Skip navigation
The Habeas Citebook Ineffective Counsel - Header

Maricopa Az Mcso Bus Procurement Contract Non-compliance Review 2009

Download original document:
Brief thumbnail
This text is machine-read, and may contain errors. Check the original document to verify accuracy.
Maricopa County
Internal Audit Department

301 West Jefferson St
Suite 660
Phx, AZ 85003-2148
Phone: 602-506-1585
Fax: 602-506-8957
www.maricopa.gov

To: Max W. Wilson, Chairman, Board of Supervisors
Fulton Brock, Supervisor, District I
Don Stapley, Supervisor, District II
Andrew Kunasek, Supervisor, District III
Mary Rose Wilcox, Supervisor, District V
From: Ross L. Tate, County Auditor
Subject: MCSO Bus Procurement Contract
Date: October 30, 2009

We have completed our review of the Maricopa County Sheriff’s Office (MCSO)
procurement of a 58-passenger inmate bus in October 2008. Our findings are
presented below.
Executive Summary
MCSO did not comply with the County Procurement Code or Jail Enhancement Fund
(JEF) Guidelines for the bus procurement. In summary, the following required approvals
were not obtained:
•

Board of Supervisors’ (Board) approval prior to the bus purchase

•

Board approval of contract to purchase over $250,000

•

Board approval for sole source purchase over $50,000

•

Office of Management and Budget (OMB)/Board approval for exemption to
capital purchasing freeze

In addition, MCSO did not deposit JEF monies with the County Treasurer as required by
JEF Guidelines and Arizona Revised Statutes (ARS). MCSO should follow procurement
procedures established by ARS, County policies, and JEF Guidelines for all JEF
purchases.
Background
Our objective was to determine if MCSO complied with ARS, County policies and
procedures, contract terms and conditions, and other guidelines when purchasing a 58passenger bus in October 2008. MCSO did not allow access to its procurement files;
consequently, we relied on documentation obtained directly from the vendor and from
other County departments to complete this review. We reviewed laws, policies,
guidelines, and documentation relating to MCSO’s bus procurement with JEF monies.

Examination of MCSO Bus Procurement
October 30, 2009
Page 2 of 6

Procurement Code
ARS § 41-2512 delegates procurement authority to any state governmental unit.
Based on this statute, Maricopa County established the Procurement Code to regulate
the purchase of goods and services. In addition, ARS § 11-254.01 states that a
county’s purchases should be based on sealed competitive bids. The following
questions address MCSO’s compliance with the Maricopa County Procurement Code
for the bus purchase.
Procurement Code Requirements

Yes/No

Did MCSO receive Board approval for a contract over $250,000 to
purchase a bus? All contracts must be approved by the Board unless
delegated. (Procurement Code MC1-105A and MC1-201)

No*

Did MCSO submit a purchase request to the Procurement Officer
(Materials Management)? After determining a need for a commodity, the
using agency must submit a purchase request to the County’s
Procurement Officer. (Procurement Code MC1-309A)

No

Did MCSO submit written documentation to the Board to allow a sole
source contract? The Board may award a contract exceeding $50,000
for a commodity without competition when documentation is provided that
states only one source is available for the commodity. (Procurement
Code MC1-343A)

No

Did MCSO provide the Board clear and convincing evidence that
there was only one source for this commodity? Any agency making a
request to restrict procurement to one contractor must submit written
justification to the Board explaining why no other contractor is suitable or
acceptable. (Procurement Code MC1-344A)

No

Did MCSO make a payment pursuant to a written contract? Payment
for any commodity shall not be made unless pursuant to a written contract
procured under this Code. (Procurement Code MC1-105B)

No*

Did MCSO ensure that sufficient funds were available for the
purchase? A procurement officer shall not incur an obligation on behalf
of Maricopa County if sufficient funds are not available. (Procurement
Code MC1-105C)

Yes

Was the contract consistent with the provisions of the code? All
contract clauses shall be consistent with the provisions of this code.
(Procurement Code MC1-601C)

No*

* MCSO could not provide a copy of a Board-approved contract.

The vendor, Motor Coach Industries (MCI), provided a signed agreement to purchase the
bus. This agreement contained some contract terms, but not all standard terminology that
is normally required in a County contract.

Examination of MCSO Bus Procurement
October 30, 2009
Page 3 of 6

Jail Enhancement Fund Guidelines
The JEF Guidelines published by the Arizona Department of Corrections (ADOC)
state that the sheriff should follow county procurement policies. The following
questions address MCSO’s compliance with JEF Guidelines for the bus procurement.
JEF Requirements—Procurement

Yes/No

Will MCSO use the bus more than 50% of the time for jail operations?
Joint use of equipment funded by JEF monies is only authorized if the
equipment is more than 50 percent committed to jail operations. (JEF
Guideline #3)

Yes

Did MCSO follow County procurement policies? The sheriff shall
follow county procurement policies. (JEF Guideline #6)

No

ARS § 11-492 states that all public monies from any source shall be paid into the
county treasury. Also, JEF Guidelines require all county jail enhancement monies be
deposited with the County Treasurer. However, MCSO is currently depositing the
money in an outside Bank of America account. JEF Guidelines also state the sheriff
should record financial activity on the County’s accounting and reporting system.
MCSO uses QuickBooks for JEF accounting. The following questions address
MCSO’s compliance with JEF Guidelines for the bus procurement.
JEF Requirements—Accountability

Yes/No

Did MCSO record the bus expenditure on the County’s accounting
and reporting system? The sheriff should record financial activity on the
County’s accounting and reporting system. (JEF Guideline #6)

Yes*

Did MCSO submit a 2nd quarter JEF report with the AZ Dept of
Corrections (ADOC), which included the bus purchase? The quarterly
report is due to ADOC the month following the close of the last fiscal year
quarter. (JEF Guideline Attachment #2)

Yes

Did MCSO provide an annual narrative report to ADOC including the
bus purchase? The annual narrative report details the previous year’s
JEF expenditures, which is due by September. (JEF Guideline
Attachment #2)

Yes

Did MCSO provide an annual report to ADOC that included the bus
purchase? ARS § 41-2401.B requires the sheriff to provide ADOC with
an annual financial activity report for the preceding fiscal year of all
expenditures. (JEF Guideline Attachment #2)

Yes

* MCSO wrote the JEF check in October 2008, but did not record the expenditure on the
County’s financial system until June 2009.

Examination of MCSO Bus Procurement
October 30, 2009
Page 4 of 6

Capital Purchasing Freeze
In FY 2008 and FY 2009, the Board implemented a hiring and capital purchasing
freeze for all judicial branches, elected offices, and appointed departments. The
following questions address MCSO’s compliance with the Board’s capital purchasing
freeze for the bus procurement.
Capital Purchasing Freeze Requirements

Yes/No

Was the bus purchase initiated prior to the Board’s approval of the
capital purchasing freeze? The Board approved the FY09 capital
purchasing freeze on July 23, 2008 for all capital equipment and for all
funds. (Agenda # C-49-09-004-6-00)

No

Did MCSO work with OMB for an exemption to the capital purchasing
freeze? If a purchase is deemed necessary, the elected office will work
with OMB to determine whether the purchase is appropriate. (Agenda #C49-09-004-6-00)

No

Did MCSO appeal OMB decision regarding an exemption to the
capital asset freeze? If the elected office and OMB cannot agree on an
exemption, the elected office may appeal the decision to the County
Manager. (Agenda #C-49-004-6-00)

No

Did MCSO bring an agenda item before the Board for an exemption
to the capital purchasing freeze? If the elected office and OMB cannot
agree on an exemption, the elected office may bring the item to the Board
on an agenda. (Agenda #C-49-004-6-00)

No

Fleet Policies and Procedures
According to County policy, the Equipment Services Department is the only agency
authorized to procure vehicles. In addition, County policy requires Board approval
prior to acquiring fleet equipment. The Department of Finance’s (DOF) Capital Asset
Manual documents procedures for purchasing vehicles with JEF funds. The following
questions address MCSO’s compliance with County policy and procedures for the bus
procurement.
Fleet Policies and Procedures Requirements

Yes/No

Did MCSO ensure funding was available to support the bus
purchase? Per the Capital Asset Manual, once a department determines
an additional vehicle is necessary, the department must coordinate with
their financial entity to ensure funding is available to support the purchase.
(DOF Capital Asset Manual 1E Section 4)

Yes

Did MCSO formally request Board approval via the agenda process?
Elected officials who request to acquire a vehicle through special or grant
funding must submit their request on an agenda form for Board approval.
(County Policy A2306)

No

Examination of MCSO Bus Procurement
October 30, 2009
Page 5 of 6
Did MCSO receive Board approval to order the vehicle? Upon Board
approval, the department may order the vehicle. (DOF Capital Asset
Manual 1E Section 4)

No

Did MCSO receive and inspect the bus and sign the delivery
documents? Upon receipt of the vehicle, the department is to inspect the
vehicle and sign all delivery documents. (DOF Capital Asset Manual 1E
Section 4)

Yes

Did MCSO process payment according to DOF procedures? Upon
receipt of the vehicle, the department prepares and processes the
payment to the vendor. (DOF Capital Asset Manual 1E Section 4)

No

Did MCSO prepare a capital asset acquisition form and submit to
DOF? Upon receipt of the vehicle, the department is to prepare the
capital asset acquisition form and submit to DOF for processing. (DOF
Capital Asset Manual 1E Section 4)

No

Was Equipment Services notified of the delivery? Equipment Services
is to be notified of the delivery. (DOF Capital Asset Manual 1E Section 4)

No

Did Equipment Services receive all necessary documents to enter
the bus into the FASTER fleet management system? Upon delivery,
Equipment Services is to be provided with the vehicle information to
ensure it is included in the FASTER fleet management system. (DOF
Capital Asset Manual 1E Section 4)

No

Conclusion
MCSO circumvented procurement policies and procedures designed to promote
competitive bidding and stewardship of public funds. There is no evidence that the
bus was acquired for the best price, or that procurement controls meant to protect and
account for public funds were followed.
Recommendation
The Maricopa County Sheriff’s Office should follow procurement policies established
by Arizona Revised Statutes, County policies, and JEF Guidelines for all JEF
purchases; MCSO work with County management to resolve the bus status.
Information for Management’s Consideration
Other than the legal courses of action that may be under consideration by County
management, Internal Audit came across the following information during the course
of this review:
•

A representative from MCI, the bus vendor, stated that MCI would not accept the
bus if returned, and that no return or refund policy exists. However, the
representative did state that MCI may be able to sell the bus on behalf of the
County for a commission.

Examination of MCSO Bus Procurement
October 30, 2009
Page 6 of 6

•

County management may be able to sell the bus directly to another agency.
Internal Audit learned from the MCI representative that other local or regional
agencies (Arizona Department of Corrections, Los Angeles County, and San
Diego County) own similar buses manufactured by MCI, and could be potential
buyers of the County’s bus. The demand for such a transaction is not known.

Auditing Standards
We conducted this audit in accordance with generally accepted government auditing
standards except for the scope limitation described in the Background section above.
Those standards require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and conclusions
based on our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit objectives.
C: Joseph Arpaio, County Sheriff
David Hendershott, Chief Deputy
Loretta Barkell, Executive Chief, Business Operations Command
David Smith, County Manager
Sandi Wilson, Deputy County Manager

MARICOPA COUNTY SHERIFF'S OFFICE
JOSEPH M. ARPAIO
SHERIFF

October 21, 2009

To:

Max W. Wilson, Chairman, Board of Supervisors
Ross L. Tate, County Auditor

From: .

Joseph M. Arpaio, Sheriff

Subject:

Response to Internal Audit Review of MeSO Bus Procurement

As the Sheriff is the only person in the Maricopa County authorized to spend JEF funds,
it was determined that the disbursement of funds for the purchase of critical equipment
for the transportation of inmates was not subject to the County's Capital purchasing
freeze or prior approval by the Board of Supervisors. As a result of this determination,
further Board approval on sale source and a purchase over $250,000 was also not
considered a requirement to proceed with the purchase of the Mel bus.

Additionally, it has always been the position of Maricopa County Material Management
that Jail Enhancement Funds and RICO funds were outside the responsibility of
Materials Management and not govemed by the Procurement Code. There has been no
customer support provided by Materials Management for over a decade for the purchase
of items, with these two special funds. In spite of this, the Sheriff's Office has followed
procedures for purchases from these funds mirroring the County's procurement code.
Each purchase is reviewed through the Sheriff's Office Chain of Command and justified
under the terms of the special fund. In addition, sole source information or quotations
are received and documented and county vendors are used for purchases.
The County's Internal Audit Department at the direction of the Board of Supervisors and
County Management has determined that the Sheriffs Office did not receive County
required County approvals even though the Board and County Management have no
authority to decide what can be purchased with Jail Enhancement Funds.
The total unreliability of the current fleet of transport buses forced this Office to take
action to resolve its problem of getting inmates to court and appointments on time. In
addition, acutely aware of the County's financial situation and the unavailability of
taxpayer funded revenues, the Sheriffs Office determined there was sufficient funds in
JEF (funding from fines, penalties and forfeitures) and made the business decision to
proceed with implementing this enhancement to our detention operations. Further, this
Office followed the procurement and reporting requirements for the purchase of the bus.

Wells Fargo Plaza e100 West Washington e Suite 1900 e Phoenix, Arizona 85003
(602\ 876_1000 e Statewide Toll Free 1·800·352-4553 • WWW.MCSO.ORG

Based on the recommendations of Internal Audit, it now appears that County Materials
Management should be providing customer support for purchases made with special
funds. If that is the case, why won't the Materials Management Department allow the
use of County requisitioning and purchasing systems to eliminate the need for this Office
to duplicate what is already in place in County systems?
The purchase of the Mel Bus was not made maliciously or as an attempt to usurp the
policies of the Board of Supervisors. The purchase was a business decision to get
critical equipment quickly.
Unfortunately, the Board of Supervisors and County
Management are allowing bureaucratic policies and power plays to get in the way of
releasing the bus for service by this Office.
I am confident a resolution can be reached on how the County deals with special fund
purchases and the final release of the Mel bus.

\(:Y, L---...:=r=~
Joseph M. Arpaio
Sheriff

 

 

The Habeas Citebook Ineffective Counsel Side
PLN Subscribe Now Ad 450x450
CLN Subscribe Now Ad 450x600