Setting up a fair and logical process with written procedures will improve your purchasing practices, according to consultant Mark Rogers, who spoke at a workshop about purchasing practices at Harris County Department of Education’s School Finance Council and Gulf Coast TASBO event last week. Rogers presented with Jesus Amezcua, calling Amezcua “Mr. EDGAR” due to his knowledge about the new federal law.
Rogers discussed professional and consulting services contracts. He stressed the need to appropriately categorize services, strictly observing the most restrictive of policy or law, carefully documenting each step along the way and making sure that processes are transparent and legal.
“The most important thing when you select someone to provide services is that the process you use needs to make sense and be defensible,” said Rogers, who boasts 35 years’ experience in public purchasing. “Hopefully you didn’t do it just because the guy is your brother-in-law.”
Another key to purchasing is categorizing services appropriately. Professional services, such as those provided by an accountant or architect, are distinguished from manual or so-called “practicable” services.
In Texas, some professional services, enumerated by the Professional Services Procurement Act (PSPA) in Chapter 2254 of the Texas Government Code, are prohibited by law from being procured through the bidding process outlined there and in section 44.031.
“The theory behind this is that the bidding process would select the least competent person and you don’t want to procure brain surgery on the lowest bid,” Rogers joked.
The PSPA explicitly lists accounting, architecture, landscape architecture, land surveying, medicine, optometry, engineering, real estate appraising, and professional nursing as services that cannot be acquired through competitive bid. Instead, they are selected on the basis of demonstrated competence and qualifications, then negotiated for a fair and reasonable price.
HCDE and its purchasing cooperative, Choice Partners, follow the competitive procurement requirements of Chapter 44 of the Texas Education Code when contracting with services providers such as speakers, education consultants and other service providers that do not fall into the category of statutorily defined professional services. For construction-related goods and services, HCDE follows procedures outlined in Chapter 2269 of the Texas Government Code. Both Chapter 44 and Chapter 2269 require application of the PSPA to certain types of contracts.
When determining the proper process for selecting services, Rogers suggested caution in setting the dollar threshold for when and what selection process to use.
“Observe the most restrictive of board policy or state law, and then you’ll keep yourself out of trouble,” he said.
Rogers also mentioned the importance of following precedent when making purchasing decisions, jokingly referring to “bleeding edge” purchasers whose cleverness ends up compromising the legality of their practices.
“If you’re going to be a pioneer and do something for the first time, then you need to be particularly careful,” he explained.
In addition to professional services and consulting services, Rogers talked about the legal challenges of procuring “sole source” services. A sole source purchase, he explained, should be made only after a good-faith review of available sources has been conducted. There must be only one source for the required services.
“Most of the time services are not sole source,” said Rogers, although he recognizes that it is common for administrators to want exceptions and call something sole source. ”Patented or copyrighted items may be sole source, but most of the time they are not. If the functional equivalent is available, it is not sole source,” he said.
He stressed that documentation is critical throughout any purchasing process.
“It’s got to be defensible,” Rogers said, adding words for any purchasing professional to live by: “Everything we do, we should be able to defend how we got there.”
The new federal Education Department General Administrative Regulations (EDGAR) apply to new and continuation federal grants awarded on or after Dec. 26, 2014. Jesus Amezcua, HCDE assistant superintendent for business services, said that HCDE has made a number of changes to ensure that HCDE is compliant and is following the appropriate EDGAR regulations on all of its procurements and contracts. Amezcua said changes to procedures are already taking place and policy changes are forthcoming from TASB Policy Services. Additionally, vendors are required to execute EDGAR certifications as part of the procurement process for both HCDE and Choice Partners.
“From a cooperative perspective, know that if you buy something from us, be assured that Choice Partners folks are complying with the new EDGAR rules and will supply members with documentation showing that,” said Amezcua.
Robert B. Fazakerly, Fort Bend ISD director of purchasing and materials management, said, “My experience is that Choice Partners is further along on that.”