State auditor releases best practices review

Published 12:00 am Monday, November 21, 2005

ST. PAUL &045;State Auditor Pat Anderson recently released her second annual best practices review on local government public service delivery.

The review, titled Contracting and Procurement in the Public Sector, highlights examples of successful contracting and procurement operations by local governments in Minnesota.

&8220;It’s important that government at all levels constantly look for new and better ways to operate more effectively and more efficiently,&8221; said Anderson. &8220;This review will serve as an excellent reference tool for local government officials.&8221;

Email newsletter signup

By highlighting examples of successful and innovative contracting and procurement around the

state, the report outlines those elements that are integral to success. The review also offers specific best practices for exploring and evaluating contracting and procurement operations.

State auditor’s recommendations

Best practices reviews highlight current practices that could be adopted (or adapted) by local governments to improve their operations. In addition, based on the information and feedback obtained through the review process, the State Auditor is making three specific recommendations as it relates to improving contracting for services and procurement.

– The state auditor encourages associations of local governments such as the League of Minnesota Cities, Minnesota Association of Townships, the Association of Minnesota Counties, the Minnesota School Boards Association, and the Minnesota Association of School Administrators to offer training on project management and contract maintenance.

Project management and contract maintenance functions are important parts of the contracting process. Unfortunately, according to the results of the survey conducted for this study, only one-third of the individuals who oversee contract administration had received any training in this area.

In addition, of the individuals who had received training, one-third indicated that it was on-the-job training or experience from a prior position.

– The Auditor encourages all counties to join the State’s Cooperative Purchasin Venture at the $1,500 level so that all townships and fourth-class cities are able

to make use of the &8220;state contract&8221; for free.

As outlined in the report, the Cooperative Purchasing Venture (CPV) is a members-only program that enables participants to purchase goods and services under contract terms established by the state of Minnesota. All governmental units are eligible for CPV membership. If a township or city wants to join the CPV individually, it costs $500. However, if a county pays $1,500, all the

townships and fourth class cities that lie within the county’s boundaries become members of the CPV for free. This represents, for example, a $44,500 value for townships and fourth-class cities in St. Louis County alone.

While $500 is immaterial for large local governments, it is enough of a burden on many smaller entities to dissuade them from joining the CPV. The State Auditor’s Office believes that man smaller entities could benefit from a membership in the program and that encouraging counties to join at the $1,500 level will result in savings for many smaller communities.

– The Auditor encourages the exploration of a limited exemption to current

contracting law to allow townships to &8220;piggy-back&8221; on existing competitively bid road construction and maintenance contracts between a vendor and an adjacent local governmental entity without a pre-existing joint powers agreement.

Local governments are currently prohibited from using a contract that was competitively bid by another entity in place of bidding out their own contract without a previously signed joint powers agreement.

To illustrate this issue, consider a competitively bid county road project. During the project, the contractor approaches the town board and proposes paving a town road that abuts the section currently being paved at the county’s price. If paving the road is estimated to cost over $50,000, the town is prohibited from piggybacking on the county contract, and instead must have the project competitively bid separately. This may waste time. In addition, if the original county contract was much larger than the town project, it may increase cost because the town would miss out on any savings that could have been achieved by the economies of scale of using the county price.

The purpose of this recommendation would be to allow townships to save time and money by taking advantage of the costs and terms of an existing contract.