Responses to the Audit
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The Superior Court of San Diego County
October 21, 2016
Elaine Howle, CPA
State Auditor
621 Capitol Mall, Suite 1200
Sacramento, CA 95814
Re: Response to Report Entitled “Judicial Branch Procurement: The Five
Superior Courts We Reviewed Mostly Adhered to Applicable
Requirements, but Some Improvements Are Needed.”
Dear Ms. Howle:
The Superior Court of California, County of San Diego has reviewed the above-entitled draft audit report. We agree with the findings in this report regarding our court.
Sincerely,
JEFFREY B. BARTON MICHAEL M. RODDY
Presiding Judge Court Executive Officer
The Superior Court of San Joaquin County
October 25, 2016
Ms. Elaine M. State Howle, CPA
California State Auditor
621 Capitol Mall, Suite 1200
Sacramento, CA 95814
Subject: Judicial Branch Procurement Report 2016-301
Dear Ms. Howle,
On behalf of the Superior Court of California, County of San Joaquin, we are pleased to submit our written response to the draft Judicial Branch Procurement Audit Report #2016-301. The attached document summarizes any audit findings for our Court and includes our Court's responses to those findings.
Our Court is pleased that your audit found the remaining elements of our Local Contracting Manual and our contract and procurement practices in compliance with judicial branch contracting requirements.
We look forward to the finalization of the audit report.
Sincerely,
Hon. Jose L. Alva Rosa Junqueiro
Presiding Judge Court Executive Officer
Superior Court of California,
County of San Joaquin
Court’s Response to Judicial Branch
Procurement Audit Report #2016-301
Audit Recommendation 1:
San Joaquin should implement a process for applicable noncompetitive procurements to ensure that the vendor’s prices are fair and reasonable.
Audit Recommendation 2:
San Joaquin should follow the judicial contracting manual’s recommendations for procurement processes, and they should provide and consistently retain in contract files the justification for entering into contracts that they have not competitively bid.
Court’s Response to Recommendations 1 and 2:
The Court’s Local Contracting Manual incorporates the Judicial Branch Contracting Manuals (JBCM) policies and procedures and the Court makes concerted efforts to follow the procurement processes instituted within the JBCM. The Court concedes that there were instances it did not include the sole source justification document, however, the procurements were approved prior to purchase. The Court was able to justify the procurements either through price comparisons or other reasonable justifications why certain procurements were sole sourced. The Court will ensure that all future sole sourced procurements include the sole source justification document prior to purchase.
With regards to the blanket purchased (BPO) order referenced within the Auditor’s report, the Court did not consider the BPO as an exclusive sole source blanket agreement for toner, or a definite quantity agreement. The Court did procure toner from multiple entities during FY15/16. The Court understands the Auditor’s position and will fully evaluate the Court’s use of BPO’s.
Recommendation 3:
San Joaquin should make sure that they are receiving the goods and services they ordered and for which they plan to pay by making payments to vendors only after verifying receipt of the goods or services.
Court’s Response to Recommendation 3:
The Court agrees with this recommendation. The Court paid an invoice for four bottles of water, for jurors, without ensuring the receipt was signed by the receiving Court department. The Court has notified the vendor that invoices will not be paid if signed receipts have not been received by the Accounting department. In addition, the Court has reminded the receiving departments to provide all signed receipts to Accounting.
Recommendation 4:
The San Joaquin court should implement a process to ensure that its staff adheres to the requirements within its policy for exceeding the $1,500 per transaction limit for purchase cards as established in the judicial contracting manual.
Court’s Response to Recommendation 4:
The Court agrees with this recommendation. The Court’s written policy has been revised:
Existing Policy
“If there is a specific business need for exceeding the $1,500 per transaction limit, the purchaser must obtain prior approval and explain the business reason for the higher transaction amount.”
Revised Policy
“If there is a specific business need for exceeding the $1,500 per transaction limit, the purchaser must obtain prior approval and provide a written explanation of the business reason for the higher transaction amount.”
Comments
CALIFORNIA STATE AUDITOR’S COMMENTS ON THE RESPONSE FROM THE SUPERIOR COURT OF SAN JOAQUIN COUNTY
To provide clarity and perspective, we are commenting on the Superior Court of San Joaquin County’s (San Joaquin court) response to our audit. The numbers below correspond to the numbers we have placed in the margin of the San Joaquin court’s response.
The San Joaquin court’s response indicates a lack of understanding of the sole‑source procurement process. As stated here in the Introduction of our report, there are specific requirements that the court is to follow when entering a sole‑source contract. However, basic to these requirements is formal approval of the request to use a sole source procurement. In making that request, the court should describe the goods or services to be procured, explain why a competitive procurement cannot be done, the effort made to solicit competitive bids, the determination that the pricing offered is fair and reasonable, and any special factors affecting the cost or other aspects of the procurement. As noted here in the Introduction, the Public Contract Code contains competitive bidding requirements to provide all qualified bidders with a fair opportunity to enter the bidding process and to eliminate favoritism, fraud, and corruption in the awarding of public contracts. By failing to understand and follow these required and recommended practices, the San Joaquin court risks entering into sole‑source contracts that bypass the competitive process inappropriately.
The San Joaquin court is wrong. The participating addendum of the master agreement it refers to includes some required contract terms, but the basic terms outlining its procurement for multifunction copiers and related software were missing: the rental term—how long it would be renting each copier; type—what type of copiers it was renting; and pricing—how much it would pay for the rental of copiers as well as charges for maintenance, supplies, and copy volume. Lacking these elements, the San Joaquin court failed to enter into a contract that defined appropriately its rental of these multifunction copiers. Moreover, the fact that its procurement system is unable to produce a valid purchase order for this procurement did not preclude the San Joaquin court from manually preparing a purchase order that would clearly outline the rental agreement. Additionally, the mere removal of the language from the template document that the court describes would not make it a valid purchase order because that document continues to lack details such as the price per page copied and the signature of the court manager who approved the procurement. Finally, the participating addendum clearly states that the vendor and the San Joaquin court will use purchase orders that “provide specific detail with regards to delivery, agreed upon rental term and type, pricing, or other detail that is strictly transactional detail.”
The Superior Court of San Mateo
October 21, 2016
Elaine M. Howle, CPA, California State Auditor
621 Capitol Mall, Suite 1200
Sacramento, CA 94815
RE: Report 2016-301
Dear Ms. Howle:
The San Mateo Superior Court has reviewed the draft audit report, Judicial Branch Procurement, Report 2016-301. Listed below are our responses to the five recommendations contained in the report. As you will see, we agree with all of the recommendations and plan to take action on most of them by December 31, 2016 and one by no later than November 2017.
Judicial Branch Procurement Audit Recommendations – Response of the Superior Court of California, County of San Mateo:
Recommendation #1—The court should implement a process for applicable noncompetitive procurements to ensure that vendor’s prices are fair and reasonable.
The Court agrees with the recommendation, specifically as it relates to leveraged purchase agreements. In general, the Court will revise its Local Contracting Manual to include all relevant sections of the JBCM that covers fair and reasonable pricing. Specifically, when utilizing LPAs, the court will take additional steps as needed to determine whether the vendor’s prices are fair and reasonable.
Estimated completion date—December 31, 2016.
Recommendation #2—The court should follow the judicial contracting manual’s recommendation for procurement processes, and should provide and consistently retain in contract files the justifications for entering into contracts that they have not competitively bid.
The Court agrees with the recommendation, specifically as it relates to legal services contracts. The Court will amend its Local Contracting Manual to require the court to make clear and explicit in relevant documents why contracts that are sole sourced are exempt from competitive bidding and will include all documents in the contract files.
Estimated completion date—December 31, 2016.
Recommendation #3—The court should take steps to ensure that appropriate employees authorize all payments.
The Court agrees with the recommendation. It is currently the Court’s policy that all payments must be authorized by the appropriate approving officer and invoices must be signed by the approving officer before they are processed for payment. The court will identify steps that will help ensure that invoices are not paid unless approved by the appropriate officer.
Estimated completion date—December 31, 2016.
Recommendation #4—The court should make sure that they are receiving the good and services they ordered and for which they plan to pay by making payments to vendors only after verifying receipt of the goods or services.
The Court agrees with this recommendation and will immediately instruct division managers to confirm that all supplies ordered are received, sign all delivery packing slips when confirmation is made, and send signed slips to the Court’s finance division. The finance division will confirm receipt of the slips before processing payment. The Court will revise its Local Contracting Manual to include these required steps.
Estimated completion date—December 31, 2016.
Recommendation #5—The court should amend its bottled water service contract to ensure water is purchased for and delivered to jurors and courtroom staff only.
The Court agrees with this recommendation and will amend its bottled water service contract to ensure water is only purchased for and delivered to jury assembly and deliberation rooms and courtrooms.
Estimated completion date—No later than November 2017.
I would like to commend your staff, led by Jerry Lewis, for their professional and courteous demeanor when working with our court staff during the audit process.
Sincerely,
Rodina M. Catalano, Court Executive Officer
Superior Court of California, County of San Mateo
The Superior Court of Tehama County
October 21, 2016
Elaine M. Howle
CPA
California State Auditor
621 Capitol Mall, Suite 1200
Sacramento, CA 95814
RE: Response to Draft Audit Report on Judicial Branch Procurement, Report 2016-301
Dear Ms. Howle:
The Tehama Superior Court has received and reviewed the California State Auditor’s draft report of our procurement practices related to contracts (both competitive and noncompetitive) and payments. The attached document addresses items noted in the audit report concerning contracting practices. Please be aware that the Tehama Court has already taken action on your recommendations to comply with the requirements and recommended practices of the Judicial Council and the State of California to ensure that we obtain the best value for the goods and services purchased.
The Tehama Superior Court is pleased that your audit findings found our Court’s practices and processing of vendor and/or purchase card payments are in compliance with state law and the policies of the Judicial Council of California.
Thank you for your time and effort in reviewing our court for compliance and identifying ways to improve our contracting practices.
If you have any questions or require any additional information, please feel free to contact me directly at 530-527-6198.
Sincerely,
Caryn A. Downing
Court Executive Officer
Enclosure
California State Auditor Report 2016-301
November 16, 2016
Judicial Branch Procurement
RESPONSES TO THE FINDINGS AND RECOMMENDATIONS IN THE PROCUREMENT AND PAYMENT AUDIT OF THE TEHAMA SUPERIOR COURT
Contracting Practices
The Tehama Court did not Consistently Follow Procedures for Noncompetitive Contracts, Particularly Regarding Fair and Reasonable Pricing.
Recommendation:
Tehama should follow a process for applicable noncompetitive procurements to ensure that vendor’s prices are fair and reasonable.
Response:
The Court has revised its Contracts Checklist Form to include fair and reasonable pricing (See attached).
Recommendation:
Tehama should follow the judicial contracting manual’s recommendations for procurement processes, and they should provide and consistently retain in contract files the justifications for entering into contracts that they have not competitively bid.
Response:
The Court agrees with the recommendation and has already implemented a process for retaining justifications for entering into contracts in the actual contract file.
Recommendation:
Tehama should ensure that contracts include all required elements and the Tehama court should ensure that all contracts are properly approved.
Response:
The Court has revised its Contracts Checklist Form to include fair and reasonable pricing (See attached). (This document can be obtained by contacting the California State Auditor's office.