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March 31, 2010

Onondaga Water Authority Needs
to Improve Purchasing Practices

The Onondaga Water Authority Board needs to improve its procurement process to be sure it’s getting the best price for goods and services, according to an audit released by State Comptroller Thomas P. DiNapoli. The audit also found that the board should investigate why some authority contracts received a limited number of bids.

“These are public dollars,” said DiNapoli. “The board has to make sure its procurement process is getting the very best value. If the process is flawed, the authority risks paying too much. The board needs to assure its customers it's watching every dime.”

DiNapoli’s auditors found that the authority has been relying on an informal verbal policy by the executive director requiring personnel to get competitive bids for procurements over $10,000 and price quotes for lesser amounts.

Auditors reviewed five procurements totaling approximately $250,000 not subject to state bidding requirements to determine whether authority personnel complied with the executive director’s unwritten policy. They found that staff did not follow the policy for three of them for a total of more than $220,000. As a result, the authority may have paid more than necessary for these items and services.

Auditors reviewed the bids and awards for four annual construction and maintenance contracts: 2006 ($2.8 million), 2007 ($3 million), 2008 ($2.8 million), and 2009 ($2.1 million). While the authority received three bids from three contractors in 2007, it received only two bid responses in 2006, 2008, and 2009. Though the contract was awarded to the lowest bidder each year, officials did not determine why so few firms responded with bids. By failing to survey non-bidders and analyze why so few responded, authority managers cannot be sure they are obtaining the best price from contractors.

DiNapoli recommended that authority officials:

  • Develop a written procurement policy that provides guidance on the procurement of goods and services including information on competitive bidding, aggregate purchases, emergency purchases, and documentation of purchases;
  • Require authority staff to obtain multiple proposals or quotations when procuring goods and services where competitive bidding is not required by state law; and
  • Establish procedures for soliciting competitive bids that require a formal review of the reasons for an insufficient number of responses to competitive bid solicitations.

Officials generally agreed with DiNapoli’s recommendations and indicated they would take corrective action.

Click here for a copy of the audit.


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