The information provided below is pertinent only to Arizona school districts unless otherwise noted.
Written quotations vs. RFP – threshold
Q: Our district requested written quotations and three vendors replied with varying amounts – two were above the formal bidding threshold and one was below the formal bidding threshold. Will our district be required to prepare a formal Request for Proposals (RFP) for this purchase?
A: As long as the District expends an amount below the formal bidding threshold, the District will not be required to prepare a formal RFP.
Q: Our District is planning to purchase textbooks. Will our District be required to obtain quotes or prepare a formal bid or RFP?
A: Arizona Administrative Code R7-2-1002(D) states Article 10 (School District Procurement) does not apply to expenditures for Governing Board adopted textbooks as defined in ARS Section 15-721(G) and ARS Section 15-722(G) when the textbooks are purchased from the publisher.
Textbooks Direct from Publisher
Q: ARS Sections 15-721 and 722 allow the Governing Board to purchase textbooks directly from the publisher. Are supplemental workbooks and similar items included in the definition of ‘textbooks’, and therefore excluded from the bidding process?
A: If supplemental workbooks, etc. are adopted by the governing board in accordance with ARS Sections 15-721 and 722 (including the public review), they are included in the definition of textbooks and may be purchased directly from the publishers without going through formal competitive procurement procedures.
When is it OK to contract with the second-place non awarded vendor on original bid if the awarded vendor breached the contract
Q: A district awarded a contract via the bid/RFP process and the vendor breached the contract, therefore cancelling it. Can the district then award a contract to a vendor that was in second-place on the original bid? Or must the district go back out to bid?
A: The district could award a subsequent contract to the second-place bidder if the second contract is for the same goods or services and for the same timeframe outlined in the original bid/RFP and the second-place vendor will honor their original bid amount.
Procurement authority and decisions
Q: Does our Governing Board need to approve all procurements?
A: The USFR and School District Procurement Rules allow the Governing Board to delegate to a designee procurement authority including the authority to make determinations, award contracts, make sole source and emergency procurements, and approve change orders and contract modifications. The board’s delegation must be done through the adoption of a governing board policy in accordance with AAC R7-2-1007. Absent of this delegated authorization, then the governing board must approve.
Q: What are the procurement rules for purchasing goods and services from employees and governing board members?
A: There are different rules based upon whether the purchase is for goods or services and if the District’s average daily membership (ADM) is less than or greater than 3,000. See the tables below per the USFR manual and ARS section 38-503(C).
Need to bid for services provided by bond counsel and underwriters
Q: If a district issues general obligation or refunding bonds, would the District need to bid for the services provided by the bond counsel and underwriters, even though the fees are usually taken directly from the bond proceeds?
A: The district would need to follow School District Procurement Rules if the cost of the services provided by the bond counsel or underwriters exceeded the bidding threshold. If the cost of the services were below the bidding threshold, then written quotations would be required.
Exempt from procurement procedures if vendor is on an ADE approved list
Q: Is a school district exempt from procurement procedures if a vendor is chosen from the Arizona Department of Education approved list of food commodity processors?
A: The list of food commodity processors was not compiled using procurement procedures; therefore, a district would still need to follow appropriate procurement procedures if the cost of processing was expected to exceed State procurement thresholds.
Due diligence and written determinations
Q: What documentation must be included when a District uses a cooperative contract?
A: The District must complete the due diligence checklist for cooperative contracts and all contracts must have a written determination for the reason why that contract was selected.
State procurement guidelines for grant proposals
Q: In writing a 21st Century grant proposal, (or other grant), a district must identify specific service providers that will be used during the grant. If payment to a specific provider identified will exceed the procurement quote or bid limits, does the district need to follow state procurement guidelines?
A: Prior to applying for the grant, the district should estimate the total payments to be made to the service provider. If the payments will exceed the procurement quote or bid thresholds, the district should issue bids or RFPs, or seek the required quotations, prior to applying for the grant. The procurement specifications should include that the award of the service contract is contingent upon award of the grant. The selected vendors could then be listed in the grant proposal.
Our tax-exempt status determination
Q: How do we respond to a vendor or outside organization requesting our tax exempt status determination?
A: According to IRS Code Section 170(b) and 170(c), a governmental unit [as described in 170(c)(1)] is classified as a charitable organization. However, no determination letter is needed from the IRS since the district is a governmental entity (political subdivision).
Is it OK to grant preference to local bidders?
Q: Can a District or Charter School grant a preference to local bidders in order to help increase business within the community?
A: According to a similar question posed to the Attorney General’s office, local preference is contrary to your duty to act in the public interest to purchase goods/services at the lowest price. Such criteria as response time, shipping charges, etc. are appropriate so long as those matters are legitimate concerns for the particular procurement, the criteria are identified in the invitation to bid and the vendor responses are evaluated on the same scale. The non-Federal entity must take all necessary affirmative steps to assure that minority businesses, women’s business enterprises, and labor surplus area firms are used when possible (2CFR §200.321)
Cumulative Purchases Best Practices
Q: Each of our schools obtains written quotes for basic office supplies when purchases exceed $10,000 per vendor. Is this appropriate or is there a better way to evaluate these types of purchases?
A: According to Arizona Administrative Code R7-2-1002, procurement guidelines are applicable when the total procurement cost, of all construction, material, and services, exceeds the aggregate dollar amount specified in A.R.S. § 41-2535(A). This is not dependent on the vendor the goods are purchased from. Districts should analyze purchases based on the items being purchased regardless of the vendors being used. Additionally, this should be evaluated district-wide and not at each individual site.
Multiple Year Purchases
Q: Our district spends approximately $40,000 on therapist services each year. Do we have to get written quotes every year when we are happy with the therapists we have on contract?
A: Districts may enter into contracts for one year with four additional one year renewals if it is determined to be advantageous to the district to do so. When using multi-term contracts, the terms and conditions of renewal or extension, if any, must be included in the solicitation for bids, proposals or quotes, and monies must be available for the first fiscal year that the time of contracting. When determining what level of procurement is required, (RFP, sealed bid or written quotes) the district must consider the total expenditures that will be made over the multiple years. For the example noted in the question, if the District wanted to obtain pricing for 3 years on these types of services, they would need to use a formal RFP as the expected amount of expenditures for the 3 years (3 X $40,000 – $120,000) total more than the formal procurement threshold of $100,000.
Sole Source and Emergency Procurement Documentation
Q: What documentation is needed for sole source vendors?
A: Per R7-2-1053 of the Arizona procurement Code, sole source procurements should be avoided and rare. Procurement deemed to be sole source requires governing board determination that includes:
- A description of the procurement need and the reason why there is only a single source available or why no reasonable alternative exists
- The name of the proposed supplier;
- The duration and estimated total dollar value of the proposed procurement;
- Documentation that the price submitted is fair and reasonable; and
- A description of efforts made to seek other sources.
Q: What documentation is needed for an emergency procurement?
A: Per R7-2-1055, emergency procurements should be very rare and should only be made if there is an immediate and serious need for materials, services, or construction that cannot be met through normal procurement methods AND the emergency condition seriously threatens the functioning of the district, the preservation or protection of property or the public health, welfare or safety. Examples could include floods, epidemics, riots, fire or equipment failures. Documentation required includes a written statement documenting the basis for the emergency, the basis for the selection of the particular contractor, and why the price paid was fair and reasonable. This is prepared and signed by the designated board member or district official. Additionally, a board meeting should be convened if possible to approve the procurement. If this is not possible, the responsible person must submit a report at the next board meeting, including the written statement and documentation as to why it was impracticable to convene a meeting of the governing board.
Suspension and Disbarment
Q: What are the suspension and debarment requirements and what documentation is required to demonstrate the rules have been followed?
A: A district that expends $25,000 or more of Federal funds to a vendor in the course of the year are required to perform a check to determine the vendor was not suspended nor debarred from doing business with the Federal government. Checks may be performed at https://www.sam.gov/SAM/. Districts can create a SAM user account and save their searches in this account or can print out copies of searches and results and maintain these in either a separate file/binder or in the vendor files. This verification should be done annually.
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