UB statement on OSC audit of procurement practices

BUFFALO, N.Y. – The following is a statement from the University at Buffalo regarding the Office of the State Controller’s Procurement Practices audit report.

The University at Buffalo is strongly committed to good stewardship of state resources. This includes ensuring that university procurements are reasonable and appropriate, and optimizing the efficiency and effectiveness of procuring goods in compliance with all New York State regulations guiding procurement.

While the university agrees with some recommendations of the Office of the State Controller (OSC) report, we have raised concerns that the report overstates the impact of some of the OSC’s findings, and fails to acknowledge important steps that the university has already put in place for improved planning and operational efficiencies. 

The OSC audit report indicates in its findings that “questionable transactions” were made by the university to two vendors, and questioned whether the funds were spent “appropriately and in the best interest of the state.” While the university agrees that there is an opportunity to improve documentation and internal processes, all identified purchases benefited UB and the UB community. It is important to note that there is no evidence that the purchases were inappropriate or fraudulent.  

The report fails to mention that in several instances, prior to the OSC review, the university was in the processes of implementing systems and making process changes that will enhance the university’s monitoring controls, standardize the procurement process and lead to improved efficiency and effectiveness.  

Over the past several years, at the direction of UB’s president, the university’s Office of Finance and Administration has taken several steps to strengthen the financial control structure at the university, including instituting a comprehensive budgeting process, and implementing the Shop Blue procurement system that provides reconciling pricing lists and invoices, availability of funds and notification of discounts. In 2017, UB created and implemented a new policy for the administration of, and internal controls over, university cash-handling operations and established a new internal controls policy.

These measures are meant to ensure that across every area the university is exercising the utmost diligence in its business and financial practices and exercising responsible management of university resources. 

The university appreciates OSC’s comprehensive audit work and welcomes the opportunity to address legitimate recommendations raised in the audit for procurement practices that align with local, state and federal requirements. The university is always cooperative when agencies review our programs and policies. UB will consider identified recommendations, and make any necessary improvements.  

Stewardship of the public trust is integral to our university values and mission. UB is committed to adhering to the principles and practices of good internal control practices, and to ensuring that resources are spent properly and continue to benefit the university and the UB community.

Corr Distributors, Inc.

• The university takes issue with the auditors' claim that UB did not obtain all the information needed to ensure that it was receiving the lowest cost for custodial equipment maintenance and repair work. While Corr’s list price appears to be higher than the manufacturer’s list of many parts and materials, Corr’s pricing includes shipping, handling and sourcing, which was not taken into consideration by the OSC when comparing Corr’s list price to the manufacturer's suggested retail price (MSRP)
• In 2019, the university re-bid for a custodial maintenance and repair work vendor. Once again, Corr presented the winning bid after UB performed a cost comparison of more than 50 repair parts.
• In regards to UB continuing to purchase goods and services from Corr after its contract expired, UB experienced a two-year delay in re-bidding custodial services during which time UB performed a comprehensive inventory of custodial equipment across its three campuses in order to prepare an accurate request for proposal (RFP). Due to competing priorities, this process took longer than anticipated. During this time, the terms and conditions of the previous agreement have remained in effect and UB and Corr continued to operate in accordance within the requirements of the contract to ensure the uninterrupted continuity of services. 
• UB believes that the effort will result in a more competitive and accurate contract. The inventory will also assist in UB’s ability to monitor preventative maintenance. 
• The university is in the process of implementing Shop Blue, a procurement system that will automate a number of internal controls such as comparing invoices with the agreed contract pricing and ensuring that departments appropriately purchase goods from a negotiated contract. We anticipate that this will lead to significant savings by standardizing the procurement process, leading to improved efficiency, effectiveness and compliance.

University at Buffalo Foundation Activities

• UB has long considered the foundation a strong partner in its research and educational efforts. There are long-standing agreements between the foundation and UB that are intended to support and promote UB’s mission of research, education and service.
• The university interpreted that the “research-related administrative services” identified in the OSC’s report were already included under the existing agreement with the foundation—since the purpose of these administrative services is to further the mission of the university. The university believed that the OSC shared a similar understanding, given the fact that OSC approved more than 50 similar transactions over a five-year period, totaling $368,622 in research-related administrative transactions, without requiring any additional agreement.  
• In fall 2018, the OSC changed its interpretation and discontinued these types of transactions. Following direction from OSC, UB discontinued submitting these transactions without a written agreement. The OSC failed to note in its audit that UB had stopped the transactions in 2018.