This chapter examines the Kerrville Independent School District's (KISD's) purchasing functions in three sections:
B. CONTRACT MANAGEMENT
A contract is a legally enforceable agreement between two or more competent parties, is mutually binding and obligates one party to furnish something of value and the other party to provide consideration. School districts should have a contract management process that covers the areas of contract negotiation and contract compliance. The contract negotiation process ensures that contracts awarded to bidders are for the best available goods and services at the best prices with terms that are favorable to the district. The negotiation process should also ensure the proper evaluation of terms and conditions by district finance or purchasing staff and that the school board members receive adequate information before voting to accept a contract.
After a contract is awarded, school districts should have a process to evaluate the services rendered or products provided under the contract to ensure the execution of contract terms. The monitoring process should also ensure that the district has someone to represent the district as a final authority for disputes that may arise. In addition, the monitoring process should have a mechanism by which to evaluate a vendor's performance and provide feedback or initiate corrective action when warranted.
KISD has no formal contract negotiation or contract monitoring processes in place. The absence of such a process places the district at risk for abuse by vendors and contractors. In addition, not all contracts go through a legal review by the district. Departments are allowed to enter into contracts without the central office's knowledge. The district has many contracts in place that the Finance Department does not know about.
When asked to provide a listing of all district contracts, district staff sent the review team to several individual departments including Purchasing, Finance, Child Nutrition, Transportation and Maintenance.
KISD has no policy requiring that all contracts be reviewed by the Finance Department, nor does it have a policy that requires contracts to be reviewed for legal issues before being executed.
School districts and other governmental entities have rigid contract management and compliance procedures in place to ensure that contracting processes are efficient and effective and that they avoid legal, ethical and conflict of interest problems. A sound set of procedures and practices for contract management include ensuring that:
- The district obtain value from its contracts;
- All requirements of law and regulations are met before executing an action;
- All contractor and vendor references, licensures or professional affiliations are verified;
- Sufficient funds are available for obligation;
- Contractors receive impartial, fair and equitable treatment; and
- All parties comply with terms of contracts.
Establish a contracting process and assign a staff member in the Finance Department to monitor vendor compliance.
Establishing and enforcing contracting procedures and processes will help the district improve the services it receives, and help protect the district from abuse by contractors and vendors.
IMPLEMENTATION STRATEGIES AND TIMELINE
1. The superintendent directs the assistant superintendent of Business and Finance to develop a contracting process. October 2002 2. The assistant superintendent of Business and Finance develops a contract negotiation and monitoring process that includes input from all applicable department managers and the district's legal counsel. October 2002 3. The assistant superintendent of Business and Finance works with department managers to develop specific performance measures to include in contract requirements based on best practices of other school districts and KISD's needs. Ongoing 4. The assistant superintendent of Business and Finance and the appropriate department manager monitor the process to ensure its implementation. The assistant superintendent of Business and Finance provides corrective action to employees who are not following the process. Ongoing 5. The assistant superintendent of Business and Finance assigns the Purchasing supervisor the responsibility of monitoring contract compliance in the district. November 2002 and Ongoing 6. The Purchasing supervisor begins to monitor contract compliance in the district and provides corrective action to employees who are not following the process. November 2002 and Ongoing 7. The assistant superintendent of Business and Finance makes regular reports to the school board about contracts under negotiation and contract monitoring issues for contracts that are in place. Ongoing
This recommendation can be implemented with existing resources.