Houston ISDBoard Workshop

March 29, 2012

Performance Audit Report-Contract Recommendation

Awards ProcessPresented by:

Government Auditing Standards

Specific auditing and reporting requirements

Statutes on client confidentiality applySame standards as financial auditRequired information included in Appendix to the report

Key Work StepsReviewed key written documentation

regarding the purchasing function, including, but not limited to, board policy, organization charts, procedures memos, and procurement file information.

Conducted interviews with senior staff and staff in Procurement, Finance, and Construction and Facility Services.

Interviewed all board members related to the audit objectives.

Interviewed current and prior HISD superintendents.

Key Work StepsPerformed detailed walkthroughs for each

contract selection from the issuance of the procurement request through contract execution.

Conducted comparison analyses on like entity procurement policy requirements.

Verified factual data from compliance findings with HISD senior staff.

Finalized and presented our report.

Recommendation Areas

Board policy matters

Procurement process improvements

KEY RECOMMENDATIONS

Expanded board training on existing conflict of interest and related procurement policies affecting board members annually

Simplify policies, including internal staff policies related to monitoring board activities and activities of procurement evaluation staff.

KEY RECOMMENDATIONS

Continue internal procurement improvement initiatives that began in the late fall of 2011

Procurement should be involved on all purchases in some manner, even those that are being handled in other functional areas

Board members should communicate benefits that might be received from existing vendors to the superintendent and evaluate exposing these services to market competition

Contract selection strata for compliance review

Greater than $100,000 8

$50,000 - $100,000 5

Less than $50,000 2

Contracts selected – Audit Committee:Job Order Contract Program Project No.

10-01-05Annual Building Envelope

Maintenance/Repair Project No. 08-03-04Minor General Contract Services Under

$25,000 Project 10-07-13Supplemental Bus Transportation Project

No. 11-01-09Supplemental Painting Services $5 Million

(over all contract)

Other contracts selected:Project GradSouthwest Wholesale NurseryCommunity Education Partners, Inc.Space Center HoustonStanley Security Solutions, Inc.Cecilia EdwardsStanbury UniformsLittle Green Apples, IncMorganti Texas, Inc.Demetra Jones

Two key findings:

1. Policies need to be reviewed for potential simplification

2. Procurement process consistencies must be achieved

Other Board Policy RecommendationsBoard members should disclose any

financial relationships, including governance responsibilities that exist with vendors.

Evaluate the need for policies that exclude vendor work at HISD related to financial relationships, including governance responsibilities board members may have with vendors.

Other Board Policy RecommendationsBoard members should abstain from

contract votes for those vendors where there are disclosed financial relationships or governance responsibilities.

Policy should include provisions prohibiting board member involvement in anything other than votes on contract awards.

Other Board Policy RecommendationsBoard members having an interest in a

vendor should communicate with only the superintendent on it and should not be involved in vendor discussions with HISD staff or be involved with vendor meetings with staff.

The board packet on contract awards should include documented staff evaluation committee recommendations and any differences between board recommended contracts and staff committee evaluations should be included in the board packet.

Other Board Policy Recommendations

Document all travel, lodging, or entertainment received by board members

Vendor disqualification exceptionAdopt consistent procedures to allow

votes on contracts with vendors who have made campaign contributions

Publish notice on sole source contracts

Other Board Policy Recommendations

Vendor SanctionsGuidelines for board members, staff, and

vendors to follow that define when and how allowable contact may be made, including presentation of unsolicited proposals

Other Procurement Compliance Recommendations

Periodic review and update of approved vendors

Annual evaluation of continuing vendorsBoard approval on change orders on

contracts

Questions and Discussions