Follow-up Audit Report on the Office of Payroll Administration Small Procurement Operation

SUMMARY OF FINDINGS AND CONCLUSIONS

This follow-up audit determined whether the Office of Payroll Administration (OPA) implemented the recommendations made in an earlier audit, Audit Report on the New York City Office of Payroll Administration Small Procurement Operation (FR97-150A, issued June 25, 1997). That report evaluated the compliance of OPA’s small procurement operation with Procurement Policy Board (PPB) rules, Comptroller’s Directives, local laws, and other City guidelines. In this report, we discuss the previous audit’s findings and recommendations, as well as the current implementation status of each recommendation.

The previous audit found that OPA: violated PPB rules by artificially dividing purchases in order to meet the small purchase requirements; did not always solicit bids, when required; did not, as required by PPB rules, indicate in its purchase files that the price paid was lower than the prevailing market rate when it purchased items from vendors with State contracts; charged the incorrect object codes; did not always provide adequate justification for using sole source vendors; and, issued purchase orders that lacked complete specifications. Consequently, the previous report made six recommendations.

Of the six recommendations made in the previous report, two have been implemented, two have been partially implemented, one has not been implemented, and one is not applicable. The details of the earlier recommendations and their current implementation status follow.

OPA should:

• "Obtain bids and enter into contracts with vendors when required to do so by the PPB rules."
• "Provide adequate justification when using sole source vendor(s)."
• "Issue purchase orders with complete specifications, as required by Directive #24."
• "Obtain bids for procurements in excess of $2,500, as required by the PPB rules."
• "Document its inter-governmental transactions by having its ACCO [Agency Chief Contracting Officer] prepare a written approval for these types of transactions, and document that the price paid was lower than the prevailing prices, as required by PPB rules. The approval and price analysis prepared by the ACCO should be kept on file."
• "Ensure that the correct object code is charged for all purchases."

To address the problems that still exist, we now recommend that OPA:

• Ensure that all purchase orders contain clear, precise, and accurate specifications.
• Make a concerted effort to research the market to determine that the prices listed in the New York State contracts are lower than the prevailing market prices at the time of procurement. OPA should document this research in the purchase files.
• Carefully review the Chart of Accounts and use the correct object codes for its expenses.

The matters covered in this report were discussed with OPA officials during and at the conclusion of this audit. A preliminary draft report was sent to OPA officials on May 20, 2002. On May 22, 2002, OPA decided that an exit conference would not be necessary. On May 23, 2002, we submitted a draft report to OPA officials with a request for comments. We received a written response from OPA on June 7, 2002. OPA stated that it has taken or will take the steps necessary to "assure that the cited recommendations are fully implemented."