North Carolina Agricultural and Technical State University violated a university policy by purchasing over $100,000 in services without contracts, according to a report released Wednesday by North Carolina State Auditor Beth Wood.
Wood’s office said they received four allegations through its hotline that the university purchased painting services totaling $100,210 from G.S. Painting and Home Improvement, Jamestown, without seeking bids from July 2019 through June 2021. The report also says that the purchases may have been split to avoid the threshold for requesting quotes or formal bids.
The university’s purchasing procedures policy states that purchases over $5,000 but below $25,000 require a written request for quotes and that purchases over $25,000 but below $100,000 require formal bids.
The policy prohibits departments from splitting purchases into smaller purchase orders to avoid seeking competition.
In the first grouping, the Office of Facilities and Campus Enterprises requested 15 purchase orders totaling $64,035 for G.S. Painting and Home Improvement for what appears to be six painting jobs.
Several of the purchases had similar job descriptions and were within 7-42 days of one another. Each purchase order, except one, was under the $5,000 threshold requiring a written request for quotes. Each group of purchases, when added together, exceeded the $5,000 threshold for requiring a written request for quotes. No written requests for quotes were made.
Additionally, eight purchases were within $500 of the $5,000 threshold that requires a written request for quotes. Wood’s office said that had these purchases been combined for the same painting job, the amount for each would have exceeded $5,000, requiring written requests for quotes.
Procurement Services also processed four purchase orders totaling $36,175 for G.S. Painting and Home Improvement to paint the dining hall in 2020.
Investigators say it appears that splitting of purchases to avoid competition may have occurred, based on the information reviewed during the investigation.
One of the purchases for painting the dining hall exceeded the $25,000 threshold for requiring formal bids. Three of the four purchases were below the threshold to require the university to seek competition, and no bids were obtained for any purchases or the combined amount.
The purchases for painting the dining hall were made within 25 business days of the first purchase. At a minimum, the purchase order dated June 15, 2020, exceeded the threshold in requiring formal bids.
The report said that if the purchases had been combined for painting the dining hall, the total amount would have exceeded $25,000 and required formal bids.
It also said continued violations of university policies might signal to the employees that this behavior is acceptable, causing the university to subject itself to higher fraud risk.
The director of procurement services admitted to investigators that there are no procedures to detect or prevent departments from splitting purchases to avoid seeking competition.
Wood’s office recommended that the university determine if the jobs were split to avoid intentionally seeking competition. If so, it should consider disciplinary action against the employees that split the jobs. Other recommendations are as follows.
The university’s chancellor should:
· Ensure that the director of procurement services has procedures in place to detect or prevent departments from violating the policy.
· Determine if the university has an unethical relationship with G.S. Painting and Home Improvement.
The director of procurement services should ensure competitive prices are obtained for all purchases by:
· Implementing procedures to detect departments attempting to circumvent the policy.
· Enforcing the existing policy by requiring a written request for quotes be issued for purchases that exceed $5,000 but are less than $25,000.
· Enforcing the existing policy by conducting the formal bid process for purchases between $25,000 and $100,000.