To: Aust Commies From: Nike Singleton, Chet Internal Autor Re: ‘Sole Source and Job Oréer Contract Process Reviow Date: ‘August 14,2018 Executive Summary ‘The Dallas Independent Schoo! District (DISD) Beard of Trstoes (Boar) requested the Office of intemal Aud (Irteral Aust nate a revew of purchases for possibie creurwention of the ‘compelve procurement process that caus have resulted in fraud, waste, andor abuse. Internal uci began the review by nalyzing purchases by Boaré documents. As this analysis was being performed, questons over certain jb order contracts (JOC) inthe Capital Improvement Department were received; therefor, Internal Audit opted to review the JOOS Inflated in that department In ation, ou analysis of Board documents also led Internal Audit to review he highest dolar Sole sour transaction made during Fiscal Vea 2016. This sole source transaction swolved ‘he Distr’ tansiion to PowerSenoo! Student Information System (SIS) Fom Chencary ‘Student information System (SMS) and amounted toa $10 milion project, [At the conclusion ofthese reviws Internal Aut determined the nuances surrounding the transactions suppor the same concusion that was the overazching theme inthe Weaver ‘memorandum for procurement operations. The Diste's previous Procurement Department ‘management aid not constant exerize contol over the procuramant process, ata "ing On the guidance and dracton ftom ond user dopartmants. This syle of operation led to. inefficiencies n the Distict's ably o propery maintain a compatve purchasing process and Its abit to effectively monitor fr camptance with internal and extemal requrements. Ourent Procurement Department management is waking fo establish a more proactve rie with purchasing process; and, through communications wth Intemel Aud, appears they are ‘Bccorpishing their goal Internal Audit would ke to note the sole source and JOC transactions described below were reviowed with autsde counel. Outside counci's overarching opinion Was that for bath JOC and sole source transactions the established law and Distt polis do nt provide th detaled ‘uidance necosear to deitvely determine compsance, Therefore, we cannot 2ay the ‘eansactons reviewed were unalowable or inappropriate. The Depuly Superntendant for ‘Operations has already begun comeaive action forthe possible JOC issues, The Deputy ‘Superintendent has suspended the use ofthe JOC method forth procurement of services within the maintenance department. The Construcson Services Deparment is formalzing 8 ‘now Request for Proposals (RFP) for JOC's tha wl be lized in the future, upen formal ‘approval bythe Board, The new Executive Director for Procurement has also adresse ‘issues with sole source procedures and is greatly reducing ther use, “The individuals that held primary responsibilty over the questoned tansactins are no longer ‘employed wih the District. This has aided in refoving the possbily of continued vansactons that may cause questions. However, Ihas hindered ou ably to determine @defta cause Preetisti Sign con Schl So arasee Dist forthe issues ientfed below. Observations Sole Source: + The movement rom the SMS fo SIS was brought fo the Procurement Department by Information Technology 88 an uparad and nota new product purchase, However, tiscussions with the vendors development tam concluded the two products were aiterent. +The Dict’ narmal process for system upgrade purchases involving new commercial products dona through a competive process. + Internal emai conversations within the Information Technology Deparment showed employees making the majoty push fowarés the solo sours iransacton. Atr several ff these discussione, appeared thatthe Procurement Department agreed tothe ‘verve of purchase + The transactions represented a $10.5 millon project that was nat compete id +Other student information systems do edt het provide similar serioes that are seen vith SIS. It shouldbe noted tha certain crcumstances surrounding this specie ransaction ld toa lack of understanding on how to best proceed wih the purchase. The cxginal ouners ofthe ‘Company for SMS sold thar product to anchor corporation. This corporation ls phasing cut 'S€S and aleo the suppor provide fo In order to bet facitate@ movement into thir new product, SIS. thay offered fe explanation ofan upgrade to Polp ease the Wansiton. The Fesults ofthis lack of understanding and back and forth conversations Between the Procurement Departmen an Information Tecnology led to a ten-month ong approval process forthe sole sourea, This is ypealy a langer ime period than going through he ‘ermal bidcing procedures Job Order Contracts: Dist policy states al contracts valued at $50,000 or more inthe aggregate foreach 12. ‘month period eal be made by the method tha provides the best value forthe District. Policy| Fete eight methods fr procuring a canebuction conract. One met ssted for satistying tis ‘eaurerentis the JOC (CY/-Legal). In adlon,constructon cotracs valued at or above $50,000 shallbe submited tothe Beart fr approval (CV-Loea) {Job order contracting ea procurement method used fr maintenance, pal, alteration, Tenovation, romediton, or minor constuction of afecity when th work is of a recurring falure; but the delvery times, types and quantities of work ae indefinite. (CVF-Lepal) {Wen using a JOC the Board shal approve sach job, task, or purchase order thal exceeds '8500,000. (CVF-Legal)Inde — et aia ne During intemal Auct's examination of the use of JOCS inthe Maintenance Department, we iscovered suations thet raised questions regarding compliance wih Stat aw and Dstt policy. The flowing examples were reviewed: + Campus roofing project *+ Campus carbon monoxide monitors project Roofing Projects ‘2 The use of inconsistent purchase methods for similar projects; Lo, a REP purchase retto was Issued foro! repair of fe schools (Calle, Kright, Polk, Foster, and Salaivar = toll approved $2,750,000) ané JOC method was used for rot ropa at 12 ‘school (Hllerest, Kramer, Dunbar, Mala, Wison, Preston Hotow, Rogers, Lipscomb, DeGoljer, Longfstow, Tice, and Gooch). Specie purchasing Information onthe 12 schools can ba seen nthe chart bow Po. Po, Po. campus Number___Date___Amount ‘thar Kramer ES eotoas —aTt6 $498,383 Wiliam Lipscombes 602968 31/18 8485.527 Preston Hallow ES corz7e 47816 $496,750 Hilorest HS sora 2gité $483,350 Woodrow Wiison HS SO5773 2/14 $488.07! Pui Dunbar ES 602268 3286 $451,925 Dan D. Rogers ES s9s7es 20278 $486,325 Eduardo Mata ES sestes 2248 $490,562 Everete DeGoherES Sonia /O0NG 900,000 “Tom Gagen £8 soos tine $400,570 swans Tiehe ES 5765389255 $120,000 Henry Lengfelow MS ‘See Below (©The rot repair of Longfellow Elementary wes spit between two POs totaling $882,444, which would have required Board approval performed as one projec: 19 PO 565605 ($484,112) dated June 29%, 2015 ~ there i no evidence of @ ‘suggested completion cate ater than what is presented in he Dstite SchoolDude system ~ June 20", 2016. © PO 882285 ($380,251.99) dated January 26, 2016 — there is no evidence of 8 ‘suggested compleion cate other than what is presentad inthe District's ‘SchoolDude system — March 28", 2017 © intemal Aust inquired of the former Drector of Capa Improvement (Waintenance) as to why the projects had been seperated and were informed {hat it has been an industry standard to phase rooting projects around schco! ‘operations by scheduling summer work. Thisinterpretalon was vlted though Procurement in spring of 2018." (Iteral Aut has learned that tis Interpretation has changed inthe Procurement Deparment an that projects of this manner would no langer be separated)