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SUMMARY
In July 1999, the Office of the Attorney
General requested the Office of the Auditor General to review allegations of
financial improprieties involving the operation of the Mohave Educational
Services Cooperative (MESC). Particularly, the allegations indicated that Mohave
Educational Services Cooperative officials may have improperly conducted
procurement, accepted gratuities, and unfairly charged certain fees to its
members. As a result of that request, and in conjunction with the Attorney
General’s Office, we conducted an investigation of those allegations and
submitted the following findings to the Attorney General in January 2003.
The findings are grouped into the
following five sections:
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MESC has not followed procurement
statutes and rules—Although MESC issues numerous contracts proclaimed to be
based on procurement practices that adhere to the Arizona Procurement Code
and the Arizona State Board of Education Procurement Rules, we found that
MESC consistently failed to follow many of these rules. Specifically, MESC
inappropriately used the more subjective request for proposal procurement
process; did not properly evaluate vendor responses to those proposals;
failed to make determinations of whether prices were fair and reasonable;
and improperly awarded contracts to multiple vendors for the same products.
During the
course of our review, MESC hired its first procurement director and began
revising their procurement practices to comply with the Arizona Procurement Code
and the Arizona State Board of Education Procurement Rules.
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MESC does not provide an economic
value for its members—MESC’s procurement procedures and contract oversight
practices did not consistently generate value for Arizona’s public entities.
In fact, despite MESC’s purchasing power, several products on MESC contracts
were priced higher than other purchasing cooperatives’ and school districts’
contracts. Also, MESC’s negligent oversight of purchases made from its own
contracts allowed at least one vendor to overcharge members.
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MESC charges its members
inequitably—As a service program established pursuant to A.R.S. §15-365,
MESC is required to share its administrative and general service costs on a
user basis; however, MESC charges its members inequitably. Some members pay
for services they don’t use, some pay more than others, and others do not
pay at all.
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MESC’s financial practices violate
rules and regulations—Although MESC is subject to Mohave County oversight,
rules, and regulations, MESC spent its money without regard to county rules
and regulations. Specifically, MESC’s merit and personnel practices exceeded
parameters within the Mohave County Merit System Rules and Regulations;
MESC’s travel-related purchases violated Mohave County’s travel policy; and
MESC officials improperly distributed certain benefits and gifts to
themselves, other governmental officials, and vendors.
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