Okaloosa County BOCC — January 20, 2015 — County's Response to Preliminary and Tentative Findings — reading text

Manual requirements to ensure that goods and services are acquired pursuant to BCC purchasing policies and procedures. COUNTY RESPONSE: The County concurs with the Results of the Follow-Up Procedures that the BCC has approved changes to the TDD’s Operations and Procedures Manual that require all purchases to conform to established purchasing policies and procedures. The BCC will continue its efforts to require that all goods and services are acquired pursuant to BCC purchasing policies and procedures and that all such efforts are properly documented. However, the County would note that as to the cooling tower, the Purchasing Department file does demonstrate that the Telephone Quotation sheet reflects that three providers were contacted to obtain quotes but that only two of whom provided written proposals. It appears the third provider did not provide a response. Finding No. 8: Contract Design Previously Reported The BCC negotiated and entered into contracts that did not contain adequate provisions to effectively protect the BCC’s interests. We recommended that the BCC strengthen its procurement procedures to ensure that all contracts include provisions that specify the types and amounts of contractor expenses for which the contractor is to be reimbursed and require the contractor to submit sufficiently detailed invoices to allow for an effective pre-audit. We also recommended that the contracts for advertising and marketing firms include provisions to competitively procure goods and services in accordance with BCC purchasing policies and procedures, and require the firms to submit cost estimates, obtain BCC approval prior to starting work on an advertising project or marketing campaign, and state the advertising project or marketing campaign with which invoices are associated. Results of Follow-Up Procedures The BCC’s actions corrected this finding. Our review of two contracts relating to the TDD issued during the period January 2014 through July 2014 disclosed that the contracts contained adequate provisions to protect the BCC’s interests. In addition, our review of the contract with the TDD’s advertising and marketing firm disclosed that the contract included provisions to competitively procure goods and services in accordance with BCC purchasing policies and procedures, require the firm to submit 5 cost estimates, obtain BCC approval prior to starting work on an advertising project or marketing campaign, and require that invoices indicate the advertising project or marketing campaign with which the invoices are associated. COUNTY RESPONSE: The County concurs with the Results of the Follow-Up Procedures directed to the previous Findings and agrees that the BCC has fully and completely addressed and implemented the recommended corrective actions. . Finding No. 9: Contract Monitoring and Contract Payments Previously Reported The BCC did not perform an adequate review or pre-audit of invoices submitted by two advertising and marketing firms, including a comparison of payment requests to the provisions of the contracts. As a result, the BCC paid two advertising and marketing firms $12.1 million without obtaining adequate documentation supporting the goods or services received, including payments of several invoices that incorrectly or inadequately described the actual goods or services purchased. We recommended that the BCC continue to strengthen its monitoring and pre-audit procedures to ensure that contract provisions are properly monitored and payments are supported by adequate documentation to allow for an effective pre-audit. We also recommended that the BCC continue its efforts to obtain supporting documentation for payments made to the two advertising and marketing firms. In addition, we recommended that the BCC, in consultation with its legal counsel, determine whether the BCC is entitled to recover any questioned billings, and take appropriate action to recover such billings. Finally, we recommended that the BCC adopt written policies and procedures that provide guidance on the reasonableness and necessity of TDC expenditures. Results of Follow-Up Procedures The BCC’s actions partially corrected this finding. While the BCC did not adopt policies or procedures that provide guidance on the reasonableness and necessity of tourist development related expenditures, the BCC adopted policies and procedures designed to strengthen controls over contractual payments. These policies and procedures include the adoption of a strategic marketing plan for TDD expenditures and the implementation of a task order system over contractual expenditures. A total of $2,561,315 was paid to the TDD’s advertising and marketing firm during the period January 2014 through July 2014. Our review of eight payments totaling $253,184 disclosed that the payments were properly supported by adequate documentation to allow for an effective pre-audit. In August 2014, the BCC, pursuant to court-ordered mediation, negotiated a settlement with one of the advertising and marketing firms referred to in our report No. 2013-085. However, negotiations with the other advertising and marketing firm are still ongoing. Recommendation: The BCC should continue its efforts to negotiate a settlement with the remaining advertising and marketing firm. 6 COUNTY RESPONSE: The County agrees that it has adopted policies and procedures which have strengthened controls over contractual payments. Further, the County believes that the policies, ordinances and reviews, taken collectively, do provide clear guidance for determining the reasonableness and necessity of the tourist development related expenditures. The County has also aggressively sought reimbursement of any funds that were inappropriately expended and has been extremely successful in recovering these funds. The BCC will continue these efforts where appropriate. Finding No. 10: Competitive Procurement by Contractors Previously Reported The BCC did not ensure that goods or services acquired through two advertising and marketing firms were competitively procured. We recommended that the BCC ensure that goods and services purchased through contractors are competitively procured in accordance with BCC purchasing policies and procedures. Results of Follow-Up Procedures The BCC’s actions corrected this finding. The contract with the TDD’s advertising and marketing firm, dated December 4, 2012, requires that all purchases made by the firm on behalf of the BCC be made in accordance with the BCC’s Purchasing Manual. Our review of eight payments totaling $253,184 to the TDD’s advertising and marketing firm during the period January 2014 through July 2014 disclosed that applicable goods and services purchased through contractors were competitively procured. COUNTY RESPONSE: The County concurs with the Results of the Follow-Up Procedures directed to the previous Findings and agrees that the BCC has fully and completely addressed and implemented the recommended corrective actions. Finding No. 11: Advance Payments Previously Reported The BCC paid for certain goods and services in advance of their receipt, including certain goods and services acquired through two advertising and marketing firms, contrary to law and the State Constitution. Some services for which the BCC paid in advance were not subsequently provided, resulting in overpayments of $50,760. We recommended that the BCC continue to strengthen its purchasing procedures to ensure that advance payments are approved and paid only if the payments result in a savings that is equal to or greater than the amount that would be earned by investing the funds and paying later, or if the payments are essential to the BCC’s operations and the goods or services being paid for are available only if advance payment is made. We also recommended that the BCC establish procedures to ensure that goods or services paid for in advance are either subsequently received by the BCC or a refund of the overpayment is pursued. In addition, we recommended that the BCC continue its efforts to recover the overpayments noted above. Results of Follow-Up Procedures The BCC’s actions corrected this finding. The BCC approved changes to the TDD’s Operations and 7 Procedures Manual that requires the BCC to preapprove all advancement of funds under advertising and promotions contracts. Our test of expenditures included one expenditure, representing an advance payment. Our review disclosed that the BCC preapproved the advance payment and that the advance payment was allowed by the State Chief Financial Officer’s Reference Guide for State Expenditures. The BCC also recovered, restored, or received alternative services for the overpayments noted above. For $14,960 of alternative services received, the County’s documentation of the alternative services provided lacked certain relevant information (e.g., time records, specific dates of services, methods of valuating services provided) necessary to demonstrate that the value of the services provided totaled at least $14,960. In response to our inquiry as to the valuation of the services provided, the County’s attorney indicated that based on discussion with numerous County staff as to the work performed and the extent of services provided, it was felt that there was a sufficient showing, confirmed by staff, that the amount of work performed was reasonably related to the $14,960 amount of the overpayments. COUNTY RESPONSE: The County concurs with the Results of the Follow-Up Procedures directed to the previous Findings and agrees that the BCC has fully and completely addressed and implemented the recommended corrective actions. Additionally, as to the overpayment noted in the review for which alternative services were received, the County adequately investigated and confirmed that the alternative services provided were reasonably related to the amount of the overpayment. Finding No. 12: Approval of Purchases Previously Reported The BCC did not consistently follow prescribed policies and procedures relating to the approval of purchases, including purchases made through two advertising and marketing firms. We recommended that the BCC ensure that required approvals are obtained for all purchases in accordance with BCC purchasing policies and procedures. Results of Follow-Up Procedures The BCC’s actions corrected this finding. Our review of 15 purchases totaling $372,692 made during the period January 2014 through July 2014, including 8 purchases made through the TDD’s advertising and marketing firm, disclosed that required approvals were obtained for all purchases in accordance with BCC purchasing policies and procedures. COUNTY RESPONSE: The County concurs with the Results of the Follow-Up Procedures directed to the previous Findings and agrees that the BCC has fully and completely addressed and implemented the recommended corrective actions. Finding No. 13: Purchasing Card Controls Previously Reported The BCC did not consistently follow prescribed policies and procedures relating to the use of purchasing cards (p-cards), including certifications from the p-card holder accepting the terms and conditions for the 8 use of the p-card, supervisory approval of purchases, and certifications from the p-card user and reviewer that the purchases were for official County business and in accordance with applicable rules and directives. In addition, BCC employees did not document the receipt of goods and services purchased with p-cards that were not immediately provided to the purchaser or document the public purpose served by the p-card expenditures. We recommended that the BCC strengthen