Rutgers University Resists Following Public Bidding Laws

Rutgers University, a New Jersey public university, currently enjoys an exemption from following public bidding requirements applicable to other public New Jersey colleges and universities.  If two state senators have their way, that would all change and would bring Rutgers into the fold along with other public agencies.

Broad Bidding Exemption:  The issue of Rutgers' exemption, which dates back to the 1950s, "allows for exceptions that are so general and undefined, they essentially give Rutgers officials unfettered discretion when selecting vendors," noted NJ State Comptroller Matthew Boxer.

Critical Audit Report:  The State Comptroller recently concluded a 22 month audit of Rutgers' procurement and contracting practices and found that Rutgers does not publicly advertise most of their contracts and solicits contractors from a select list of firms.  State Comptroller Boxer noted that 

"When public tax dollars are being spent, there is an obligation to avoid unfair favoritism toward particular vendors and make every effort to seek the best price available." 

List of Audit Recommendations:  While the University disagreed with many of the findings, they agreed with all of the recommendations, except the first two listed below.

1. The Legislature and Governor, as well as the University itself, should consider imposing on Rutgers a requirement to follow State public bidding requirements.
2. Revise the Policy to enhance competition for contracts exceeding $40,000 by requiring advertising without limit to pre-approved vendors.
3. Revise the Policy to define the criteria that permit non-competitive negotiated contracts as a procurement method.
4. Require documentation explaining the reasons for each non-competitive negotiation or other waiver from a competitive vendor-selection process.
5. Ensure that the Board of Governors approves any non-competitive contract exceeding $1 million.
6. Enforce the Policy addressing waivers from competition for sole source and single source contracts.
7. Require each vendor to submit an ownership disclosure form to facilitate enforcement of the Policy concerning the award of contracts to employees and related parties.
8. Utilize the DPMC system for prequalification of contractors, architects, engineers and other construction professionals.
9. Monitor adherence to revised Board policies concerning approval of employee contracts.
10. Monitor adherence to the University's policies and procedures that limit the use of Quick Orders.
11. Attempt to negotiate discount pricing agreements with vendors being paid substantial amounts by the University as a result of bulk or repetitive purchases.
12. Require the Internal Audit Department to periodically review Quick Orders to determine whether they are being used in accordance with University Policy.
13. Develop a comprehensive plan concerning implementation of the remaining RLAS applications, considering the cost-effectiveness of various options and the business justification for remaining implementations.
14. Implement the recommendations concerning information technology security measures that were provided to Rutgers' officials.
15. Using the software already purchased, automate the bank reconciliation process to increase the efficiency of operations.
16. Develop a clear policy that lists necessary procedures regarding cash deposits, reconciliations and the transfer of information to the University's bank accounts.
17. Periodically update policies and procedures to reflect the current operating environment including RLAS and any subsequent modifications to RLAS.
18. Maintain a comprehensive, up-to-date list of all business offices, their functions, location and staff assigned. 

Resistance to Audit Recommendations:  In arguing against the first two recommendations that would require Rutgers to use the same public bidding requirements as other state colleges and universities, which includes public bidding for all contracts over $40,000, Rutgers suggested they have sufficient practices in place to ensure competitive procurements, even though it is not required by state law.

Additional Information:

• Audit report of NJ State Comptroller
• www.nj.com January 20, 2011 article

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