. At this point, the PO is closed,

the original encumbrance is released and an actual reduction in budgeted funds is created.

If there are no issues on the invoice (or once they are resolved), the supplier is paid

according to the payment terms of that supplier. Suppliers cannot be paid until the order

has been received in Oracle. Penalties assessed due to delayed Oracle receiving will be

charged to the account code using in making the purchase. NOTE: The Business Office

may require completion of an Invoice Discrepancy Explanation Form to reconcile

differences between invoices, receipts, and purchase orders.

Purchase orders for which either the items/services ordered and/or the related-invoice are

not received will be finally closed after 90 days of issuance. POs for construction,

furniture, live specimens, musical instruments, student agenda books, and certain services

may be kept open longer by request through the “Note to Buyer” field. Requests for

purchases that can be broken into smaller units over an extended period of time will be

rejected in favor of issuing multiple POs.

If a PO does not automatically close after 90 days – or – the remaining encumbrance is too

large to wait, follow the instructions below to request a purchase order be manually finally

closed:

1. Complete a “Request to Final Close Purchase Order(s)” form

2. Email completed form to Business Office Accounts Payable (AP) Manager for approval

3. Upon AP Manager approval, form will be forwarded to the Purchasing Department to

process the manual close

All questions or issues related to requisitions or purchase orders should be directed to the

purchasing department.

9.4 Payment Methods – External Suppliers, page No. 5 (pdf page No. 31):

Check Requests may be used to pay for the items/services listed below. Exceptions to

this list require advance approval of the Asst. Director of Finance.

• Field-trip payments • Scholarships

• On-site instructional programs 1 • Certifications/licenses

• Competition judges • Postage

• Accompanists • Courier services

• Refunds to parents/students • Building permits

• Donations • Physical exam/drug-testing fees

• Game officials (non-GISD employees) • Attorney fees

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• Facility deposits2 • Tuition reimbursements

• Hotel deposits2 • Insurance deductibles

• Conference registrations • Notary applications/renewals

• Memberships2 • Interpreters 1 On-site instructional programs include: magicians; puppeteers; jugglers; speakers/presenters 2 These items/services should be procured using a PO or P-Card when accepted by the

vendor

9.7 Appropriate Procurement/Payment Method Reference Guide, page No.7 (pdf page No.

33): To provide a practical reference for assisting principal/department heads in making decisions

regarding appropriate procurement/payment methods, the following contains guidance on the

most commonly questioned expenditures.

Description of Expenditure Purchase

Order

(PO)

P-Card Petty

Cash

Check

Request

Exp.

Reimb.

Most tangible items & services > $100 YES YES NO NO NO

Section 10: Purchasing Policies/Procedures

10.1 Purpose, page No. 1 (pdf page No. 34)

The Purchasing Department is responsible for designing and implementing a procurement

system to efficiently provide goods and services to meet the needs of schools and

departments and comply with state law and Board Policy. Contracts are established using

competitive solicitations based on historical spend data and are the cornerstone to

establishing a functional procurement system.

10.2 Authority to Obligate the District, page No. 1 (pdf page No. 34)

All purchase commitments shall be made on a properly drawn and issued purchase order,

procurement card, properly signed contract, or a check request in accordance with

administrative procedures located in Section 9.4 of this manual. Personnel are not

authorized to place orders verbally or utilize any other method to obligate the district.

10.3 Selecting Suppliers, page Nos. 1-2 (pdf page Nos. 34-35)

Not every supplier in the Oracle database is an approved supplier. An approved or

contracted supplier is defined as a company which has been awarded a contract in

compliance with the law. Approximately 350 contracts and 1,500 suppliers have been

approved through the use of competitive solicitations in accordance with local, state, and

federal statutes; local board policy; and best business practices. Most goods and services

required by the district can be obtained through one of the approved suppliers.

Each employee should ensure that one of the 1,200 approved/contracted suppliers cannot

provide a product or service which meets the intended purpose before submitting a

requisition to use a non-approved/contracted supplier.

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10.4 Purpose of Bid Process, page No. 3 (pdf page No. 36)

The purpose and intent of competitive bidding is to help Garland ISD secure the best work

and materials at the lowest practical prices by stimulating competition. Another reason for

competitive bidding: it's an open process which provides transparency in the public sector.

Finally, competitive bidding is mandated by law.

10.5 Bid Processing, page No. 3 (pdf page No. 36)

The Purchasing Department is responsible for developing and maintaining a bid calendar

for the year (contact Purchasing for a copy). Each buyer will contact the appropriate

department in sufficient time to review the old contract and permit modifications to the

new bid package. Communication within the following timelines will ensure the district

does not experience an interruption of service:

PROCESS # Business

Days Allotted (STANDARD

)

# Business Days Allotted (COMPLEX)

Specification Development/Document Prep School/Department 10 15 Buyer 6 9

Review of Bid Documents/Bid Process School/Department 10 10 Buyer 2 3 Assistant Director 2 3 Director 1 1 Preparation for Dissemination 2 3 Bid Advertisement Time (Supplier Response Time) 15 20 Prepare Bid Recap 2 5

Evaluation Phase Buyer 2 5 School/Department 10 15

Recommendation/Board Approval Process Buyer 2 3 Assistant Director 3 4 Director 1 1 School/Department-Sign Board Documents 2 2 Purchasing Secretary prep 1 1 Management Review 5 5 Board Approval 12 12 Revise Contract Documents 5 7

TOTAL NUMBER OF DAYS REQUIRED 93 124

TOTAL NUMBER OF MONTHS REQUIRED 4 6

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10.6 Bid/Specification Development, page No. 4 (pdf page No. 37)

Developing a well-defined specification is the key to producing a solicitation document

which meets the needs of the District and ensures the best goods or services are procured

at the best possible price. A properly prepared specification will clearly communicate the

requirements for the goods or services.

Avoid over- or under-specifying. Items should be able to perform as necessary without

frills. Requiring unnecessary features can result in specifications so restrictive they defeat

competition and increase the item’s cost. Remember that all purchasing activities are

subject to public and supplier scrutiny. The Purchasing Department will prepare the

specification document but will require input from the end-user to develop the documents.

The appropriate information is communicated to the Purchasing Department by

submitting a completed Specification Development/Bid Preparation Form.

10.6.1 Sources for Specification Development, page No. 4 (pdf page No. 37)

There are several sources available to assist in developing a specification. Listed below are

a few that can be used:

• Experience and knowledge of employees that will actually use the product to determine

the function and performance required of the good or service

• Internet: brochures, catalogs, and specifications

• Literature from professional organizations or trade journals

• Peers in other school districts

• Selected suppliers (as a last resort)

Suppliers are very knowledgeable and can be an excellent source of information regarding

products/services and may be contacted to transfer knowledge if other sources were not

available. However, the procedures must be followed to ensure the process is fair and

avoids favoritism.

DO:

1. Review the Purchasing Code of Ethics (Section 10.14)

2. Contact multiple suppliers

3. Inform the supplier you are gathering information to prepare a competitive solicitation

4. Focus only on requirements and performance

5. Notify purchasing personnel of all suppliers that were contacted

DO NOT:

1. Permit the supplier to write the requirements

2. Communicate with suppliers during the solicitation process (except as outlined in the

solicitation document)

3. Allow the salesperson to sell you on their product or service

10.7 Evaluation of Bids, page Nos. 4, 5 (pdf page Nos. 37, 38)

Each bid or proposal should be evaluated based on the requirements/specifications listed

in the solicitation package. State procurement laws mandate nine criteria that must be

evaluated for each competitive solicitation. End-users may recommend changes in point

values but should exercise care in reducing cost below 50 points for personal property

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purchases (goods). Service purchases are routinely reduced to less than 50 points in

consultation with Purchasing.

The table below identifies the criteria and examples of factors to consider for each.

Remember, a well written specification will ensure that only products meeting the needs

of the District enter the evaluation phase. A Buyer from the Purchasing Department will

assist campuses and departments in determining weights for each criteria and providing

the appropriate forms to complete.

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10.9 Sole Source, page No. 6 (pdf page No. 39)

The Purchasing Department is responsible for determining if a supplier qualifies as a sole

source provider. A letter from the supplier in itself is insufficient. The Purchasing

Department must be reasonably assured that competition is precluded because the supplier

is the exclusive supplier or provider of the item(s) or service(s) and that it holds the patent

or copyright, or that the product(s) or service(s) is/are the result of a secret process or

monopoly. Submit a completed Sole Source Determination Form to the Purchasing

Department if you believe a good or service qualifies as a sole source. Submission of the

form provides the necessary information to make a determination and should not be

construed as an approved purchase.

10.12 Receiving, page No. 7 (pdf page No. 40)

Items ordered with a Purchase Order will be delivered to the site from the Supplier. It is

imperative to mark items as received in Oracle within 24 hours of physical receipt.

Suppliers cannot be paid until the receiving activity has taken place. The district is

required by law to pay bills in a timely manner or incur financial penalties for the delay.

Penalties incurred will be charged to the budget code provided on the purchase order.

10.14 Purchasing Code of Ethics, page No. 8 (pdf page No. 41)

Consider first the interests of the Garland Independent School District and the

enhancement of its educational impact.

Endeavor to monitor obtaining the greatest value for every tax dollar expended in a

manner conducive to exemplary business practices and legal statutes.

Strive for thorough knowledge of approved suppliers and products in order to

requisition items that may reduce costs and/or increase the efficiency of the

educational program.

Give all responsible bidders equal consideration and the assurance of unbiased

judgment in determining whether their products meet the educational needs of the

District. Avoid communicating with potential bidders during the bid process unless

the communication is necessary to conduct routine business.

Prohibit and decline the offer of gifts or favors which might influence, or create the

appearance of influence, as regards the purchase of goods or services. This

prohibition is applicable to a public servant who exercises discretion in connection

with contracts, purchases, payments, claims, or other pecuniary transactions. State

law specifies any gift of cash or negotiable instruments as influence and all gifts with

a value in excess of $50 as influence. A Public Servant who solicits and/or accepts a

gift in execution of his/her job is guilty of a Class A Misdemeanor. (DBD Legal)

Employees/departments reporting to the Deputy Superintendent of Business are

prohibited from soliciting sponsorship or donations from suppliers without written

approval from the Deputy Superintendent of Business.

Please accord prompt and courteous reception to all individuals that represent

legitimate business transactions.

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Appendix Ten

Applicable Portions of TEA FASRG: Module Three. Purchasing Update 14

Texas Education Agency Financial Accountability System Resource Guide (TEA FASRG):

Module 3. Purchasing Update 14

3.1.1. Purchasing Policy, page Nos. 8 – 10

Accurate record-keeping and documentation should be a fundamental element of the

procurement process. Precise and systematic record-keeping and records management

withstands the constant scrutiny of various interest groups including vendors, the general

public, and outside agencies as well as internal groups which are the users or customers of

the purchasing system. This records management function should support the school

district's overall information management plan described in the Data Collection and

Reporting module and generally provide for:

• Both the flow and retention of forms including requisitions, purchase orders, petty cash

and cash reimbursement receipts.

• Full documentation of all competitive procurements with comprehensive competitive

procurement files containing specifications, competitive procurement advertisement,

pre-competitive procurement conference minutes (as appropriate), competitive

procurements submitted, competitive procurement tabulation, board minutes indicating

competitive procurement awards (or a similar award notice) and related records.

• Full documentation of procurement procedures utilized to obtain goods and services

through competitive sealed proposals, design/build contracts and other procurement

options.

• Documentation of price quotations if there are quotations obtained by school district staff

for local policy compliance.

Quality assurance and quality control should be reflected in all administrative procedures

and extend to areas such as analysis of products provided, review of services and review

of vendor performance. Specific areas of quality control may be grouped as:

• Administrative Control activities may include:

Independent review of account coding

Confirmation of availability of funds

Confirmation of utilization of approved vendors

Confirmation of legal compliance with bid, proposal and quotation requirements

• Vendor Performance Control activities may include:

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Review of compliance with contractual terms for prices

Analysis of timeliness and accuracy of product delivery

Responsiveness to problems

3.2.3. Competitive Procurement Options, page No. 25

Texas Education Code 44.031 (a) states that all contracts, except contracts for the purchase

of produce or vehicle fuel, valued at $50,000 or more in the aggregate, for each 12-month

period are to be made by the method that provides the best value to the district. The law

enumerates several options for competitive procurement that are available to school

districts. These options include:

• Competitive bidding

• Competitive sealed proposals

• Request for proposals, for services other than construction services

• lnterlocal contracts

• Design-build contracts

• Contract to construct, rehabilitate, alter, or repair facilities that involves using a

construction manager; or

• Job order contract for the minor construction, repair, rehabilitation, or alternation of a

facility

• The reverse auction procedure as defined by Section 2155.062(d), Government Code

• The formation of a political subdivision corporation under Section 304.001, Local

Government Code

This module will provide a general overview of these procurement options; however, for

more detailed information, districts should refer to the Handbook on Purchasing for Texas

Public

Schools, Junior Colleges and Community Colleges, which is included in this module as

Appendix 1.

3.2.3.1. Competitive Bids, page Nos. 25 – 27

Competitive bidding is a formal process that may also be referred to as competitive sealed

bidding, sealed bidding or formal bidding. It is an option available to school districts for

the procurement of goods and services. The purpose of competitive bidding is to stimulate

competition and obtain the lowest practical price for the work, service and/or item(s)

needed. The competitive bidding process requires that bids be evaluated and awards made

based solely upon bid specifications, terms and conditions contained in the request for bids

document, and according to the bid prices offered by vendors and pertinent factors that

may affect contract performance.

State law requires that the purchase, lease or lease-purchase of a school bus must be

competitively bid when the contract is valued at $20,000 or more (Texas Education Code

§44.031ill).

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HB 2411 passed by the 80th Legislature allows for competitive sealed proposals as an

alternate procurement method to competitive bidding for bank depository services.

The advertisement for bids, description in the request for bids of item(s), work and/or

services and specific terms and conditions must be done in a manner that stimulates

competition and obtains the lowest practical price. A request for bids contains the

following elements:

• Purchase description or specifications covering the item(s) to be obtained

• Work and/or services needed

• Terms and conditions for the proposed bid contract

• Time and place for opening bids and other provisions

The bid process itself should be structured and incorporated into school district purchasing

procedures. This process should involve:

• Development of clear specifications

• Advertising for competitive bids

• Responding to vendor questions

• Procedures for opening and tabulating the bids

• Analysis of the bids to ensure compliance with requirements

• Recommending the vendor(s) for bid award

• Award of the bid by the board

Competitive bidding is further defined and the specifications for bid documents and

newspaper advertisements as well as other terms and conditions pertinent to the

competitive bid process are found in the Handbook on Purchasing for Texas Public

Schools, Junior Colleges and Community

Colleges, which is included in this module as Appendix 1.

Because competitive bidding is one of the most complicated areas of purchasing, a

separate section of this module is devoted to this purchasing method.

3.2.3.2. Competitive Sealed Proposals/Request for Proposals, page Nos. 27-28

The competitive sealed proposal process is an alternative to competitive bidding. The

terms and conditions of competitive sealed proposals are identical to those for competitive

bidding except that an important difference between competitive sealed proposals and

competitive sealed bidding relates to the finality of initial offers. Under competitive sealed

proposals, changes in the nature of a proposal, and in prices, may be negotiated after

proposals are opened. In contrast, changes in the price of goods and services are not

negotiable in the competitive bidding process. The competitive sealed proposal process

provides for full competition among proposals and allows for negotiation with the

proposer or proposers to obtain the best services at the best price.

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Competitive proposal procedures are recommended where other procurement procedures

are not required according to state or federal rules, laws or regulations, in order to

stimulate competitive prices for services.

Competitive bidding is prohibited for certain types of professional services, including

engineering, architecture, accounting and certain other services (Chapter 2254

Government Code). However, Government Code §2254.004 does specify a two-step

proposal process for obtaining services from architects, engineers, and land surveyors.

A Request for Proposals (RFP) is a part of the competitive sealed proposal process. The

RFP is the mechanism that generates the receipt of competitive sealed proposals and

should contain several key elements:

• Determination by board of trustees that this method will provide the best value for

the district must be done first, if a construction contract

• Newspaper advertisement

• Notice to proposers

• Standard terms and conditions

• Special terms and conditions

• Scope of work

Scope and intent

Definitions and applicable documents

Requirements

Quality assurance

• Acknowledgment form/response sheet

• Felony conviction notice

• Contract clause

Note: A Request for Proposals may also be used as a procurement option to generate a

non-sealed competitive proposal, but only for services other than construction services. In

this instance, a school district may open the proposal upon receipt and begin the

negotiation process for the offered goods/ services.

3.5. Cooperative Purchasing, page Nos. 62-65

A progressive trend in district purchasing is cooperative purchasing (see Interlocal

Contracts). It involves one district participating with either other districts or governmental

entities to acquire goods and services. In Texas, cooperative purchasing agreements

currently exist between districts and:

• The Comptroller (previously the Texas Building and Procurement Commission or

General Service Commission)

• Education Service Centers

• Cities

• Counties/County Departments of Education

• Community College Districts

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• Certain nonprofit corporations

In some cases, a district may participate in multiple cooperative purchasing arrangements.

3.5.1. Cooperative Purchasing Benefits

Cooperative purchasing agreements are popular because they offer some advantages over

individual buying (see Interlocal Contracts). Benefits of cooperative purchasing may be

realized by districts of all sizes and can include:

• Cost savings on products or services. A cooperative purchasing arrangement can

increase the buying power of a single district with volume discounts.

• Savings on administrative costs. A cooperative arrangement can reduce

administrative costs relating to performing the purchasing function. Cost savings can

include major areas such as salaries and benefits, supplies, office equipment and

contracted services. A cooperative can result in the elimination of redundant costs

which may be associated with individual districts performing their own purchasing

functions. Although purchasing cooperatives may charge annual fees for overhead

costs, many districts can realize savings on both products and administration.

• Accessibility to more products and services. A cooperative may provide districts the

opportunity to buy a greater variety of products and services. The district chooses what

is best for its needs at lower costs.

3.5.2. Cooperative Purchasing Arrangements

Cooperative purchasing arrangements (see Interlocal Contracts) may be open-ended

allowing all who qualify to join. The Comptroller Cooperative Purchasing Program

(formerly the Texas Building and Procurement Commission or General Services

Commission cooperative purchasing program) is such a program. Others may be

selectively formed by two or more entities (i.e., an interlocal program).

The Cooperative Purchasing Program (State of Texas Co-op) provides for districts the

ability to purchase goods and services through the Comptroller (previously the Texas

Building and Procurement Commission). Procurement duties previously handled by the

Texas Building and Procurement Commission were transferred to the Comptroller

effective September 1, 2007. It extends state contract prices to districts and other

governmental entities. Under the Local Government Code 271.081-271.083 and V.T.C.A.

Section 2155.202 and 217 5. 001 ( 1) of the Texas Government Code, Title 10, Subtitle D,

a district can participate in this program after its board of trustees executes a resolution

certifying that it is an eligible participant and designating authorized administrative

personnel who will act on behalf of the district.

Interlocal purchasing cooperatives may consist of districts, counties, county education

departments, cities, educational service centers, community college districts, nonprofit

corporations created and operated to provide one or more governmental functions and

services to other local governmental entities. The size of the cooperative may vary as may

the variety of services and products offered. Some of these cooperatives have two

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members, while others have up to 100 members. A district may participate in multiple

cooperatives. District boards simply adopt resolutions authorizing participation. The

statutory authority is granted under Title 7, Chapter 791 of the Texas Government Code.

3.5.3.0perating Characteristics

The operating characteristics vary widely. In some cases the lead agency in the

cooperative having received and combined orders from participating districts, purchases in

bulk and stores purchases in a centralized warehouse. This lead agency then serves as the

member districts' principal "vendor" and distributes goods as they are ordered and

subsequently invoices the district. It may offer a catalog of centralized warehouse

merchandise. Distribution may be either direct delivery to the district or by pick-up at the

cooperatives' central warehouse. Other operating arrangements may allow each district to

order directly from approved vendors at bulk prices negotiated by the cooperative. A third

arrangement may have a lead agency serving as a warehousing site for other districts with

each district responsible for pick-up of goods and products.

Some areas to investigate about cooperatives being considered by districts are:

• Variety of products and services offered

• Cost of these products and services as compared with other cooperatives or the

district's individual ability to buy these products or services

• Timing and method of delivery

• Participation charges including administrative and operating costs

• Reputation for overall service delivery including problem resolution

• Administrative requirements placed on member districts including paperwork or

related Issues

3.5.4. Fee Disclosure

A district that enters into a purchasing contract valued at $25,000 or more under certain

cooperative purchasing contracts must document any contract-related fees, including

management fees, and the purpose of each fee. The amount, purpose, and disposition of

any fee must be presented in a written report annually as an agenda item in an open

meeting of the board of trustees. This written report may be audited by the commissioner.

This requirement applies only to a contract entered into on or after the effective date of

June 16,2007. (TEC 44.0331 added by HB 273, 80th Legislature)

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Appendix Eleven

Applicable Portions of Texas Statutes Education and Government Codes

Texas Statutes Education Code, Title 2. Public Education, Subtitle I. School Finance and Fiscal

Management, Chapter 44. Fiscal Management

Subchapter B. Purchases; Contracts, page Nos. 13 – 24

Sec. 44.031. PURCHASING CONTRACTS.

(a) Except as provided by this subchapter, all school district contracts for the purchase of

goods and services, except contracts for the purchase of produce or vehicle fuel, valued at

$50,000 or more in the aggregate for each 12 month period shall be made by the method,

of the following methods, that provides the best value for the district:

(1) competitive bidding for services other than construction services;

(2) competitive sealed proposals for services other than construction services;

(3) a request for proposals, for services other than construction services;

(4) an interlocal contract;

(5) a method provided by Chapter 2269, Government Code, for construction services;

(6) the reverse auction procedure as defined by Section 2155.062(d), Government

Code; or

(7) the formation of a political subdivision corporation under Section 304.001, Local

Government Code.

(b) Except as provided by this subchapter, in determining to whom to award a contract, the

district shall consider:

(1) the purchase price;

(2) the reputation of the vendor and of the vendor's goods or services;

(3) the quality of the vendor's goods or services;

(4) the extent to which the goods or services meet the district's needs;

(5) the vendor's past relationship with the district;

(6) the impact on the ability of the district to comply with laws and rules relating to

historically underutilized businesses;

(7) the total long-term cost to the district to acquire the vendor's goods or services;

(8) for a contract for goods and services, other than goods and services related to

telecommunications and information services, building construction and

maintenance, or instructional materials, whether the vendor or the vendor's

ultimate parent company or majority owner:

(A) has its principal place of business in this state;

or

(B) employs at least 500 persons in this state; and

(9) any other relevant factor specifically listed in the request for bids or proposals.

(b1) In awarding a contract by competitive sealed bid under this section, a school district

that has its central administrative office located in a municipality with a population of

less than 250,000 may consider a bidder's principal place of business in the manner

provided by Section 271.9051, Local Government Code. This subsection does not

apply to the purchase of telecommunications services or information services, as those

terms are defined by 47 U.S.C. Section 153.

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(c) The state auditor may audit purchases of goods or services by the district.

(d) The board of trustees of the district may adopt rules and procedures for the acquisition

of goods or services.

(e) To the extent of any conflict, this subchapter prevails over any other law relating to the

purchasing of goods and services except a law relating to contracting with historically

underutilized businesses.

(f) This section does not apply to a contract for professional services rendered, including

services of an architect, attorney, certified public accountant, engineer, or fiscal agent.

A school district may, at its option, contract for professional services rendered by a

financial consultant or a technology consultant in the manner provided by Section

2254.003, Government Code, in lieu of the methods provided by this section.

(g) Notice of the time by when and place where the bids or proposals, or the responses to a

request for qualifications, will be received and opened shall be published in the county

in which the district's central administrative office is located, once a week for at least

two weeks before the deadline for receiving bids, proposals, or responses to a request

for qualifications. If there is not a newspaper in that county, the advertising shall be

published in a newspaper in the county nearest the county seat of the county in which

the district's central administrative office is located. In a two-step procurement process,

the time and place where the second step bids, proposals, or responses will be received

are not required to be published separately.

(h) If school equipment, a school facility, or a portion of a school facility is destroyed,

severely damaged, or experiences a major unforeseen operational or structural failure,

and the board of trustees determines that the delay posed by the contract methods

required by this section would prevent or substantially impair the conduct of classes or

other essential school activities, then contracts for the replacement or repair of the

equipment, school facility, or portion of the school facility may be made by a method

other than the methods required by this section.

(h) If school equipment or a part of a school facility or personal property is destroyed or

severely damaged or, as a result of an unforeseen catastrophe or emergency, undergoes

major operational or structural failure, and the board of trustees determines that the

delay posed by the methods provided for in this section would prevent or substantially

impair the conduct of classes or other essential school activities, then contracts for the

replacement or repair of the equipment or the part of the school facility may be made

by methods other than those required by this section.

(i) A school district may acquire computers and computer related equipment, including

computer software, through the Department of Information Resources under contracts

entered into in accordance with Chapter 2054 or 2157, Government Code. Before

issuing an invitation for bids, the department shall consult with the agency concerning

the computer and computer related equipment needs of school districts. To the extent

possible the resulting contract shall provide for such needs.

(j) Without complying with Subsection (a), a school district may purchase an item that is

available from only one source, including:

(1) an item for which competition is precluded because of the existence of a patent,

copyright, secret process, or monopoly;

(2) a film, manuscript, or book;

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(3) a utility service, including electricity, gas, or water; and

(4) a captive replacement part or component for equipment.

(k) The exceptions provided by Subsection (j) do not apply to mainframe data processing

equipment and peripheral attachments with a single item purchase price in excess of

$15,000.

(l) Each contract proposed to be made by a school district for the purchase or lease of

one or more school buses, including a lease with an option to purchase, must be

submitted to competitive bidding when the contract is valued at $20,000 or more.

Sec. 44.0312. DELEGATION.

(a) The board of trustees of the district may, as appropriate, delegate its authority under

this subchapter regarding an action authorized or required by this subchapter to be

taken by a school district to a designated person, representative, or committee. In

procuring construction services, the district shall provide notice of the delegation and

the limits of the delegation in the request for bids, proposals, or qualifications or in an

addendum to the request. If the district fails to provide that notice, a ranking, selection,

or evaluation of bids, proposals, or qualifications for construction services other than

by the board of trustees in an open public meeting is advisory only.

(b) The board may not delegate the authority to act regarding an action authorized or

required by this subchapter to be taken by the board of trustees of a school district.

(c) Notwithstanding any other provision of this code, in the event of a catastrophe,

emergency, or natural disaster affecting a school district, the board of trustees of the

district may delegate to the superintendent or designated person the authority to

contract for the replacement, construction, or repair of school equipment or facilities

under this subchapter if emergency replacement, construction, or repair is necessary

for the health and safety of district students and staff.

Sec. 44.0313. PROCEDURES FOR ELECTRONIC BIDS OR PROPOSALS.

(a) A school district may receive bids or proposals under this chapter through electronic

transmission if the board of trustees of the school district adopts rules to ensure the

identification, security, and confidentiality of electronic bids or proposals and to

ensure that the electronic bids or proposals remain effectively unopened until the

proper time.

(b) Notwithstanding any other provision of this chapter, an electronic bid or proposal is

not required to be sealed. A provision of this chapter that applies to a sealed bid or

proposal applies to a bid or proposal received through electronic transmission in

accordance with the rules adopted under Subsection (a).

Sec. 44.0331. MANAGEMENT FEES UNDER CERTAIN COOPERATIVE

PURCHASING CONTRACTS.

(a) A school district that enters into a purchasing contract valued at $25,000 or more under

Section 44.031(a) (5), under Subchapter F, Chapter 271, Local Government Code, or

under any other cooperative purchasing program authorized for school districts by law

shall document any contract related fee, including any management fee, and the

purpose of each fee under the contract.

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(b) The amount, purpose, and disposition of any fee described by Subsection (a) must be

presented in a written report and submitted annually in an open meeting of the board of

trustees of the school district. The written report must appear as an agenda item.

(c) The commissioner may audit the written report described by Subsection (b).

Sec. 44.034. NOTIFICATION OF CRIMINAL HISTORY OF CONTRACTOR.

(a) A person or business entity that enters into a contract with a school district must give

advance notice to the district if the person or an owner or operator of the business

entity has been convicted of a felony. The notice must include a general description of

the conduct resulting in the conviction of a felony.

(b) A school district may terminate a contract with a person or business entity if the district

determines that the person or business entity failed to give notice as required by

Subsection (a) or misrepresented the conduct resulting in the conviction. The district

must compensate the person or business entity for services performed before the

termination of the contract.

(c) This section does not apply to a publicly held corporation.

Sec. 44.0351. COMPETITIVE BIDDING.

(a) Except to the extent prohibited by other law and to the extent consistent with this

subchapter, a school district may use competitive bidding to select a vendor as

authorized by Section 44.031(a)(1).

(b) Except as provided by this subsection, Subchapter B, Chapter 271, Local Government

Code, does not apply to a competitive bidding process under this subchapter. Sections

271.026, 271.027(a), and 271.0275, Local Government Code, apply to a competitive

bidding process under this subchapter.

(c) A school district shall award a competitively bid contract at the bid amount to the

bidder offering the best value for the district. In determining the best value for the

district, the district is not restricted to considering price alone but may consider any

other factors stated in the selection criteria. The selection criteria may include the

factors listed in Section 44.031(b).

Sec. 44.0352. COMPETITIVE SEALED PROPOSALS.

(a) In selecting a vendor through competitive sealed proposals as authorized by Section

44.031(a)(2), a school district shall follow the procedures prescribed by this section.

(b) The district shall prepare a request for competitive sealed proposals that includes

information that vendors may require to respond to the request. The district shall state

in the request for proposals the selection criteria that will be used in selecting the

successful offeror.

(c) The district shall receive, publicly open, and read aloud the names of the offerors and,

if any are required to be stated, all prices stated in each proposal. Not later than the 45th

day after the date on which the proposals are opened, the district shall evaluate and rank

each proposal submitted in relation to the published selection criteria.

(d) The district shall select the offeror that offers the best value for the district based on the

published selection criteria and on its ranking evaluation. The district shall first attempt

to negotiate a contract with the selected offeror. The district may discuss with the

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selected offeror options for a scope or time modification and any price change

associated with the modification. If the district is unable to negotiate a satisfactory

contract with the selected offeror, the district shall, formally and in writing, end

negotiations with that offeror and proceed to the next offeror in the order of the

selection ranking until a contract is reached or all proposals are rejected.

(e) In determining the best value for the district, the district is not restricted to considering

price alone but may consider any other factors stated in the selection criteria.

Texas Statutes Education Code, Title 2. Public Education, Subtitle I. School Finance and Fiscal

Management, Chapter 45. School District Funds

Subchapter A. Tax Bonds and Maintenance Taxes, page Nos. 1, 26

Sec. 45.001. BONDS AND BOND TAXES.

(a) The governing board of an independent school district, including the city council or

commission that has jurisdiction over a municipally controlled independent school district,

the governing board of a rural high school district, and the commissioners court of a

county, on behalf of each common school district under its jurisdiction, may:

(1) issue bonds for:

(A) the construction, acquisition, and equipment of school buildings in the district;

(B) the acquisition of property or the refinancing of property financed under a contract

entered under Subchapter A, Chapter 271, Local Government Code, regardless of

whether payment obligations under the contract are due in the current year or a

future year;

(C) the purchase of the necessary sites for school buildings; and

(D) the purchase of new school buses; and

(2) may levy, pledge, assess, and collect annual ad valorem taxes sufficient to pay the

principal of and interest on the bonds as or before the principal and interest become due,

subject to Section

45.003.

Sec. 45.084. CONTRACTS.

The district may execute contracts for constructing or equipping school buildings in the

district or for purchasing any necessary sites for school buildings in the manner provided

by law. If any contract recites that payments under the contract are to be made either from

the proceeds from the sale of real property under an installment sale agreement or any

similar method pursuant to this subchapter or from proceeds from the sale of bonds issued

pursuant to this subchapter, then the contract may be made payable in installments to

correspond with the receipt by the district either of proceeds under the sale agreement or

proceeds from the sale of any bonds to be issued and delivered in more than one issue,

series, or installment, and the contract is not a prohibited debt or indebtedness of the

district if the payments under the contract are required to be made solely from the

proceeds from the sale of real property or the bonds.

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Texas Statutes Government Code, Title 10. General Government, Subtitle D. State Purchasing

and General Services, Chapter 2161. Historically Underutilized Businesses

Subchapter A. General Provisions, page Nos. 1 and 2,

Sec. 2161.001. DEFINITIONS. In this chapter:

(1) "Goods" means supplies, materials, or equipment.

(2) "Historically underutilized business" means an entity with its principal place of

business in this state that is:

(A) a corporation formed for the purpose of making a profit in which 51 percent or

more of all classes of the shares of stock or other equitable securities are owned by

one or more economically disadvantaged persons who have a proportionate

interest and actively participate in the corporation's control, operation, and

management;

(B) a sole proprietorship created for the purpose of making a profit that is completely

owned, operated, and controlled by an economically disadvantaged person;

(C) a partnership formed for the purpose of making a profit in which 51 percent or

more of the assets and interest in the partnership are owned by one or more

economically disadvantaged persons who have a proportionate interest and

actively participate in the partnership's control, operation, and management;

(D) a joint venture in which each entity in the venture is a historically underutilized

business, as determined under another paragraph of this subdivision; or

(E) a supplier contract between a historically underutilized business as determined

under another paragraph of this subdivision and a prime contractor under which

the historically underutilized business is directly involved in the manufacture or

distribution of the goods or otherwise warehouses and ships the goods.

(3) "Economically disadvantaged person" means a person who:

(A) is economically disadvantaged because of the person's identification as a member

of a certain group, including:

(i) Black Americans;

(ii) Hispanic Americans;

(iii) women;

(iv) Asian Pacific Americans;

(v) Native Americans; and

(vi) veterans as defined by 38 U.S.C. Section

101(2) who have suffered at least a 20 percent service connected disability as

defined by 38 U.S.C. Section 101(16); and

(B) has suffered the effects of discriminatory practices or other similar insidious

circumstances over which the person has no control.

(4) "Contract" includes an arrangement under which a state agency receives professional or

investment brokerage services.

Subchapter B. General Powers and Duties of Commission, page Nos. 5 – 7

Sec. 2161.061. COMMISSION CERTIFICATION OF HISTORICALLY UNDERUTILIZED

BUSINESSES.

(a) The commission shall certify historically underutilized businesses.

(b) As one of its certification procedures, the commission may:

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(1) approve the certification program of one or more local governments or nonprofit

organizations in this state that certify historically underutilized businesses,

minority business enterprises, women's business enterprises, or disadvantaged

business enterprises under substantially the same definition, to the extent

applicable, used by Section 2161.001, if the local government or nonprofit

organization meets or exceeds the standards established by the commission; and

(2) certify a business that is certified by a local government or by a nonprofit

organization as a historically underutilized business under this chapter.

(c) To maximize the number of certified historically underutilized businesses, the

commission shall enter into agreements with local governments in this state that

conduct certification programs described by Subsection (b) and with nonprofit

organizations. The commission may terminate an agreement if a local government or

nonprofit organization fails to meet the standards established by the commission for

certifying historically underutilized businesses. The agreements must take effect

immediately and:

(1) allow for automatic certification of businesses certified by the local government or

nonprofit organization;

(2) provide for the efficient updating of the commission database containing

information about historically underutilized businesses and potential historically

underutilized businesses; and

(3) provide for a method by which the commission may efficiently communicate with

businesses certified by the local government or nonprofit organization and provide

those businesses with information about the state historically underutilized

business program.

(d) A local government or a nonprofit organization that certifies historically underutilized

businesses, minority business enterprises, women's business enterprises, or

disadvantaged business enterprises as described in Subsections (b) and (c) shall

complete the certification of an applicant or provide an applicant with written

justification of its certification denial within the period established by the commission

in its rules for certification activities.

(e) A local government or a nonprofit organization that certifies historically underutilized

businesses under Subsection (c) or that conducts a certification program described by and

approved under Subsection (b) shall make available to the public an online searchable

database containing information about historically underutilized businesses, minority

business enterprises, women's business enterprises, and disadvantaged business enterprises

certified by the local government or nonprofit organization, including:

(1) the name of the business;

(2) the contact person or owner of the business;

(3) the address and telephone number of the business;

(4) the type or category of business, including relevant capabilities of the business and the

North American Industry Classification System codes for the business; and

(5) the expiration date of the business's certification.

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Texas Statutes Government Code, Title 10. General Government, Subtitle F. State and

Local Contracts and Fund Management, Chapter 2254. Professional and Consulting

Services, Subchapter A. Professional Services

page No. 1: Sec. 2254.001. SHORT TITLE. This subchapter may be cited as the

Professional Services Procurement Act.

page Nos. 2 and 3: Sec. 2254.002. DEFINITIONS. In this subchapter:

(1) "Governmental entity" means:

(B) a district, authority, county, municipality, or other political subdivision of the state;

(C) a local government corporation or another entity created by or acting on behalf of

a political subdivision in the planning and design of a construction project;

(2) "Professional services" means services:

(A) within the scope of the practice, as defined by state law, of:

(i) accounting;

(ii) architecture;

(iii) landscape architecture;

(iv) land surveying;

(vii) professional engineering;

(viii) real estate appraising; or

(B) provided in connection with the professional employment or practice of a person

who is licensed or registered as:

(i) a certified public accountant;

(ii) an architect;

(iii) a landscape architect;

(iv) a land surveyor;

(vii) a professional engineer;

(viii) a state certified or state licensed real estate appraiser

page No. 2: Sec. 2254.003. SELECTION OF PROVIDER; FEES.

(a) A governmental entity may not select a provider of professional services or a group

or association of providers or award a contract for the services on the basis of

competitive bids submitted for the contract or for the services, but shall make the

selection and award:

(1) on the basis of demonstrated competence and qualifications to perform the

services; and

(2) for a fair and reasonable price.

(b) The professional fees under the contract may not exceed any maximum provided

by law.

page Nos. 2 and 3: Sec. 2254.0031. INDEMNIFICATION.

A state governmental entity may require a contractor selected under this subchapter to

indemnify or hold harmless the state from claims and liabilities resulting from the

negligent acts or omissions of the contractor or persons employed by the contractor. A

state governmental entity may not require a contractor to indemnify or hold harmless

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the state for claims or liabilities resulting from the negligent acts or omissions of the

state governmental entity or its employees.

page No. 3: Sec. 2254.004. CONTRACT FOR PROFESSIONAL SERVICES OF

ARCHITECT, ENGINEER, OR SURVEYOR.

(a) In procuring architectural, engineering, or land surveying services, a governmental

entity shall:

(1) first select the most highly qualified provider of those services on the basis of

demonstrated competence and qualifications; and

(2) then attempt to negotiate with that provider a contract at a fair and reasonable

price.

(b) If a satisfactory contract cannot be negotiated with the most highly qualified

provider of architectural, engineering, or land surveying services, the entity shall:

(1) formally end negotiations with that provider;

(2) select the next most highly qualified provider; and

(3) attempt to negotiate a contract with that provider at a fair and reasonable price.

(c) The entity shall continue the process described in Subsection (b) to select and

negotiate with providers until a contract is entered into.

page No. 3: Sec. 2254.005. VOID CONTRACT.

A contract entered into or an arrangement made in violation of this subchapter is void

as against public policy.

Texas Statutes Government Code, Title 10. General Government, Subtitle F. State and Local

Contracts and Fund Management, Chapter 2269. Contracting and Delivery procedures for

Construction Projects

Subchapter A. General Provisions

page No. 1: Sec. 2269.001. DEFINITIONS. In this chapter:

(1) "Architect" means an individual registered as an architect under Chapter 1051,

Occupations Code.

(2) "Engineer" means an individual licensed as an engineer under Chapter 1001,

Occupations Code.

(3) "Facility" means, unless otherwise specifically provided, an improvement to real

property.

(4) "General conditions" in the context of a contract for the construction, rehabilitation,

alteration, or repair of a facility means onsite management, administrative personnel,

insurance, bonds, equipment, utilities, and incidental work, including minor field labor

and materials.

(5) "General contractor" means a sole proprietorship, partnership, corporation, or other

legal entity that assumes the risk for constructing, rehabilitating, altering, or repairing

all or part of a facility at the contracted price.

(6) "Public work contract" means a contract for constructing, altering, or repairing a public

building or carrying out or completing any public work.

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page Nos. 2 and 3: Sec. 2269.002. APPLICABILITY OF CHAPTER TO

GOVERNMENTAL ENTITIES ENGAGED IN PUBLIC WORKS.

This chapter applies to a public work contract made by a governmental entity authorized

by state law to make a public work contract, including:

(1) a state agency as defined by Section 2151.002, including the Texas Facilities

Commission;

(2) a local government, including:

(A) a county;

(B) a municipality;

(C) a school district;

(D) any other special district or authority, including a hospital district, a defense base

development authority established under Chapter 379B, Local Government Code,

and a conservation and reclamation district, including a river authority or any other

type of water district; and

(E) any other political subdivision of this state;

(3) a public junior college as defined by Section 61.003, Education Code; and

(4) a board of trustees governed by Chapter 54, Transportation Code.

page Nos. 3 and 4: Sec. 2269.003. CONFLICT OF LAWS; REQUIREMENT TO

FOLLOW PROCEDURES OF THIS CHAPTER.

(a) Except as provided by this section, this chapter prevails over any other law relating to a

public work contract.

(b) This chapter does not prevail over a conflicting provision in a law relating to

contracting with a historically underutilized business.

(c) This chapter does not prevail over a conflicting provision in an ordinance or resolution

passed by the governing body of a municipally owned electric utility in a procedure

described by Section 252.022(c), Local Government Code, that:

(1) requires the use of competitive bidding or competitive sealed proposals; or

(2) prescribes a design build procurement procedure that conflicts with this chapter.

(d) This chapter does not prevail over any law, rule, or regulation relating to competitive

bidding or competitive sealed proposals for construction services, or to procurement of

construction services pursuant to Section 49.273, Water Code, that applies to a river

authority or to a conservation and reclamation district created under Section 59,

Article XVI, Texas Constitution, unless the governing body of the river authority or

conservation and reclamation district elects to permit this chapter to supersede the law,

rule, or regulation.

(e) This chapter does not prevail over a conflicting provision in a regulation that prescribes

procurement procedures for construction services that is adopted by the governing

board of a river authority or of a conservation and reclamation district created pursuant

to Section 59, Article XVI, Texas Constitution, that owns electric generation capacity

in excess of 2,500 megawatts, except with respect to Subchapter H.

Subchapter B. General Powers and Duties

page No. 6: Sec. 2269.051. RULES. A governmental entity may adopt rules as necessary

to implement this chapter.

109

page No. 6: Sec. 2269.052. NOTICE REQUIREMENTS.

(a) A governmental entity shall advertise or publish notice of requests for bids, proposals,

or qualifications in a manner prescribed by law.

(b) For a contract entered into by a governmental entity under a method provided by this

chapter, the governmental entity shall publish notice of the time and place the bid or

proposal or request for qualifications will be received and opened in a manner

prescribed by law.

page No. 8: Sec. 2269.053. DELEGATION OF AUTHORITY.

(a) The governing body of a governmental entity may delegate its authority under this

chapter regarding an action authorized or required by this chapter to a designated

representative, committee, or other person.

(b) The governmental entity shall provide notice of the delegation, the limits of the

delegation, and the name or title of each person designated under Subsection (a) by

rule or in the request for bids, proposals, or qualifications or in an addendum to the

request.

page Nos. 8 and 9: Sec. 2269.054. RIGHT TO WORK.

(a) This section applies to a governmental entity when the governmental entity is engaged

in:

(1) procuring goods or services under this chapter;

(2) awarding a contract under this chapter; or

(3) overseeing procurement or construction for a public work or public improvement

under this chapter.

(b) In engaging in an activity to which this section applies, a governmental entity:

(1) may not consider whether a person is a member of or has another relationship with

any organization; and

(2) shall ensure that its bid specifications and any subsequent contract or other

agreement do not deny or diminish the right of a person to work because of the

person's membership or other relationship status with respect to an organization.

page Nos. 8 and 9: Sec. 2269.055. CRITERIA TO CONSIDER.

(a) In determining the award of a contract under this chapter, the governmental entity may

consider:

(1) the price;

(2) the offeror's experience and reputation;

(3) the quality of the offeror's goods or services;

(4) the impact on the ability of the governmental entity to comply with rules relating to

historically underutilized businesses;

(5) the offeror's safety record;

(6) the offeror's proposed personnel;

(7) whether the offeror's financial capability is appropriate to the size and scope of the

project; and

110

(8) any other relevant factor specifically listed in the request for bids, proposals, or

qualifications.

(b) In determining the award of a contract under this chapter, the governmental entity

shall:

(1) consider and apply any existing laws, including any criteria, related to historically

underutilized businesses; and

(2) consider and apply any existing laws, rules, or applicable municipal charters,

including laws applicable to local governments, related to the use of women,

minority, small, or disadvantaged businesses.

page No. 9: Sec. 2269.056. USING METHOD OTHER THAN COMPETITIVE

BIDDING FOR CONSTRUCTION SERVICES; EVALUATION OF PROPOSALS;

CRITERIA.

(a) The governing body of a governmental entity that considers a construction contract

using a method authorized by this chapter other than competitive bidding must, before

advertising, determine which method provides the best value for the governmental

entity.

(b) The governmental entity shall base its selection among offerors on applicable criteria

listed for the particular method used. The governmental entity shall publish in the

request for proposals or qualifications the criteria that will be used to evaluate the

offerors, and the applicable weighted value for each criterion.

(c) The governmental entity shall document the basis of its selection and shall make the

evaluations public not later than the seventh day after the date the contract is awarded.

page No. 10:Sec. 2269.057. ARCHITECT OR ENGINEER SERVICES.

(a) An architect or engineer required to be selected or designated under this chapter has

full responsibility for complying with Chapter 1051 or 1001, Occupations Code, as

applicable.

(b) If the selected or designated architect or engineer is not a fulltime employee of the

governmental entity, the governmental entity shall select the architect or engineer on

the basis of demonstrated competence and qualifications as provided by Section

2254.004.

page No. 10: Sec. 2269.058. USE OF OTHER PROFESSIONAL SERVICES.

(a) Independently of the contractor, construction manager at risk, or design build firm, the

governmental entity shall provide or contract for the construction materials

engineering, testing, and inspection services and the verification testing services

necessary for acceptance of the facility by the governmental entity.

(b) The governmental entity shall select the services for which it contracts under this

section in accordance with Section 2254.004.

page No. 10: Sec. 2269.059. SEALED BIDS, PROPOSALS, OR QUALIFICATIONS

REQUIRED.

A person who submits a bid, proposal, or qualification to a governmental entity shall seal

it before delivery.

111

Subchapter C. Competitive Bidding Method

page Nos. 10 and 11: Sec. 2269.101. CONTRACTS FOR FACILITIES: COMPETITIVE

BIDDING.

(a) In this chapter, "competitive bidding" is a procurement method by which a

governmental entity contracts with a contractor for the construction, alteration,

rehabilitation, or repair of a facility by awarding the contract to the lowest responsible

bidder.

(b) Except as otherwise provided by this chapter or other law, a governmental entity may

contract for the construction, alteration, rehabilitation, or repair of a facility only after the

entity advertises for bids for the contract in a manner prescribed by law, receives

competitive bids, and awards the contract to the lowest responsible bidder.

page No. 11: Sec. 2269.102. USE OF ARCHITECT OR ENGINEER.

The governmental entity shall select or designate an architect or engineer in accordance

with Chapter 1051 or 1001, Occupations Code, as applicable, to prepare the construction

documents required for a project to be awarded by competitive bidding.

page No. 11: Sec. 2269.103. PREPARATION OF REQUEST.

The governmental entity shall prepare a request for competitive bids that includes

construction documents, estimated budget, project scope, estimated project completion

date, and other information that a contractor may require to submit a bid.

page No. 12: Sec. 2269.104. EVALUATION OF OFFERORS.

The governmental entity shall receive, publicly open, and read aloud the names of the

offerors and their bids.

page No. 12: Sec. 2269.105. SELECTION OF OFFEROR.

Not later than the seventh day after the date the contract is awarded, the governmental

entity shall document the basis of its selection and shall make the evaluations public.

Subchapter D. Competitive Sealed Proposal Method

page No. 13: Sec. 2269.151. CONTRACTS FOR FACILITIES: COMPETITIVE

SEALED PROPOSALS.

(a) In this chapter, "competitive sealed proposals" is a procurement method by which a

governmental entity requests proposals, ranks the offerors, negotiates as prescribed, and

then contracts with a general contractor for the construction, rehabilitation, alteration, or

repair of a facility.

(b) In selecting a contractor through competitive sealed proposals, a governmental entity

shall follow the procedures provided by this subchapter.

page No. 13: Sec. 2269.152. USE OF ARCHITECT OR ENGINEER.

The governmental entity shall select or designate an architect or engineer to prepare

construction documents for the project.

112

page No. 13: Sec. 2269.153. PREPARATION OF REQUEST.

The governmental entity shall prepare a request for competitive sealed proposals that

includes construction documents, selection criteria and the weighted value for each

criterion, estimated budget, project scope, estimated project completion date, and other

information that a contractor may require to respond to the request.

page No. 14: Sec. 2269.154. EVALUATION OF OFFERORS.

(a) The governmental entity shall receive, publicly open, and read aloud the names of the

offerors and any monetary proposals made by the offerors.

(b) Not later than the 45th day after the date on which the proposals are opened, the

governmental entity shall evaluate and rank each proposal submitted in relation to the

published selection criteria.

page No. 14: Sec. 2269.155. SELECTION OF OFFEROR.

(a) The governmental entity shall select the offeror that submits the proposal that offers the

best value for the governmental entity based on:

(1) the selection criteria in the request for proposal and the weighted value for those

criteria in the request for proposal; and

(2) its ranking evaluation.

(b) The governmental entity shall first attempt to negotiate a contract with the selected

offeror. The governmental entity and its architect or engineer may discuss with the

selected offeror options for a scope or time modification and any price change

associated with the modification.

(c) If the governmental entity is unable to negotiate a satisfactory contract with the

selected offeror, the governmental entity shall, formally and in writing, end

negotiations with that offeror and proceed to the next offeror in the order of the

selection ranking until a contract is reached or all proposals are rejected.

Subchapter E. Construction Manager-Agent Method

page No. 15: Sec. 2269.201. CONTRACTS FOR FACILITIES: CONSTRUCTION

MANAGER-AGENT.

(a) In this chapter, the "construction manager-agent method" is a delivery method by

which a governmental entity contracts with a construction manager-agent to provide

consultation or administrative services during the design and construction phase and to

manage multiple contracts with various construction prime contractors.

(b) A construction manager-agent is a sole proprietorship, partnership, corporation, or

other legal entity that serves as the agent for the governmental entity by providing

construction administration and management services described by Subsection (a) for

the construction, rehabilitation, alteration, or repair of a facility.

(c) A governmental entity may retain a construction manager-agent for assistance in the

construction, rehabilitation, alteration, or repair of a facility only as provided by this

subchapter.

113

page No. 15: Sec. 2269.202. CONTRACT PROVISIONS OF CONSTRUCTION

MANAGER-AGENT.

The contract between the governmental entity and the construction manager-agent may

require the construction manager-agent to provide:

(1) administrative personnel;

(2) equipment necessary to perform duties under this subchapter;

(3) onsite management; and

(4) other services specified in the contract.

Sec. 2269.203. LIMITS ON CONSTRUCTION MANAGER-AGENT.

A construction manager-agent may not:

(1) self-perform any aspect of the construction, rehabilitation, alteration, or repair of the

facility;

(2) be a party to a construction subcontract for the construction, rehabilitation, alteration,

or repair of the facility; or

(3) provide or be required to provide performance and payment bonds for the construction,

rehabilitation, alteration, or repair of the facility.

page No. 16: Sec. 2269.204. FIDUCIARY CAPACITY OF CONSTRUCTION

MANAGER-AGENT.

A construction manager-agent represents the governmental entity in a fiduciary capacity.

page Nos. 16 and 17: Sec. 2269.205. USE OF ARCHITECT OR ENGINEER.

(a) On or before the selection of a construction manager-agent, the governmental entity

shall select or designate an architect or engineer in accordance with Chapter 1051 or

1001, Occupations Code, as applicable, to prepare the construction documents for the

project.

(b) The governmental entity's architect or engineer may not serve, alone or in combination

with another person, as the construction manager-agent unless the architect or engineer

is hired to serve as the construction manager-agent under a separate or concurrent

selection process conducted in accordance with this subchapter. This subsection does

not prohibit the governmental entity's architect or engineer from providing customary

construction phase services under the architect's or engineer's original professional

service agreement in accordance with applicable licensing laws.

(c) To the extent that the construction manager-agent's services are defined as part of the

practice of architecture or engineering under Chapter 1051 or 1001, Occupations Code,

those services must be conducted by a person licensed under the applicable chapter.

page No. 17: Sec. 2269.206. SELECTION OF CONTRACTORS.

A governmental entity using the construction manager-agent method shall procure, in

accordance with applicable law and in any manner authorized by this chapter, a general

contractor or trade contractors who will serve as the prime contractor for their specific

portion of the work and provide performance and payment bonds to the governmental

entity in accordance with applicable laws.

114

page No. 17: Sec. 2269.207. SELECTION OF CONSTRUCTION MANAGER-AGENT.

A governmental entity shall select a construction manager-agent on the basis of

demonstrated competence and qualifications in the same manner that an architect or

engineer is selected under Section 2254.004.

page No. 18: Sec. 2269.208. INSURANCE.

A construction manager-agent selected under this subchapter shall maintain professional

liability or errors and omissions insurance in the amount of at least $1 million for each

occurrence.

115

Appendix Twelve

Applicable Portions of The State of Texas Comptroller of Public Accounts

State of Texas Cooperative Purchasing Manual

State of Texas Cooperative Purchasing Manual

I. Introduction, page No. 3

Created by legislation in 1979, the Texas Procurement and Support Services

Cooperative Purchasing Program (State of Texas CO-OP) provides the State of Texas

volume purchasing power to local governments and assistance organizations. Members

can purchase goods and services from state term contracts, TXMAS contracts, and

travel contracts. Using these services through the State of Texas CO-OP will meet your

competitive bidding requirements.

III. Purchasing Options, page No. 5

Purchasing Statutes

The State of Texas CO-OP offers several purchasing options to members.

Specific statutes governing CO-OP purchases from State contracts include:

1. Local Government Code, Section 271.083(4)(b) states:

A local government that purchases an item under a state contract satisfies any

state law requiring local governments to seek competitive bids for the purchase

of the item.

DATE:

TO:

FROM:

RE:

ctso Garland Independent School District

September 26, 2016

Steven Martin, CPA/CFF, CFE, CGMA, CIGI Director of l~t:Tal Audit

Linda Chan~vEd .D . Chief of Staff

Responses to Internal Audit Department's Performance Audit of the Bidding Process when Expending Bond Funds from November 4, 2014 to October 31, 2015

Thank you for the opportunity to respond to the issues noted in the audit report referenced above. While I am pleased with the audit results which showed "no findings with regard to the bidding process", I appreciate your audit pointing out some inconsistencies in current Board Policies and administrative procedures, which we have addressed as noted herein.

Although your audit references that administration "disregarded" CDAP procedures and Board Policy, we believe that the items identified in your audit, coupled with the administration's responses herein, are more properly classified as oversights or resulting from conflicts between current policies and procedures, rather than the more egregious "disregard" noted in your audit comments. Further, while your audit opines that the issues noted in the audit reflect negatively on the District's internal control, specifically regarding the control environment and it's "tone at the top", and we acknowledge that some oversights and errors may have occurred, we believe that the "tone at the top" and commitment to the district's internal control environment, as established by the GISD Board of Trustees and implemented by the district administration, comply with the requirements set forth in Appendix Three of the FASRG manual.

Please find attached the GISD administration's responses to the audit report referenced above. For your information, I have summarized these responses below, with additional documentation related to each audit finding included in the attached documents.

1. Finding One: Documents unavailable at Dallas Black Chamber of Commerce and Fort Worth Hispanic Chamber of Commerce

Documents for these two meetings were posted on Jacobs Project Management Company's website as well as the district bond website prior to each scheduled meeting. However, for further clarification and assistance, Jacobs has amended its procedures to include calling each organization to verify that the documents are available at any such scheduled meetings going forward.

Please see attached response from Joel Falcon (Exhibit II) for additional information.

dlpaltjo

Text Box

Appendix Thirteen

2. Finding Two: Suppliers' Criminal History certification and Certificates of Insurance (COl) coverage, including applicable Workers' Compensation coverage, were unavailable

The purchasing department acknowledges the finding regarding the missing documents and has updated current procedures to ensure these documents are maintained for all projects going forward.

Please see attached responses from Rene Barajas and Mark Booker (Exhibit I) for additional information.

3. Finding Three: Services ordered from non-contracted supplier

Services provided to the vendor in question, Alpha Testing, Inc., is considered a contract for professional engineering services pursuant to §2254.004 of the Texas Government Code. Accordingly, the District issued a Request for Qualification (RFQ) for engineering services utilizing RFQ #362, in which Alpha Testing was selected from several firms. Although using a RFQ is a best practice and is commonly used to develop a list of providers, the statute does not require issuance of a RFQ to select a professional service provider.

Please see attached responses from Rene Barajas and Mark Booker (Exhibit I) for additional information.

4. Finding Four: Purchase orders not issued for services totaling $811,312

This finding relates to a conflict between requirements set forth by Board Policy CH (Local) and the CDAP Manual.

Board Policy CH (Local) states that purchase commitments shall be made on a" .. . properly drawn and issued purchase order, procurement card or a check request in accordance with administrative procedures located in the Purchasing and Campus Accounting Manual."

The CDAP manual states " ... all tangible items and services, except those excluded in Section 9.4, must be ordered using a Purchase Order (PO) or a Purchasing Card (P-Card)."

As noted, Board Policy authorizes a purchase commitment to be made on a "check request", but additionally references procedures required in CDAP, which states that purchase orders are required for commitments, but it is unclear if this also includes payments made on a check request. Accordingly, the transactions cited by the auditor may represent a violation of CDAP, but do not represent a violation of Board Policy CH (Local) or the TEA Financial Accounting Systems Resource Guide (FASRG).

However, the administration will review noted conflicts between Board Policy and the CDAP manual and present to the Board of Trustees for consideration and approval as part of an effort to align guidance and oversight responsibility going forward.

Please see attached responses from Rene Barajas and David Pate (Exhibit I) for additional information.

5. Finding Five: Reconciliations of project expenditures to District accounting and financial system not performed per Jacobs Project Management Company's contract with the District

Once the initial budgets were established for the bond program projects upon inception, the District began providing financial information for verification as required by the Jacobs' contract.

District personnel in the Finance Department and Facilities and Maintenance Department reviewed this audit finding with Jacobs Project Management Company. A monthly review procedure has been established where the District provides financial information to Jacobs. Jacobs then compares this to its financial management system (Prolog) and identifies variances/ inconsistencies and develops a plan to address such items. Jacobs will continue to coordinate with the District on comparing the financial information provided by Oracle and the financial information provided by Jacobs' system, Prolog.

Please see attached responses from Rene Barajas and David Pate (Exhibit I) and Joel Falcon (Exhibit II) for additional information.

6. Observation: Bond Fund 681 not included as a potential source of funding in Administrative Recommendations for Board Approval

The listing of potential sources of funding is an administrative decision to give the Board of Trustees a general sense of which funding sources (e.g. general fund, federal funds, student activity funds) may be used to procure the goods or services being recommended for award by the District. There is no Board Policy or administrative guideline requiring all potential funding sources be listed.

Please see attached response from Rene Barajas (Exhibit I) for additional information.

Attachments (2)

cc: Dr. Bob Morrison Dr. Rene Barajas Dr. Doug Brubaker

EXHIBIT I

September 23, 2016

To: Linda Chance Chief of Staff

From: Rene Baraja~

Garla nd Independe nt School District Depuly Super inlendenl of Business

Street Address Harris Hill Adminislrolion Building

50 I S. Jupllcr RD Gorlond, TX

750~2

Pho ne 972-407.3100

FAX 972-•185·4922

Re: Finance and Purchasing Response to Internal Audit's Performance Audit of tlie Biddi119 Process wlien Expendi1rg Bond Fu11ds from Novemher 4, 2014 to Octoher 31, 2015

The response from the Purchasing and Finance departments to the Internal Audit report (the /(report") referenced above is listed in the table below as well in the attached memos. The response covers items included in the report's Synopsis, Details, Findings, and Observation sections and are listed in that order.

1 Section of Report

Synopsis

Page 1 of 4

Item

On page 5 of the report in the second paragraph of the Director of IA note a reference is made to /(TEA mandated encumbrance accounting" not being used.

Response

I No violation of TEA

. mandated encumbrance I

' accounting occurred 1 related to the transactions in the report.

. For further clarification I please see the attached memo from Mr. David Pate dated September 15,2016.

Diverse Community. Sl1orcd Vision. Exceplionol Educalion.

i Finding one· ·

Page2 of 4

On page 7 of the report in the Director of IA note, Rene Barajas is quoted as indicating "The

. District will use the ·. General Fund to replace

!Pads in three to four · · · • years which are now

being paid with bond funds:'

· · ·. Documents unavailable at Dallas Black Chamber of Commerce and Fort

· · · ... Worth Hispanic · · Chamber of Commerce

The quote should be qualified to indicate that it is the District's intent to use General Funds to replace the !Pads but that is not certain, That decision, in 2019 or 2020,

is left to the Board and whether the dollars are available for that purpose.

This finding is related to a contractual obligation by Jacobs Project Management Company. Neither Purchasing or Finance is responsible for contract adherence by Jacobs. Should Jacobs not adhere to the contract Purchasing should be notified by the department that does monitor Jacobs' adherence to the contract. Purchasing's role

. is to then make Jacobs ; aware of a potential breach of contract.

Finding Two

Finding Fol!r .·

Page3 of 4

· .. ·. Suppliers' Criminal ·. History certification and

.· Certificates of Insurance . • (COI) coverage, including

·· • · applicable Workers' · · Compensation coverage,

were unavailable

· · .. ··. • ·. Servic~s ordered from . · · · non-contracted supplier

· · ·.· .• Purchase Orders not issued for services

· .. totaling #811,312

The purchasing department acknowledges the finding regarding the missing documents. For further clarification regarding the required retention of expired certificates of insurance (cor) please see the attached memo from Mr. Mark Booker dated September 20, 2016.

Also please see Mr. Pate's response in his memo. . .... .. . ....... ----------------------------------The Purchasing Department has responded to this finding in the attached memo from Mr. Mark Booker.

Both Purchasing and Finance provide a response in their respective memos which are attached,

Observation

Reconciliations of project ·This finding is related to expenditures to District . a contractual obligation accounting and financial l by Jacobs Project

.. system not performed I Management Company. ·. per Jacobs Project I Neither Purchasing or , · Management Company's ! Finance is responsible for 1

contract with the i contract adherence by I ·. District. 'Jacobs. Please also see the I

! response by Finance in · : Mr. Pate's memo .

. . Bond Fund 681 not ... IThelisting of p~te~tial . · ·. · . •.•• .· .. ·• included as a potential I sources of funding is an

•,·. · ... · .. source of funding in j administrative decision · · · · Administrative i to give the Board of I . .. . · Recommendations for l Trustees a general sense ! · • · · ·.· Board Approval i of which funding sources !

I (e.g., General Fund, 1 federal funds, student 1 activity funds) may be

! used to procure the i goods or services being ' recommended for award by the District. There is no Board policy or administrative guideline requiring all potential funding sources be listed.

Both the Purchase and Finance departments appreciate the report's assistance in helping to strengthen internal controls and to keep administrative documents, such as the CDAP, relevant to normal business operations.

The issues brought up in the report, in my assessment, are procedural in nature and do not indicate a glaring lack of internal controls. My read of the report indicates no potential for fraud or malfeasance by any employee. Procedures were not followed and those issues will be remedied.

Page4 of 4

Internal Audit’s comments to Chief Financial Officer (CFO) Rene Barajas’ Response Dr. Barajas refers to a table in his report as well as to supporting memorandum from Director of Finance (DoF) David Pate, Director of Purchasing (DoP) Mark Booker, and Executive Director of Facilities and Maintenance (EDFM) Joel E. Falcon. Synopsis The CFO in his response references the Director of Finance’s memorandum in stating that no violation of TEA mandated encumbrance accounting occurred related to the transactions in the report. As can be seen in IA’s comments to the DoF’s memorandum inserted behind it, IA stands by its assertion that the District violated TEA mandated encumbrance accounting.

The DoF’s position is that TEA only requires encumbrance accounting for budgeted funds, and because a budget is not required for the Capital Projects Fund, then encumbrance accounting is not required for it. However, the Board appropriated funds in a budget for the Capital Projects Fund, as described in the District’s last two financial statements. Because the Capital Projects Fund has a budget, and TEA mandates encumbrance accounting for budgeted funds, encumbrance accounting is therefore mandated for the Capital Projects Fund.

Because the administration paid $811,312 in check requests instead of Purchase Orders for bond fund 681 expenditures, it violated the TEA’s mandated use of encumbrance accounting for budgeted funds. Check requests create encumbrances but only as the checks are written, in effect nullifying the usefulness of any encumbrance. Purchase Orders written before goods are ordered or services received set aside funds to ensure payment when the bill comes due. The use of check requests does not do this and, in fact, bypasses the internal control provided by the Purchasing Department.

Details The CFO corrects a quote. IA will not dispute this. The CFO states, “It is the District’s intent to use General Funds to replace the iPads but that is not certain.” The original report stated that the District will use General Funds. Finding One The CFO does not disagree with Finding One. Finding Two The CFO does not disagree with Finding Two. Finding Three The CFO, in referring to the memorandum provided by the DoP, does not disagree with Finding Three. The DoP stated, “Although Alpha Testing was not issued an award on subsequent RFQ# 362-01-15 which was approved on December 9, 2014; the firm was used for selected projects based on demonstrated competence.” The DoP also stated, “Check request (sic) were issued because the ranking form, which is used to document the most highly qualified provider was not provided to the Purchasing Department.”

Finding Four The CFO refers to memorandums provided by the DoF and DoP. Finding Five The CFO does not disagree with Finding Five, stating, “Neither Purchasing or Finance is responsible for the contract adherence by Jacobs.”

September 15, 2016

To: Rene Barajas, Ph.D., RTSBA Chief Financial Officer

From: David Pate, CPA, RTSBA ._fj(S. r Director of Finance

Re: Response to Independent Auditor's Report: Performance Audit of the Bidding Process when Expending Bond Funds from November 4, 2014 to October 31, 2015

I have reviewed the Internal Auditor's report Performance Audit of the Bidding Process when Expending Bond Funds from November4, 2014 to October31, 2015 dated July 26, 2016. The report provides valuable feedback on the usefulness of the Campus/Department Accounting Procedures Manual and the status of internal controls. The findings do not indicate a pervasive lack of internal controls or a heightened risk of fraud. My responses to the findings and assertions in the report are:

ISSUE

Page 5 of Performance Audit of the Bidding Process when Expending Bond Funds from November 4, 2014 to October 31, 2015 (lA Report) states "Additionally, by bypassing the use of purchase orders, TEA mandated encumbrance accounting was not used."

RESPONSE

The Texas Education Agency's Financial Accounting Systems Resource Guide (FASRG) Module 1 Financial Accounting and Reporting Section 1.1.3 Accounting Principles and Policies page 14 states "The official school district budget, as adopted, shall be recorded in the general ledger." Only the General Fund, Debt Service Fund and Food Service Fund must be included in the official school district budget." "To control budgeted fund commitments as a result of unperformed executory contracts for goods or Services, the accounting system shall employ a method of encumbrance accounting. Encumbrances shall be documented by contracts, purchase orders, or other evidence showing binding commitments for goods or services."

FASRG Module 3 Purchasing does not require a purchase order to be used for the procurement of all goods and services in a school district.

The District's Oracle system utilizes encumbrance accounting in all funds. As stated above, the requirement to utilize encumbrance accounting applies to budgeted funds. The Capital Projects Fund is not required to have an official budget. A budget is loaded in the Oracle Projects Module to assist management with monitoring the fund. Additionally, encumbrances may be documented by sources other than a purchase order, such as a contract. The lA Report referenced $811,312 that did not have a purchase order, only $70,000 was from a vendor that did not have a contract. No violation of TEA mandated encumbrance accounting has occurred related to the transactions in the lA Report.

Expenditures of $17,412,709 were made during the audit period. The lA Report does not clearly state the sample size, which makes it difficult to relate the issue to the entire population.

The District has the following options:

Enforce Board policies and the Campus/Department Accounting Procedures Manual (CDAP) as written.

Amend Board policy CH (Local) to include expense report in addition to purchase order, procurement card, or a check request.

Amend Section 9 of the CDAP so as not to be more restrictive than the FASRG. Additionally guidance could be added to address other situations that should not utilize a purchase order including but not limited to, utilities, refunds, debt issuance and repayment transactions, and legal settlements.

FINDING TWO

Supplier' Criminal History certification and Certificates of Insurance (COl) coverage, including applicable Workers' Compensation coverage, were unavailable

2

RESPONSE

The statement in CDAP Section 1.7 "All financial records" was never intended to be more restrictive than the Texas State Records Retention Schedule.


Enforce the CDAP as written.

Revise the first sentence of CDAP Section 1.7 to: All records should be kept current and in good order as required by the Texas State Records Retention Schedule.

FINDING FOUR

Purchase orders not issued for services totaling $811,312

RESPONSE

Transactions represent a violation of the CDAP. They do not represent violation of Board policy or the FASRG.

Expenditures of $17,412,709 were made during the audit period. The lA Report does not clearly state the sample size, which makes it difficult to relate the issue to the entire population.


Enforce the CDAP as written.

Amend Section 9 of the CDAP so as not to be more restrictive than the FASRG. Additionally guidance could be added to address other situations that should not utilize a purchase order including but not limited to, utilities, refunds, debt issuance and repayment transactions, and legal settlements.

FINDING FIVE

Reconciliations of project expenditures to District accounting and financial system not performed per Jacobs Project Management Company's contract with the District

3

RESPONSE

Management of the contract with Jacobs is not the responsibility of the Finance Department. As requested, in April 2016, I began sending Jacobs personnel a report of the life to date expenditure of bond funds by project number for use in their reconciliation.

Prior to that date numerous meetings were held with District and Jacobs personnel to ensure that the appropriate level of detail was being tracked in Oracle and the system utilized by Jacobs. Jacobs personnel do not enter any data into Oracle.

4

Internal Audit’s comments to Director of Finance’s (DoF) Response Response (Regarding encumbrance accounting and the Capital Projects Fund) The DoF correctly states, “the requirement to utilize encumbrance accounting applies to budgeted funds.” The DoF then also correctly states, “The Capital Projects Fund is not required to have an official budget.” However, the District’s Capital Projects Fund has a budget even though one is not required. As stated under Note 1, Summary of Significant Accounting Policies, page 28, of the District’s Year-Ended August 31, 2015 and 2014, financial statements, under Official Budget, “The District is required by state law to adopt annual budgets for the General Fund, Debt Service Fund, and the Student Nutrition Services Fund (included within the Special Revenue Fund). The remaining Special Revenue Funds and Capital Projects Fund adopt project–length budgets that do not correspond to the District’s fiscal year. Each budget is presented on the modified accrual basis of accounting, which is consistent with generally accepted accounting principles.” Because the District has a Capital Projects Fund budget, and encumbrance accounting is mandated for budgeted funds, the District is required to use encumbrance accounting for it. The DoF included in his response, “The Texas Education Agency's Financial Accounting Systems Resource Guide (FASRG) Module 1 Financial Accounting and Reporting Section 1.1.3 Accounting Principles and Policies page 14 states, "The official school district budget, as adopted, shall be recorded in the general ledger." Only the General Fund, Debt Service Fund and Food Service Fund must be included in the official school district budget." "To control budgeted fund commitments as a result of unperformed executory contracts for goods or services, the accounting system shall employ a method of encumbrance accounting. Encumbrances shall be documented by contracts, purchase orders, or other evidence showing binding commitments for goods or services." Once the Board appropriated Capital Project Fund expenditures by approving a Capital Project Fund budget, the administration is mandated, “To control budgeted fund commitments…shall employ a method of encumbrance accounting. Additionally, the DoF did not include section 1.1.6, Encumbrance Accounting, which states, “Budgets are the legal authority for expenditures. To exercise this authority, the administrator must have accurate up-to-date information on the status of the budget balances at all times. Knowing how much money has been spent to date is generally not sufficient. The amount committed must also be known to avoid over expenditure of budgeted funds. An encumbrance accounting system is a method of ascertaining the availability of funds and then reserving funds to cover outstanding obligations. Encumbrances represent commitments related to contracts not yet performed (executory contracts), and are used to control expenditures for the year and to enhance cash management. A school district often issues purchase orders or signs contracts for the purchase of goods and services to be received in the future. At the time these commitments are made, which in its simplest form means that when a purchase order is prepared, the appropriate account is checked for available funds. If an adequate balance exists, the amount of the order is immediately charged to the account to reduce the available balance for control purposes.

The encumbrance account does not represent an expenditure for the period, only a commitment to expend resources. Likewise, the account reserve for encumbrances is not synonymous with a liability account since the liability is recognized only when goods are received or the services are actually performed. When the invoice comes in and is approved, the budgetary accounts are eliminated and the actual expenditure and related liability are recorded. Any difference between the encumbrance and the expenditure is reflected as an adjustment to the remaining encumbrance balance. The original encumbrance entry is based on the estimated costs of goods and services and may, as illustrated above, differ from the eventual cost of the item.” Board approved budgets are loaded into Oracle at the start of each fiscal year. Oracle tracks the amount spent per category and the amount yet to be spent. As stated in the FASRG, “Budgets are the legal authority for expenditures,” however, “Knowing how much money has been spent to date is generally not sufficient. The amount committed must also be known to avoid over expenditure of budgeted funds. An encumbrance accounting system is a method of ascertaining the availability of funds and then reserving funds to cover outstanding obligations.” Once the Board approved the Capital Projects budget, even though on a project and not a fiscal year basis, the administration is directed by the FASRG to use encumbrance accounting with regard to Capital Projects expenditures. Furthermore, also included under Note 1, Encumbrances, is stated, “Encumbrance accounting, which is used in all government fund types, utilizes purchase orders, contracts, and other commitments to reserve the applicable appropriation. Under Texas law, appropriations, including those in the Capital Projects Fund, lapse at August 31 and encumbrances outstanding at that time are to be either canceled or appropriately provided for in the subsequent fiscal year’s budget to provide for the liquidation of the prior commitments.” The Capital Projects Fund is a government fund. Accordingly, the administration stated to TEA, constituents, and bond holders that encumbrance accounting is used, including “purchase orders, contracts, and other commitments to reserve the applicable appropriation.” However, for $811,312 in Capital Project Fund expenditures, check requests were used, not Purchase Orders, and accordingly encumbrance accounting was not used. Additionally, Governmental Accounting Standards Board, Governmental Accounting and Financial Reporting Standards, volume 1, section 1700.127 a., states, “Encumbrance accounting should be used to the extent necessary to assure effective budgetary control and accountability and to facilitate effective cash planning and control.” GASBS 54, from which this section is codified, defines “should be used” as “required,” GASBS 54 pdf page 61. (Regarding the use of Purchase Orders) The DoF then states, “FASRG Module 3 Purchasing does not require a purchase order to be used for the procurement of all goods and services in a school district.” The DoF is correct. The other

two payment mechanisms mentioned are petty cash and purchase cards (debit cards). The

FASRG Module 3 does not mention the use of check requests.

(Regarding recording encumbrances by contracts)

The DoF states, “Additionally, encumbrances may be documented by sources other than a

purchase order, such as a contract.” This is correct but the DoF does not state nor provide

supporting documents that this was done.

(Regarding sample size)

The DoF states, “The IA Report does not clearly state the sample size, which makes it difficult to

relate the issue to the entire population.” However, the report states on page one, “IA reviewed

five sources of data, including Bond Fund 681 purchases, to capture bids under Bond Fund 681.

Both bids entirely and partially funded by bond funds were reviewed.” IA went to great lengths

to identify all expenditures paid from Bond Fund 681 during the audit period. There was no

sampling. Expenditures in which questions arose were also reviewed.

(Regarding corrections)

The DoF offers three options for the District to correct the use of check requests.

Finding Two

The DoF offers two corrections.

Finding Four

The DoF repeats his position as described above in his “Response” section.

Finding Five

The DoF does not dispute Finding Five stating, “Management of the contract with Jacobs is not

the responsibility of the Finance Department.”

DATE: September 20,2016

TO: Dr. Rene Barajas, Chief Financial Officer

FROM: Mark A. Booker

Director of Purchasing

SUBJECT: Purchasing Department Response to Internal Audit of Bond Expel)ditures

On September 8, 2016, the purchasing department received a draft copy of "Performance Audit of the Bidding Process when Expending Bond Funds from November 4, 2014 to October 31, 2015" which

included five findings. In accordance with CFC Local, the purchasing department is providing an

administrative response of corrective action taken for Finding Two: Suppliers, Criminal History

certification and Certificates oflnsurance (COl) coverage, including applicable Workers'

Compensation coverage, were available. General9bservations and comments are provided for

Findings three and four. The purchasing department does not believe the findings represent a system

problem, but recognize the need to improve our processes as identified below.

Finding

Missing Criminal

History Cettification

for Dallas County

Schools DBA

Texserve

Missing Insurance

Certificates for Six

Suppliers

Phone: 972-487-3009 Street Address: 501 South jupiter Road Garland, Texas 75042

Corrective Action

Reinforce with GISD buyers of the impmtance of following the

contract process sheet to ensure Blanket Purchase Agreements BPA's,

Contract Purchase Agreements (CPA's), and purchase orders (PO's)

are only created for suppliers that have submitted the proper

certification. This action was completed of September 6, 2016.

Process was added to verify receipt of the insurance cettificate before

finalizing an award or renewing an existing contract (completed). Staff

informed to maintain bid documentation in compliance with the records retention schedule (completed). Cull'ent Records retention

documentation does not require retention of expired insurance

certificates according to the Texas State Records Retention Schedule

published by the Texas State Library and Archives Commission and

the State of Texas Contract Management Guide which selected

portions are attached. Develop new insurance requirements based on

scope of work as approved by risk management-anticipated completion

date 10/1/16.


www.garlandisd.net

FAX: 972-487-3097 Mailing Address: P.O. Box 469026

Garland, Texas 75046-9026

Finding Three - Services ordered from non-contracted supplier

Services provided by Alpha Testing, Inc. for geotechnical exploration is considered a professional service for engineering services pursuant to §2254.004 of the Texas Government Code. The District issued Request for Qualifications (RFQ) for engineering services utilizing RFQ# 362 in which Alpha Testing was selected among several firms based on demonstrated competence through September 30, 2013. Although Alpha Testing was not issued an award on subsequent RFQ# 362-01-15 which was approved on December 9, 2014; the firm was used for selected projects based on demonstrated competence.

Although using a RFQ is a best practice and is commonly used to develop a list of providers, the statute does not require issuance of a RFQ to select a professional service provider. The statute states, "(1) first select the most highly qualified provider of those services on the basis of demonstrated competence and qualifications; and (2) then attempt to negotiate with that provider a contract at a fair and reasonable price." Check request were issued because the ranking form, which is used to document the most highly qualified provider was not provided to the Purchasing Department.

Finding Four - Purchase orders not issued for services totaling $811,312.

Issuance of a contract and purchase order is the standard method to authorize architectural services for our district.

Phone: 972-487-3009 Street Address: 501 South jupiter Road Garland, Texas 75042


www.garlandisd.net

FAX: 972·487·3097 Mailing Address: P.O. Box469026

Garland, Texas 75046-9026

Figure: 13 TAC §6.10

Texas State Records Retention Schedule

Revised 4th Edition

Effective August 31, 2016

Texas Administrative Code, Tide 13, Chapter 6, Section 6.10

TEXAS STATE LffiRARY AND ARCHIVES COl\.fMISSION

--------··-·--··

Item No. Record Series Trtle

5.1.001 Contracts and Leases

Contracts, leases, and agreements include general obligation, land lease, utilities, and construction except for buildings. Documents include specifications, affidavits of publication of calls for bids,, performance bonds, contracts, purchase orders, inspection reports, and correspondence. May also include other applicable documentation in the master contract file perT exas Comptroller of Public Accounts Contract Management Guide.

a) Executed, renewed, or amended on or after September 1, 2015.

b) Executed, renewed, or amended on or before August 31, 2015.

5.1.003 Delivery Reports

Retention Codes AC- After dosed, terminated, completed, expired or settled AV ~As long as administratively valuable CE·Calendaryear end FE • Fiscal year end

VItal

X

Section 5.1- Gen=l

Archival Total Retention

AC+7

AC+4

LA -life of asset PM ·Permanent

us~ Until superseded

2

Remarks

Government Code, 441.1855

AC = Expiration or termination of the instrument according to lts terms. SEE related item numbers 3.1.035 Performance Bonds and 5.3.007 Bid Documentation. SEE item number 5.2.028 for building construction contracts and item number 5.1.017 for contract logs.

Arclllval Oldes A- Transfer to Archives and Information Services Division

R- Review before disposal 45

Item No. Record Series Title

5.1.004 Mail and Telecommunications Listings

Any mailing address, telephone or fax number, or e-mail address records maintained by an agency on its employees or on entities or persons it serves.

5.1.005 Postage Records

Records and reports of postage expenses, including postal meter usage.

5.1.007 Requisitions for In-Agency or Inter-Agency Copy/Printing Service

Includes word processing and data processing.

5.1.010 Licenses and Permits for Non-vehides

Does not include licenses and permits issued by an agency as part of its statutory responsibilities.

5.1.011 Photocopier and Telefax Usage Logs & Reports

5.1.012 Charge Schedules/Price Lists

Schedules of prices charged by an agency for services to the public or other agencies, including any documentation used to determine the charges.

Retention Codes AC ·After dosed, terlninated, completed, expired or settled AV .. As long as administratiVely valuable a- calendar year end FE - Ascal year end

VItal

X


us

FE+3

AV

AC+2

AV

US+3

lA- Ufe of asset PM .. Permanent

us- Unta1 superseded

Remarks

AC- Expiration date of license or permit.

---- ---

.Archival Codes A -Transfer to ArchiveS and Information SeMces Olvision

R- Review before <fosposal

···--------------

.ol6

Item No. Record Series IItie

5.1.017 Contract log

list of agency contracts, leases, and agreements including general obligation, land lease, utilities, and construction contracts .

--- ....


5.2.001 Appraisals- Building or Property

5.2.002 Building Construction Project Files

Planning, design, and construction records; accepted and rejected bids; correspondence; etc.

5.2.003 Building Plans and Specifications

Includes architectural and engineering drawings, profiles, and blueprints.

5.2.004 Building Space Requests

5.2.00S calibration Records (Equipment or Instrument)

5.2.006 Property Destruction, Certificates of

Retention COdes AC- After dosed, tennlnate<!, completed, expired or settled AV- As long as administratively valuable tE- Caleru:!;ir year end fE • F"ISCal year end

V"rtal Archival Total Retention

FE+3

Catego.ty 5: Support Services Recot:ds

Section 5.2 -Facility :Management

V"rtal

X

X

X


R AV

R AC+10

R State owned: LA

Leased: AC+2

1

10

FE+3

LA -life of asset PM ·Permanent

US- Until superseded

Remarks

Remarks

AC =Completion of project. SEE ALSO item numbers S.2.003 and S.2.028.

AC: For leased buildings, AC =Termination or cancellation of lease. SEE ALSO item numbers 5.2.002 and 5.2.028.

ARCHIVES NOTE: Archival review designation is for state-owned buildings only.

Archival Cedes A· Transfer to Archives and Information Services Division

R ·Review before d-48


5.2.007 Damage Reports

Reports of damage to state property.

5.2.008 Equipment History File; Includes requests for installation, moves, service, etc.; and service/repair logbooks, etc.

52.009 Equipment Inventory Detail Report Forms

Updates agency portion of the inventory listing and adds, changes, transfers, or deletes items from inventory.

5.2.010 Equipment Manuals

5.2.011 Equipment warranties

5.2.012 Estimate FDes (Supply and Repair Cost Estimates

5.2.014 Inventory -Annual Physical

Property, equipment, supply verification.

5.2.015 Inventory, Notices of Equipment Removeil From

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

Retention Codes AC- After dosed, terminated, completed, expired or settled AV- As long as administratively valuable CE - calendar year end FE- Rsca! year end

V"ltal Archival Total Retention

F£+3

IA+3·

FE+3

lA

AC+1

1

FE+3

FE+3

LA· Ufe cf asset PM- Permanent

US - Until superseded

Remarks I

I

.

For service agreements or contracts related to '

equipment repairs and service, retain in accordance with item number 5.1.001.

AC =Expiration of Warranty.

An:hival Codes A- Transfer to Archives and lnformationServices'Oivision

R-R..new belon! disposal 49


5.2.016 Inventory System Update Ustings

Usting shows all additions, changes, deletions, and transfer times for the monthly processing period.

5.2.017 Lost & Stolen Property Reports

5.2.018 Q.uaroty Control Reports

5.2.019 Service Orders

Agency copy offorms completed by mechanical service personnel for installation or repair. lndudes billing code, service, labor, parts, and remarks.

5.2.020 SUpply Usage Records

5.2.021 Surplus Property Sale Reports

5.2.022 Utility Usage Reports

5.2.023 Year-to-Date Activity (Inventory Usting)

Shows additions, changes, transfers, and deletions of information within the inventory system. Data indude agency, dMsion, tag number, batch, document, transaction date, location, item code, description, date, and cost.

5.2.024 Material Specifications

5.2.025 Equipment Descriptions and Specifications

Retention Cedes AC ·After dosed, terminated, completed1 expired or settled AV- As long as administratively valuable CE - C:alendar year end FE .. Rscal year end

V"Jtal Archival Total Retention

AC

FE+3

2

1

FE+1

FE+3

AV

FE+3

AC+2

AC+2

1A- Ufe of asset PM- Permanent

US· Until superseded

Remarks

AC =Transfer of information into annual listing.

AC- Material is no longer in the agency.

AC = Equipment is no longer in the agency.

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

Ard1ival Cedes A- Transfer to Archives and Information Services Division

R- Review before disposal 50

Item No. Record Series IItle

5.2.026 Facil"lties Reservation Logs

Reservation logs or similar records relating to the use of agency facilities such as meeting rooms, auditoriums, etc.

5.2.027 Space Utilization Reports

5.2.028 Building Construction Contract and Inspection Records

Building construction contracts, surety bonds, and inspection records.

Item No. Record Series IItle

5.3.002 Freight Bills Paid

5.3.003 Freight Claims

5.3.004 Order- Acknowledgments

5.3.005 Packing Slips

Retention Codes AC~ After dosed, t.ermlnated1 completed, explred or settled AV -As Tong as adminlstrativelyvaluable CE ·calendar year end FE • F'ISCal year erJd

Vrtal Archival Total Retention

2

AV

X R LA+lO

Categoty 5: Support Semces Records

Section 5.3 - Pmcbasing

Vital Archival Total Retention

FE+3

AC+2

LA- Ufe of asset PM· Permanent

US • Unt>1 superseded

AV

AV

Remarks

SEE ALSO item numbers 5.2.002 and 5.2.003.

·--

Remarks

AC - Resolution of daim.

Ardllval Codes A-Transfer to Archives and Information Services DMslon

R- RevieW before disposal 51


5.3.007 Bid Documentation

Includes bid requisition/authorizations, invitations to bid or propose, bid specifications, successful and unsuccessful bids, and bid tabulation/evaluations.

a) Asscciated with a contract executed, renewed, or amended on our after September 1, 2015.

b) Associated with a contract executed, renewed, or amended on our before August 31, 2015.

c) Unsuccessful bids that do not meet agency submission requirements and are not included in bid evaluation process (e.g. withdrawn, missed submission deadline, incomplete submission, etc.).

Retention Codes AC~ After dosed,. terminated, completed,. expired or settled AV- As long as administratively valuable CE -Calendar year end FE- Rsc:al year end

Vrtal Archival Total Retention

AC+7

FE+3

AC+2

LA· Ufe of asset PM- Permanent

us- Until superseded

Remarks

AC=Expiration or termination of the instrument according to its terms or decision not to proceed with the bid.

AC=Date of notification of denial or date of withdrawal, as applicable.

Archival COdes A-TransfertoAn:h!Vesand Information Services Division

R • Review before disposal 52


5.3.008 Purdlasing Logs

Log, register, etc., providing a record of purchase orders issued, orders received, and similar data on procurement status.

53.009 Requests for Information

Requests for information preliminary to the procurement of goods or services by direct purchase or bid.


5.4.001 Accident Reports and Associated Documentation

AcCident or occupational disease reports by supervisors and employees) and other associated reports required to be submitted to the Texas Department of Insurance or its predecessors or maintained internally on accident frequency.

Retention Codes AC- After closed, terminated; completed, expired or settled AV- As long asadministrat:Jvely valuable CE • calendarY<8fend FE- F'JScal year end

V"ltal Archival Total Retention

FE+3

AC

Categoty 5: Support Services :R.ocords

Section 5.4-Risk Management

Vital

X


CE+S

LA- Ufe of asset PM- Permanent

us- """' superseded

Remarks

AC = Decision not to proceed with the procurement.

CAUTION: If the request for information leads to request for proposal or bid, the request for information documentation should be retained in accordance with item number 5.3.007.

Remarks

29 CFR 1904.33. The Texas Department of Insurance retains copies of the reports submitted to it for 50 years.

Arthival Codes A - Transfer to Archives and lnfonnation 5ervices DiviSion

R - Review before cflsposal 53


5.4.002 Evacuation Plans

Plans for evacuation of agency facilities in cases of emergency.

S.4.003 Inspection Records

Fire, safety, and other inspection records of agency facilities and equipment.

5.4.004 Fire Orders

Orders issued by Fire Marshal to correct deficiencies in compliance with the fire code.

5.4.007 Hazardous Materials Training Records

Records of training given employees in an agency hazard communications program.

5.4.008 Hazard Communication Plans

S.4.009 Workplace Chemical Usts

5.4.010 Material Safety Data Sheets

5.4.011 VISitor Control Registers

Logs, registers, or similar records documenting visitors to limited access or restricted areas of agency facilities.

Retention Codes AC- After dosed, termimrted, complet~ expired or settled AV. As long as administratively valuable CE- calendar year end FE~ Fi:sca1 yearend

VItal

X


us

AC+3

AC+3

s

US+S

30

AC

3

1A- Ufe of asset PM·Petmanent

us - Until superseded

Remarks

AC = Inspection, or date of the correction of the deficiency if the inspection report reveals a deficiency.

CAUTION: Does not include inspection reports of building construction. SEE item number S.2.028. AC = Deficiency corrected.

Texas Health and Safety Code, S02.009(g).

Texas Health and Safety Code, 502.009(g).

Texas Health and Safety Code, 502.005(d).

AC = After sheets are updated or hazardous chemical no longer stored by agency, as applicable.

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

An:hival <:odes A - Transfer to Att:hNes and Information Services Division

R - Review before disposal

54

Item No. Record Series rrtte 5.4.012 Security Access Records

Records relating to the issuance of keys, identification cards, building passes, passwords, signed statements or similar instruments of access to agency or state facilities, equipment or automated systems.

5.4.013 Disaster Preparedness and Recovery Plans


5.5.001 Bilfmg Detail -Telecommunications (Other Than TEX-AN)

In addition to summary detail, includes any accompanying detailed listing of long distance calls.

5.5.002 long Distance Telephone logs

Long distance logs created by agencies for internal documentation purposes. Includes any similar logs created for long distance facsimile or electronic transmissions.

-Codes AC -After dosed~ terminated, completed, expired or settled AV- As long as admrnistratively valuable CE ~ calendar year end FE ~ Fiscal year end

VItal An:hival Total Retention

X AC+2

X us

Category 5: Support Services Records

Section 5.5 - Telecommunications

Votal Archival Total Retention

FE+3

LA .. Ufe of asset PM~ Permanent

US - Un1ll supeJ>e<led

AV

Remarks

AC = Until superseded, date of expiration, or date of termination, whichever sooner.

Remarks

SEE item number 5.5.006 for TEX-AN billing detail.

--

Archival Codes A w Transfer to Archives and Information Services Division

R-Revlewbeft><elfsposal

55

State of Texas Contract Management Guide

In addition, a state agency shall verify that accuracy of any information reported about the contract if the Information Is based on Information provided by a contractor. An agency shall verify the delivery time of goods or services scheduled under a contract as well

THE CONTRACT ADMINISTRATION FILE

RETENTION OF CONTRACT AND RELATED DOCUMENTS BY STATE AGENCIES

State agencies have always been required to maintain documentation related to the contracting practice In state government. Openness, accountability, and honesty define government transparency. Transparency Is government's obligation to share Information with cltlzens.m The right and the means to examine the process of decision making allows citizens to see what their government Is dolng.(e) In 2016, the Legislature lengthened the lime that state agencies are required to maintain contract documentation from four years to seven years or until any litigation Issues are resolved. A state agency:

(1) shall retain In Its records each contract entered Into by the state agency and all contract solicitation documents related to the contract; and

(2) may destroy the contract and documents only after the seventh anniversary of the date:

(A) the contract Is completed or expires; or

(B) all issues that arise from any litigation, claim, negotiation, audit, open records request, administrative review, or other action Involving the contract or documents are resolved.

This retention period for contracts and associated documents applies notwithstanding the agency's retention schedule. Texas Government Code, Section 441.1866.

MASTER FILE

Keeping one complete master contract administration file is critical. The file will provide a basis for settling claims and disputes should they arise in administrative or court actions. Throughout the life of the contract, the contract administration file should contain such things as:

• A copy of the current contract and all modifications;

• A copy of ali specifications, drawings or manuals Incorporated Into the contract by reference;

• A reference list or a list of prior contracts with this specific vendor (if they offer valuable historical data);

• The solicitation document, the contractor's response, evaluation determination, and the notice of award document;

• A list of contractor submittal requirements;

Statewide Contract Management Guide Page 120

01-Mar-2016 Version 1.16

• A list of government furnished property or services;

• A list of all information furnished to the contractor;

• A copy of the pre-award conference summary, if conducted;

• A schedule of compliance review, Internal correspondence, If applicable;

• A copy of all general correspondence related to the contract:

• The originals of all contractor data or report submittals:

• A copy of all routine reports required by the contract such as sales reports, pricing schedules, approval requests, and Inspection reports;

• A copy of all notices to proceed, to stop work, to correct deficiencies, or change orders:

• A copy of all letters of approval pertaining to such matters as materials, the contractor's quality control program, prospective employees, and work schedules;

• The records/minutes of all meetings, both Internal and external. Include sign-In sheets and/or agendas;

• A copy of all contractor invoices, Information relative to discount provisions for prompt payment, letters pertaining to contract deductions or fee adjustments; and

• A copy of all backup documentation for contractor payment or progress payment; and copies of any audits.

Agencies should maintain an original of all contracts on file in a central repository. This allows contract managers to reference past or current contracts for useful information relating to a current project.

CONTRACT CLOSE-OUT

The contract close-out process Is usually a simple but detailed administrative procedure. The purpose is to verify that both parties to the contract have fulfilled their contractual obligations and there are not responsibilities remaining. 1 n addition, contract close-out Is the time to assess the success of the contract and determine If there are any lessons learned for future contracting.

A contract Is completed when all goods or services have been received and accepted; all reports have been delivered and accepted; all administrative actions have been accomplished; all agency furnished equipment and material have been returned; and final payment has been made to the contractor.

To Initiate the close-out process, the agency should first determine that the contractor has satisfactorily performed all required contractual obligations. A contract is ready for close out when:

• All deliverables, Including reports have been delivered and accepted by the agency. Contract managers should compare actual performance against performance measures, goals and objectives to determine whether all required work has been completed;

• Final payment has been made;

Statewide Contract Management Guide Page121

01-Mar-2016 Version 1.15

Internal Audit’s comments to Director of Purchasing’s (DoP) Response Response Finding Two The DoP provided corrective action. Finding Three The DoP agrees with Finding Three. The check requests for Alpha Testing were issued during February and March 2015. The DoP wrote, “Although Alpha Testing was not issued an award on subsequent RFQ# 362-01-15 which was approved on December 9, 2014; the firm was used for selected projects based on demonstrated competence.” The DoP also stated, “Check request (sic) were issued because the ranking form, which is used to document the most highly qualified provider was not provided to the Purchasing Department.” Finding Four The DoP agrees with Finding Four writing, “Purchase orders not issued for services totaling $811,312. Issuance of a contract and purchase order is the standard method to authorize architectural services for our district.”

EXHIBIT I I

cfso Garland Independent School District

DATE: September 20, 2016

TO: Dr. Linda Chance, Chief of Staff

FROM: Joel E. Falcon, Executive Director of Facilities and Maintenance

RE: Facil ities Department and Jacobs Responses to Internal Audit Department's Performance Audit of the Bidding Process when Expending Bond Funds from November 4, 2015 to October 31, 2015

1. Finding One: Documents unavailable at Dallas Black Chamber of Commerce and Fort Worth Hispanic Chamber of Commerce

For the Bond Program, Jacobs is utilizing the DFW Plan Room to distribute drawings to various plan rooms and organizations around the Dallas/Fort Worth area. The DFW Plan Room receives the contract documents for distribution to the various plan rooms and organizations including the Dallas Black Chamber of Commerce and the Fort Worth Hispanic Chamber of Commerce. Jacobs posted on their website some of those organizations and on the Bond website at http://www.garlandisdbond.com to inform the publ ic of various sources. It should be noted, a direct link to the site containing the drawings is on the Bond website. It is not the intent of Jacobs to exclude any organization, but rather to provide as much information as possible to any organization interested in the Garland ISO 2014 Bond Program. A testimony to th is is the community outreach events and meetings with various minority organizations. In order to eliminate any exclusion, Jacobs has amended its procedures to call each of the organizations indicated on the website and verify that they have rece ived contract documents from DFW Plan Room once the drawings have been issued for public viewing. This will allow a verification and trigger action if the drawings have not reached the intended parties.

2. Finding Five: Reconciliations of project expenditures to District accounting and financial system not performed per Jacobs Project Management Company's contract with the District

During the initial stages of the Bond Program, the Distri ct was in the process of establishing the various budgets in its Oracle system. As the establishing of the budgets occurred, Jacobs established and was utilizing (and still is) Prolog Cost Management System to track commitments (contracts) and expenditures (actual costs paid). Once the District had completed establishing the budgets, the District began providing financial information for verification as required by the Jacobs contract. A monthly procedure has been established where the District provides financial information to Jacobs.

Jacobs then compares this to its financial management system (Prolog) and identifies variances/ inconsistencies and develops a plan to address such items. Jacobs will continue to coordinate with the District on comparing the financial information provided by Oracle and the financial information provided by Jacobs' system, Prolog.

cc: Herschel Acosta, Jacobs, Program Director Dr. Doug Brubaker, Associate Superintendent of Administration Janet McDade, Executive Director of School Transformation

Internal Audit’s comments to Executive Director of Facilities and Maintenance (EDFM) Joel E. Falcon’s Response Finding One The EDFM misses the point of Finding One. Jacobs Management in the GISD 2014 bond webpage, which it created and manages, stated that Bid Package Plan Room documents would be available at both the Fort Worth Hispanic Chamber of Commerce and the Dallas Black Chamber of Commerce. IA sent auditors out to both chambers to see if this was done. It was not. One of the reasons this audit was done was to determine the fairness of the bond bid program. Part of this fairness is to address the Board’s determination to include minority contractors. Jacobs said it would provide the documents to both chambers on its website and did not do it. The EDFM did not address this in his response. Finding Two The EDFM agrees with Finding Two and described corrective action.

Internal Audit Department · Request for Proposal (RFP) Date Trustees approved bids Professional...

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