Audit and Finance Committee Confirming Purchase Orders Reason for the Report During the course of its other

Chapter 3.12 of the El Dorado County Charter documents Purchasing Procedures and is known as the County Purchasing Ordinance. This section of the County Charter provides in part: “3.12.020: The purpose of this chapter is to secure for the county taxpayers the advantages and economies which will result from centralized control over the purchase of supplies, materials, equipment and contractual services resulting from the application of modern, businesslike methods relative to government expenditures for such purchases. Further, this chapter is to adopt policies and procedures governing the purchase of supplies, equipment and contractual services by the county in accordance with the Government Code, section 54201 et seq. 3.12.060: The purchasing agent may, and where legally required to do so, shall, authorize in writing any county department to purchase renewable types of office supplies and materials in total amounts of four hundred ninety-nine and 99/100 dollars ($499.99) or less, utilizing the ‘direct’ purchase order form, independently of the county purchasing agent’s office; but such purchases shall be made in conformity with the applicable procedures. The purchasing agent may also rescind the authorization to purchase independently, by written notice to the county department unless otherwise prohibited by law. 3.12.070 A. Only department heads or their designated representatives may approve and sign direct purchase orders in total amounts of four hundred ninety-nine and 99/100 dollars ($499.99) or less. Department heads may delegate such authority by filing a written authorization therefor with the purchasing agent and the auditor-controller. … C. All departments shall strictly adhere to written purchasing procedures as they may be issued or amended from time to time by the purchasing agent or the board of supervisors.”

The General Services Department in conjunction with the Information Services Department developed a tracking system to report the number and percentage of confirming purchase orders. Confirming or “after the fact” purchase orders are not acceptable and are a violation of County Purchasing Ordinance requirements. The data reflects purchase orders issued between $0 - $10,000.00. Data was not extracted for purchases exceeding $10,000.00 since the competitive bidding threshold is established at $10,000.00 by ordinance. The data does not include the issuance of blanket purchase order purchasing activity, but rather independent purchase orders that were requisitioned by departments as confirming. Following are the results of this tracking system: Reporting Period Total Purchase Total Confirming Percentage Ending Fiscal Year 2000-2001 $14,716 $10,955 74% September 30, 2001 2,544 1,901 75% December 31, 2001 4,043 2,997 74% March 31, 2002 4,552 3,070 67%

Purchase orders are sometimes “split” in order to circumvent required signature authority. For example, while a $15,000 purchase requires competitive bidding, two $7,500 purchases would not. This is an unacceptable practice.

There is no system in place to hold department heads accountable for failing to adhere to County Purchasing Ordinance Requirements.

Purchasing practices that do not adhere to the County Purchasing Ordinance subject the County to risks of overspending and poor budget management.