1. Why must school districts follow the School District Procurement Rules?
A.R.S. §15-213 requires districts to follow procurement practices adopted by the State Board of Education. The School District Procurement Rules are based on the Arizona Procurement Code (A.R.S. Title 41, Ch. 23), which is the legislative authority and guidance for procurement. These rules:
2. Where can school districts find the current procurement thresholds, purchasing guidelines and the School District Procurement Rules?
USFR §VI-G, Expenditures includes the current guidelines for written quotes and the threshold for competitive sealed bids and proposals.
The School District Procurement Rules are available on the Arizona Secretary of State’s website in Title 7 Education, Ch. 2 State Board of Education (Board), Articles 10 and 11, School District Procurement.
School District Procurement Rules the Board recently adopted are available at: Rules | Arizona State Board of Education (az.gov)
3. What competitive purchasing does the USFR require for purchases below $100,000?
Districts should obtain written quotes from at least 3 vendors for purchases costing at least $10,000 and less than $100,000. Refer to the USFR §VI-G, Expenditures for detailed requirements.
4. How does a school district compile a prospective bidders' list, and what are the requirements if a district does not have at least 5 vendors on its prospective bidders' list?
School District Procurement Rule R7-2-1023 requires a district to compile and maintain a prospective bidders' list. Vendors desiring to be included on a district's prospective bidders' list must notify the district, and the district should mail or otherwise provide the person with the district's procedures for inclusion on the bidders' list.
If a district's prospective bidders' list has 4 or fewer prospective bidders on the list, then Rule R7-2-1022(B) requires the district to publish notices of the invitation for bids or request for proposals in the official newspaper of the county within which the district is located, in addition to issuing an invitation for bids or request for proposals to vendors that are on the bidders' list.
5. Does a school district need to advertise when procuring services?
Yes. School District Procurement Rule R7-2-1022(A) requires districts to advertise the notice of the IFB/RFP if procuring services other than the following:
Further, for all other goods, services, and construction procurements, if there are 4 or fewer bidders on the bidders list, the district must advertise the notice of the IFB/RFP.
6. Are school districts required to keep envelopes from bidders/offerors as part of the IFB/RFP file documentation?
Districts must maintain a record of all bids/proposals received, including the time and date each bid/proposal or modification is received. Maintaining the time-and-date-stamped envelopes in the bid file is 1 way to comply with these rules. Alternatively, districts may keep photocopies of the time-and-date-stamped envelope/box. The district may also choose to maintain a log of bids/proposals received, with a second person signing off at the bid submission deadline that all bids received have been logged in and no further bids will be entered below that point in the log. School District Procurement Rules R7-2-1029(A) and (B), and R7-2-1045 (A) and (B).
7. If a school district has a 3-year contract with an architect, can the district issue a purchase order for services in the last year of the contract knowing the architect will not be able to complete the architectural work before the end of the contract period?
Yes, if a majority of the work will be done in the last year of the contract and work will not carry over substantially into the next fiscal year. However, the district should not ask or allow the architect to start work on any new projects scheduled for the fiscal year after the contract period, thereby circumventing the School District Procurement Rules that would require those services to be competitively bid. School District Procurement Rule R7-2-1093(E)
8. How does a school district document that a vendor is sole source?
If a district has evaluated the availability of the required goods or services and determined that there is only 1 source for those goods or services, then it may award a sole source procurement contract without competition. Before making a purchase or entering into a contract, the governing board must determine in writing, following the requirements in School District Procurement Rule R7-2-1053, that there is only 1 source for the required material, service, or construction item. However, designating a vendor as a sole source should be avoided, except when no reasonable alternative exists.
9. What is a due diligence?
Due diligence is the process of obtaining and reviewing documentation to verify that the procuring entity procured contracts pursuant to the School District Procurement Rules and determining that the contract price and terms are favorable to the district to receive the best value for the good or service desired.
Whether administering or purchasing from a cooperative purchasing agreement, districts are responsible for ensuring that procurements are done in accordance with School District Procurement Rules.
10. What documentation should a school district maintain to support that due diligence has been completed for purchases made through a cooperative?
Due diligence, at a minimum, should include verification that the cooperative contract was awarded through a competitive process. Districts should review the cooperative’s procurement compliance questionnaire (PQ), if available. If a PQ is not available, a district should review a sample of cooperative contract documents, including:
If deficiencies are noted based the review of the PQ or the contact documents, districts should evaluate the frequency and severity of those deficiencies to determine if they can rely on that contract or take additional steps to remedy the deficiency and use the contract.
11. What documentation should school districts maintain to support their reasons for the use of any specified professional services, construction, construction services, or materials to an entity selected from a qualified select bidders list or through a school purchasing cooperative?
Based on R7-2-1004(B), districts are authorized to prescribe methods and operational procedures to be used in preparing written determinations.
Districts should prepare and maintain written determinations, as required by R7-2-1004 to support their reason(s) for the selection of a particular vendor, including for any specified professional services, construction, construction services, or materials to an entity selected from a qualified select bidders list or through a school purchasing cooperative. The determination shall specify the reasons for the determination, including how the determination was made. Documentation should be included in the procurement file to substantiate the determination.
12. What documentation should be included in a school district procurement file?
The procurement file for competitive sealed bids or proposals (either paper or electronic), as applicable, could include the following:
The procurement file should be available for public inspection within 10 days after contract award, as prescribed in the School District Procurement Rules. We have developed a checklist that districts may use to assist them in compiling their procurement files. The complexity of the file is based on the type of procurement that was completed.
13. How can a school district determine if pricing and contract terms are “fair and reasonable?"
Districts should carefully research goods or services and determine in writing that the pricing or contract terms are fair and reasonable. If the good or service needed has been provided before, districts should consider what price was previously paid and research and determine if another district has purchased the same item. Districts may also review documents and evaluate the following, as applicable, to determine:
This research will provide valuable pricing information that can be used during negotiations and in determining price reasonableness. R7-2-1079, R7-2-1110 and R7-2-1122
14. Is a school district required to follow the School District Procurement Rules and the USFR for E-rate expenditures?
Yes. The School District Procurement Rules and the requirements in the USFR apply to all district expenditures of public money, including federal grant monies such as E-rate monies. Additionally, when expending federal grant monies, districts must comply with the individual grant agreements. School District Procurement Rule R7-2-1002(A).
15. Where can the requirements for creating a qualified select bidders list or using construction-manager-at-risk, design-build, or job-order-contracting methods to build school facilities be found?
School District Procurement Rule R7-2-1101 includes procedures for creating a qualified select bidders list, R7-2-1106—1115 includes procedures for construction-manager-at-risk, design-build, and job-order contracting methods of construction, and R7-2-1117—1123 relate to specified professional services such as architects or engineers.
16. Where can the requirements for the procurement of goods and information services using electronic, on-line bidding be found?
School District Procurement Rule R7-2-1021(B) addresses the use of electronic, on-line bidding and R7-2-1018 addresses the use of reverse auctions.
17. Are Auxiliary Operations and Community School Funds expenditures exempt from the School District Procurement Rules and USFR guidelines for written quotes?
Yes/No. Auxiliary Operations and Community School Fund monies are public monies. The School District Procurement Rules or USFR guidelines for written price quotes apply to every district expenditure of public monies when the cost of the construction, materials, or services is at least $10,000, unless an expenditure is specifically exempted by a federal/State law or regulation or is otherwise specifically exempted from the Procurement Rules or USFR guidelines (e.g., payroll or student activities monies).
Example:
A district decides to run a dance program through the Community School Program/Fund and wants to hire a dance instructor.
Yes. If the district hires a new employee to be the dance instructor, the payment would not be required to be bid.
Yes. If the district hires a current district employee to be the instructor (by addendum to a teacher's contract or classified employee's agreement), the payment would not be required to be bid since the extra duties are within the realm of duties normally added by addendum to a contract or agreement (e.g., coaching, or sponsoring a student activity or extracurricular activity).
Note—Services such as t-shirt silk screening, painting buildings, plumbing, construction, etc., performed by a teacher/employee acting as a vendor, regardless of what fund they are paid out of, would require the district to follow the School District Procurement Rules. (USFR §VI-G, Expenditures).
No. If the district hires someone other than a district employee to be the instructor, the district should obtain written quotes or formal competitive bids in accordance with the USFR guidelines or Procurement Rules, as applicable, for this service.
If the district obtains written quotes and does not want to select the lowest bidder, they should document why they selected someone other than the lowest bidder (e.g., the person who was the lowest bidder does not know how to dance!).
18. Are expenditures from the Gifts and Donations Fund exempt from the School District Procurement Rules and USFR guidelines for written quotes?
Sometimes.
Articles 10 and 11 do not apply to purchases made in compliance with the terms and conditions of any grant, gift, bequest, or cooperative agreement. Therefore, competitive bids/proposals and quotes are not necessary if, for example, the donor has specified, as a condition of the gift, the specific vendor or contractor to be used. If the gift’s or donation’s terms and conditions are not specific as to the use of a particular vendor or contractor, then the district should follow the School District Procurement Rules or USFR guidelines because the School District Procurement Rules or USFR guidelines apply to every district expenditure of public monies when the cost of the construction, materials, or services is at least $10,000. R7-2-1002(C)(15)
19. Can school district employees accept gifts or benefits from vendors?
No. A.R.S. §15-213(N) prohibits district employees from accepting personal gifts from vendors.
Further, A.R.S. §15-213(Q)(1) defines “gift or benefit” as a payment, distribution, expenditure, advance, deposit or donation of monies, any intangible personal property or any kind of tangible personal or real property. A gift or benefit does not include items that are of nominal value such as a greeting card, t-shirt, mug or pen, food or beverage, or expenses or sponsorships relating to a special event or function to which individuals involved in procurement are invited.
In addition, A.R.S. §38-504(C) prohibits a public officer or employee from using their official position to secure anything of value or benefit for themselves that they would not ordinarily receive as part of their official duties, if the thing or benefit is of such character as to manifest a substantial and improper influence on the officer or employee with respect to their official duties.
Some scenarios to consider and whether they could be considered a personal gift or benefit:
1. A district vendor invites you to a charity event and pays your fee that includes meals, hotel stay, and golf. Highly questionable.
2. The vendor also pays for your spouse to attend the charity event. Highly questionable.
3. A district vendor, also a friend, gives you a birthday gift. Depends. Are you in a position as defined under A.R.S. §15-213?
4. A district employee, who is also a district foundation board member, seeks donations from district vendors for a foundation event. Does not appear to be, but caution is needed. The scenarios above and any other types of actions that might be considered or give the appearance of a personal gift or benefit should be carefully evaluated and discussed with district management and the district’s legal counsel, as appropriate, before accepting anything of value.
20. How can school districts and vendors demonstrate that they have taken steps to ensure that employees have not violated the gifting prohibitions?
Districts should train employees about the gifting prohibitions and should require employees involved in the procurement process to attest that they have not violated the gifting prohibition as prescribed in A.R.S. §15-213(N). The employee’s attestation could be included as part of a procurement disclosure statement that is required by R7-2-1008.
Vendors are required to certify that it has taken steps and exercised due diligence to ensure its bid or proposal has not violated the gifting prohibition. A.R.S. §15-213(O), R7-2-1003(J), R7-2-1024(B)(1)(q), or R7-2-1042(A)(1)(l).
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