Watchdog faults Rutgers over contract awards

Posted: August 30, 2013

Rutgers University should have gone further in improving the transparency and cost-effectiveness of its processes for establishing public contracts for goods and services, New Jersey's watchdog agency said in a report released Wednesday following up on a 2011 audit.

"It's really about fundamental fairness and transparency and cost savings for taxpayers," said Comptroller A. Matthew Boxer, whose office produced the report. ". . . So their review looked to whether the practices and procedures that are in place when it comes to spending these taxpayer funds are the kinds of procedures that taxpayers would be comfortable with."

A follow-up report is standard procedure, Boxer said by phone Wednesday. The goal is to monitor organizations to ensure proper action is taken, he said.

With more than $400 million in state funding and state-paid employee benefits in the school's 2013-14 budget, Boxer said, Rutgers needs to show it is properly handling its money.

Of 18 recommendations made in the Jan. 19, 2011, report from the Office of the State Comptroller, eight were implemented in full, four were partially implemented, and six have not been implemented, according to the report.

The university rebutted many of the claims in individual responses to the recommendations, included in the report.

"In many cases, we have embraced the comptroller's suggestions," the university said in a separate statement. "In other instances, we have modified previously existing practices, and, in some cases, we do not believe that a 'one size fits all' approach is in the best interests of the university, its students and those that support our operation."

The initial audit of Rutgers' procurement processes found the school in some cases did not follow its own policies; in other cases, it used a restricted version of competitive bidding that potentially prevented more firms from participating.

Some examples cited in the 2011 audit have been changed, such as eliminating the university's ability to bypass bidding by awarding contracts "in the best interest of the university."

But the follow-up report, based on fieldwork conducted from March 2012 through April, found problems remain in two main areas: limiting the pool of bidders for contracts, and the use of sole- or single-source contracts.

The comptroller's office examined five capital project contracts of more than $40,000 and found none was publicly advertised; instead, 10 to 13 firms were invited to bid for general contracting projects, and 24 to 27 firms were invited for architectural-services contracts.

Those firms represent about 6 percent of the school's list of preapproved contractors in those categories, according to the report.

Rutgers rejected several of the recommendations regarding bidding for contracts, saying in its official response that its standards allow for greater autonomy from political influence and citing examples of lower costs obtained for services through its system.

"Rutgers points out that our approach to contracting for capital projects is informed by Rutgers successful completion of over $2 billion worth of construction projects over approximately the last 10 years," the university's response reads.

"Simply put, Rutgers' experience is that inviting a smaller number of well-qualified general contractors (whose experience covers the specific project at hand) leads to much more competitive and well-thought-out bids than casting a wider net to draw in more general contractors who may not have the experience or ability to oversee a large, complex, and often extremely time-sensitive project," the university replied in the report.

The comptroller's office report also continued to recommend further oversight of single-source contracts, which are awarded without competition because only a single vendor can provide the specialized services.

But in one example cited in the report, the university contracted with a catering company for food for some students, a company chosen because "no other vendor could include this level of services," such as vegetarian and gluten-free options.

But other vendors could provide such services, the comptroller's office said, making the awarding of a single-source contract anticompetitive.

Not all the recommendations are enforceable by Boxer's office; state law exempts Rutgers from public bidding requirements that apply to other state colleges and universities. Those colleges must seek bids for contracts of more than $30,700.

Legislation was introduced in 2012 to make Rutgers fall under the limits.

Boxer, who supports that legislation, said he hoped Rutgers would continue to work on the recommendations. Several were complicated by Rutgers' July 1 merger with the bulk of the now-defunct University of Medicine and Dentistry of New Jersey. Rutgers is reviewing its procurement practices as it merges various systems, it said.

"The university is committed to reviewing its practices, so we're interested in seeing how that process plays out," Boxer said.


Contact Jonathan Lai at 856-779-3220, jlai@phillynews.com, or follow on Twitter @elaijuh.

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