Report 2016-125.1 Recommendation 9 Responses
Report 2016-125.1: The University of California Office of the President: It Has Not Adequately Ensured Compliance With Its Employee Displacement and Services Contract Policies (Release Date: August 2017)
Recommendation #9 To: University of California
To ensure that the university achieves its goals of obtaining services at the lowest cost or best value and of providing vendors with fair access to contracting opportunities, the Office of the President should revise the university's contract manual to narrow the exemption from competition to only selected professional services, similar to the State Contracting Manual.
Annual Follow-Up Agency Response From October 2019
As with all UC contracting, UC departments are strongly encouraged to engage in competitive procurement for the acquisition of professional services, unless another method of procurement is required for that particular type of service. If a UC department determines an exemption or exception applies, then the UC department is required to complete a UC "Source Selection & Price Reasonableness Justification Form" to substantiate the appropriateness of source selection and price reasonableness. Due to the extraordinarily large breadth and depth of professional services required to serve our mission, it would be overly tedious and burdensome, if in fact possible, for UC to narrowly define the professional services contracts that it considers exempt from competitive bidding.
- Completion Date: November 2017
California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement
We stand by the recommendation we made for the university to more narrowly define which professional services are exempt from competition. At this time, the university's contract manual provides a broad definition of professional services that are exempt from competitive bidding and the revisions the university has made do not narrow the exemption from competition to selected professional services as we had recommended. The university's responses to this recommendation indicates that it does not plan to make further changes to its contracts manual to implement this recommendation.
- Auditee did not substantiate its claim of full implementation
- Auditee did not address all aspects of the recommendation
Annual Follow-Up Agency Response From October 2018
We continue to agree with the recommendation to narrow the exemption from competition to only selected professional services, and believe that we have addressed this in the revision to BUS-43 which states:
"Professional Services: Highly specialized functions, typically of a technical nature, performed by a supplier that, with respect to the services to be rendered, most commonly a) has a professional license; b) is licensed by a regulatory body; and/or c) is able to obtain professional errors and omissions insurance. Professional services are of a nature that the University would consider the supplier's experience, qualifications and skills to be more important than comparative cost when selecting a supplier. Examples of professional services include medicine and related medical services, and legal, accounting, architectural, and engineering services."
Beyond the above reference in the "Definitions" section, Part 1, Purchasing Transactions, Sub-Paragraph D.1 has been modified to emphasize that although competitive bidding may not be required for Professional Services, competition is still strongly encouraged if possible.
- Completion Date: November 2017
California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented
Although the Office of the President made certain revisions to the university's contract manual to encourage competitive bidding for professional services, the revisions do not narrow the exemption from competition to selected professional services as we had recommended.
Furthermore, the language that the Office of the President quotes in its most recent response is from the Definitions section. The text regarding exemptions from competition continues to give procurement staff wide latitude to contract for professional services.
Specifically, the intent of our recommendation was that the university more narrowly define the professional services that it considers exempt from competitive bidding, but its contract manual still only provides a broad definition.
1-Year Agency Response
We continue to agree with the recommendation to narrow the exemption from competition to only selected professional services, and believe that we have addressed this in the revision to BUS-43 which states:
"Professional Services: Highly specialized functions, typically of a technical nature, performed by a supplier that, with respect to the services to be rendered, most commonly a) has a professional license; b) is licensed by a regulatory body; and/or c) is able to obtain professional errors and omissions insurance. Professional services are of a nature that the University would consider the supplier's experience, qualifications and skills to be more important than comparative cost when selecting a supplier. Examples of professional services include medicine and related medical services, and legal, accounting, architectural, and engineering services."
- Completion Date: November 2017
- Response Date: August 2018
California State Auditor's Assessment of 1-Year Status: Partially Implemented
Although the Office of the President made certain revisions to the university's contract manual to encourage competitive bidding for professional services, the revisions do not narrow the exemption from competition to selected professional services as we had recommended.
Furthermore, the language that the Office of the President quotes in its most recent response is from the Definitions section. The text regarding exemptions from competition continues to give procurement staff wide latitude to contract for professional services.
Specifically, the intent of our recommendation was that the university more narrowly define the professional services that it considers exempt from competitive bidding, but its contract manual still only provides a broad definition.
6-Month Agency Response
To narrow the exemption from competition to only selected professional services, the Office of the President:
-Amended the definition of Professional and Personal Services in BUS-43 and encouraged competitive bidding even when a potential exemption exists
-Sent a letter from the UC Chief Procurement Officer to all Campus and the Office of the President procurement leaders to remind to reinforce UC's commitment to encourage competitive bidding even when a potential exemption exists
-Conducted training for all Procurement systemwide and campus management and staff on November 29, 2017. An additional session for the Procurement Leadership Council was conducted on November 7, 2017.
-Updated templates, job aids and FAQs published on the UCOP website
- Completion Date: November 2017
- Response Date: February 2018
California State Auditor's Assessment of 6-Month Status: Partially Implemented
Although the Office of the President made certain revisions to the university's contract manual to encourage competitive bidding for professional services, the revisions do not narrow the exemption from competition to selected professional services as we had recommended. Specifically, the intent of our recommendation was that the university more narrowly define the professional services that it considers exempt from competitive bidding, but its contract manual still only provides a broad definition.
- Auditee did not address all aspects of the recommendation
60-Day Agency Response
To achieve the objective of this recommendation UC Procurement will:
-Revise its contracting policy (BUS-43) to:
-Amend the definitions of Professional Services and Personal Services
-Reinforce UC's commitment to encourage competitive bidding even when a potential exemption exists
-Address these items in a webinar/training event for all procurement leaders and staff
-Update templates, job aids and FAQs on the Office of the President's website
- Estimated Completion Date: December 2017
- Response Date: October 2017
California State Auditor's Assessment of 60-Day Status: Pending
All Recommendations in 2016-125.1
Agency responses received are posted verbatim.