County
of
Allegheny

Office of the Controller

1 '1 PERFORMANCE AUDIT REPORT --
THE IMPACT OF THE 

.. METHOD 0E PROCUREMENT

301x: ALLEGHENY COUNTY AND THE 

ZATION oE LOCAL BUSINESSES

1 1 THE PERIOD JANUARY 21,2 2'02
- HTJUNE 30 2018 3--

 

   
  
 
 
 
 
 

 

 
 
  
 
 
  

 

 

 

 

 

 

 

 

 
   

 

104 County Courthouse

436 Grant Street

Chelsa Wagner Pittsburgh, PA 15219
Controller Phone: (412) 350-4660

Fax; (412) 350-4770

E-mail: Controller@alleghenycounty.us

 

 

 

 

Contents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Letter 1
I. Introduction 3
II. Scope, Objectives, and Methodology 5
Findings and Recommendations
Finding The Majority of County Procurements Conducted During the
Audit Period That Exceeded $30,000 Were Accomplished Via
Piggyback Contracting 7
Finding The Allegheny County Administrative Code and Purchasing
Manual Do Not Adequately Restrict the Use of Piggyback
Contracting 0
Finding The Procedures Being Utilized by the County Do Not Mitigate
the Risks Associated With Piggyback Contracting 12
Finding Some Sole Source Contracting Does Not Appear to Have Been
Justi?ed 8
IV. Conclusion 21
V. Exhibits
Exhibit 1 Local Government Procurement Comparison Chart 22
Exhibit 2 Piggyback Justi?cation Form 23
Exhibit 3 Total Spend Under Piggyback Contracts During Our Audit Period 24
VI. Response from the Director of the Department of Administrative Services 29
VII. Controller?s Office Comments Applicable to Management?s Response 34

 

COUNTY OF ALLEGHENY

OFFICE OF THE CONTROLLER

104 COURTHOUSE 436 GRANT STREET
PITTSBURGH, PA 152i9-2498
PHONE (412) 350-4660 - FAX (412) 3503006

 

CHELSA WAGNER
CONTROLLER

April 18, 2019

Mr. Jerry Tyskiewicz, Director
Department of Administrative Services
436 Grant Street, Room 202 Courthouse
Pittsburgh, PA 15219

PERFORMANCE AUDIT REPORT
ON THE IMPACT OF THE PIGGYBACKING
METHOD OF PROCUREMENT ON
ALLEGHENY COUNTY AND THE
UTILIZATION OF LOCAL BUSINESSES
FOR THE PERIOD JANUARY 1, 2017
THROUGH JUNE 30, 2018

Dear Mr. Tyskiewicz:

We have conducted a performance audit to evaluate the operation and impact of the
piggybacking method of procurement on Allegheny County and the utilization of local
businesses. Our procedures were applied to the period from January 1, 2017 through June 30,
2018. Our engagement was performed in accordance with Government Auditing Standards.

As we conducted our audit, we gained an understanding of the overall approach that Allegheny
County takes in the procurement of goods and services, and the process and internal controls
applicable to its use of piggyback contracting. During that process, and as we applied audit
procedures to test the internal controls in place over piggyback contracting, we identi?ed
conditions that indicate that Allegheny County is not just excessively utilizing piggyback
contracting as a procurement method, it is engaging in piggyback contracting without
appropriate internal controls in place to help ensure that the lowest possible cost is obtained and
procurement fraud is prevented. We have offered recommendations to assist in remediating
these conditions which should improve the manner in which Allegheny County procures goods
and services. The results of our procedures are included in the attached report.

Mr. Jerry Tyskiewicz
March 22, 2019

We would like to thank the management and staff of the Department of Administrative Services?
Division of Purchasing and Supplies for their courtesy and cooperation during our engagement.

Kind regardsa
f; .s 5? 5 a 

Chelsa Wagner *3

Controller

 

 

Lori A. Churilla
Assistant Deputy Controller, Auditing

cc: Honorable John DeFazio, President, County Council
Honorable Rich Fitzgerald, Allegheny County Executive
Mr. William McKain, County Manager, Allegheny County
Ms. Jennifer Liptak, Chief of Staff, County Executive
Mr. Kenneth J. Varhola, Chief of Staff, County Council
Ms. Sarah Roka, Budget Manager, County Council
Ms. Mary Soroka, Director, Of?ce of Budget and Finance
Ms. Ruth Byrd?Smith, Director, MWDBE Department

I. Introduction

 

The Department of Administrative Services? Division of Purchasing and Supplies (?Purchasing?)
is responsible for the solicitation and procurement of supplies, equipment, and services on behalf
of all Allegheny County Departments, with the exception of Department of Public Works
construction-related contracts and Department of Human Services provider contracts. Allegheny
County is comprised of 28 Departments and had a 2018 operating budget of $905,750,000. At
the time we initiated our audit, Purchasing employed just six Purchasing Agents, which included
the Deputy Purchasing Of?cer who was also serving as the Acting Chief Purchasing Of?cer at
the time. The responsibilities of the purchasing agents are:

Purchasing Agent #1 - Information Technology Telecommunications, Furniture, Floor

Coverings, Of?ce Products, Of?ce Equipment, Temporary
Staf?ng (Non-Clinical), Insurance, Security Equipment, Systems
Service, Parcel Delivery

#2 Medical Equipment Supplies, Laboratory Equipment 
Supplies, Pharmaceutical Equipment and Supplies, Temporary
Staf?ng (Clinical), Vehicles Heavy Equipment, Uniforms,
Radio Communications Equipment

#3 MRO Equipment Supplies, Moving Relocation, Road
Materials, Maintenance Contracts, Laundry Service, Property 
Equipment Rental, Pest Control, Utilities, Construction Related

#4 - Print Production, Promotional Products, Publications, Multi-
Functional Equipment, Photographic Equipment Supplies,
Commemorative Religious, Athletic Recreational, Traf?c
Control, Cleaning Services, Janitorial Equipment and Supplies,
Waste Removal Recyclable Materials, Sale of Surplus Metals,
Equipment, and Materials

#5 - Record Retention, Landscape and Agricultural, Food 
Concession Programs, Public Safety, Supplies,
Fuel, Gas (Non?Fuel, Medical and Industrial), Water, Kitchen
Equipment Supplies, Leases

#6 - Purchasing Card

Allegheny County Administrative Code section 905.01 indicates that where the purchase or
rental of materials, supplies, furnishings, equipment, or other personal property and
nonprofessional services is estimated to cost $30,000 or less, contracts may be awarded without
advertising for bids. However, where the cost is estimated to be between $10,000 and $30,000,
price quotations are required to be solicited from at least three vendors. If it is believed that the
County will spend more than $30,000 for a group of similar items over the course of a year, or
for one item on an individual purchase, Administrative Code section 903.02 generally requires
that a formal procurement process be conducted. The Invitation for Bid (IFB) process is used to
procure goods over $30,000 and the Request for Proposal (RFP) process is used to procure
services over $30,000. Both of these bid processes involve public advertisement of the
speci?cations. However, Code section 907.01 also speci?cally indicates that the County may
participate in or purchase from purchase contracts entered into by a governmental or quasi-
governmental entity.

I. Introduction

 

?Piggybacking? a contract involves accepting the terms and pricing contained in an existing
contract that has already been negotiated and executed by other parties for sought goods and/or
services. Governments like Allegheny County engage in piggybacking with the intent of
reducing the time and cost associated with the procurement process while taking advantage of
favorable terms and pricing that have already been negotiated and obtained from suppliers by
other governments. When piggybacking, a government is electing to forego the solicitation of
bids or proposals, which is an attempt at identifying the best price available in the open market
for the sought goods and/or services. Consequently, it is essential for a government to perform
at least a limited analysis of the terms and pricing of the existing contract and the time and costs
associated with identifying the best available price in the open market in order to assess whether
piggybacking an existing contract may actually benefit the government. In addition, because
piggybacking involves accepting the terms and pricing contained in an existing contract, the
terms of the existing contract can usually not be modified to include MWDBE utilization goals.
The only way the County could utilize MWDBES when piggybacking would be to piggyback on
existing contracts where an MWDBE was the supplier. Since piggybacking an existing contract
is typically much easier and faster than soliciting and evaluating bids and proposals, controls
should be in place to help ensure that piggybacking is only utilized when and to the extent that it
is in the government?s (taxpayers?) best interest to do so.

Data provided by Purchasing indicates that during our audit period (January 1, 2017 through
June 30, 2018) the County had 352 active piggyback contracts, and that goods and services were
actually procured under 234 of those 352 active piggyback contracts during the period. The total
expenditures under 145 of the 234 piggybacked contracts that had been utilized during our audit
period exceeded $30,000. Purchasing advised us that during the same period, it had completed
126 public bid processes.

II. Objectives, Scope, and Methodology

 

Scope

Our performance audit covered the period from January 1, 2017 through June 30, 2018. We
conducted the audit in accordance with Government Auditing Standards issued by the
Comptroller General of the United States. Those standards require that we plan and perform the
audit to obtain suf?cient, appropriate evidence to provide a reasonable basis for our ?ndings and
conclusions based on our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our ?ndings and conclusions based on our audit objectives.

Objectives

Our performance audit objectives were to:

1.

Determine whether the Allegheny County Administrative Code and/or Purchasing
Manual adequately restrict the use of the piggyback contracting to instances in which it
best serves to bene?t Allegheny County (taxpayers).

Determine whether the piggyback contracting has been used excessively for Allegheny
County procurements, and if so, to identify the impacts.

Determine whether internal controls over piggyback contracting have been designed and
implemented to minimize procurement fraud risks.

Methodology

The methodology used to accomplish our audit objectives included, but was not limited to the
following procedures:

0 Reviewed the Allegheny County Administrative Code requirements applicable to the

procurement of goods and services and the County of Allegheny Purchasing Manual.

Interviewed Department of Administrative Services? Division of Purchasing and Supplies
(?Purchasing?) personnel to gain an understanding of the processes and controls in place
over the procurement of goods and services for Allegheny County.

Conducted research on and interviewed personnel of other local governments to gain an
understanding of the size, spend, and procurement processes of the other local
governments, including the extent to which piggyback contracting may be utilized.

Reviewed samples of Allegheny County procurements where piggybacking was the
method of procurement in order to determine whether the procurement ?les demonstrate
that a cost analysis was properly conducted and/or reasonable rationale for the
procurement method was documented.

II. Objectives, Scope, and Methodology

 

Determined the extent to which piggybacking resulted in the use of out-of?County
suppliers during the audit period.

0 Applied procedures to determine Whether there were in fact no other suppliers available
to provide the speci?c goods or services that the County sought to purchase for a sample
of sole source procurements.

We conducted our procedures from October through December of 2018. We provided a draft
copy of our report to the Director of the Department of Administrative Services for comment.
His response begins on page 29. The Controller?s Of?ce comments applicable to management?s
response begin on page 34.

 Findings and Recommendations

 

Criteria:

Condition:

Finding #1

The Majority of County Procurements Conducted
During the Audit Period That Exceeded $30,000
Were Accomplished via Piggyback Contracting

Governments typically use bid processes as the primary procurement
method for large solicitations of goods and services, because bid processes
are an attempt at identifying the best price available in the open market.
While bid processes take time, they also provide for transparency and
generally provide for fair competition among market participants. To
facilitate the timely procurement of goods and services via bid processes,
those charged with governance should allocate adequate personnel
resources to the purchasing function, and user needs for goods and
services should be communicated to those with purchasing authority as
soon as possible. Because other procurement methods (such as piggyback
contracting) may lack transparency and therefore be more susceptible to
procurement fraud, provide less assurance of obtaining the lowest possible
price, result in more frequent utilization of non?local vendors, or adversely
impact the achievement of a government?s other purchasing goals (such as
the utilization of minority and women owned disadvantaged business
enterprises, or MWDBES), the use of other procurement methods for large
solicitations is often restricted by those charged with governance or
otherwise limited by internal controls instituted by those with purchasing
authority.

Although the Department of Administrative Services? Division of
Purchasing and Supplies (?Purchasing?) had not tracked the number of
piggyback contracts active during our audit period (January 1, 2017
through June 30, 2018), we were able to determine with Purchasing?s
assistance that the County had 352 piggyback contracts that were active
for at least part of our audit period, if not our entire audit period. This
means that Purchasing would have requested Executive Action to approve
the piggybacking of the contracts, piggybacking of the contracts had been
approved, and the County would have been able to purchase goods and/or
services under each of these 352 piggyback contracts at some point during
our audit period. Data provided by Purchasing indicates that County
personnel did in fact procure goods and services under 234 of these 352
active piggyback contracts during our audit period. The data also
indicates that the County procured more than $30,000 in goods and
services during our audit period under 145 of the 234 active piggyback
contracts that had been utilized. During our same audit period, Purchasing
completed 126 bid processes. Even if the County had purchased goods
and services at the completion of every bid process during our audit
period, piggyback contracting was still the primary method of
procurement utilized for purchases in excess of $30,000 (145 of 271
contracts, or 

 Findings and Recommendations

 

Cause:

Effect:

The control environment that exists incentivizes Purchasing?s frequent use
of piggyback contracting. First, those charged with governance have not
restricted the use of piggyback contracting to accomplish large County
procurements in any way. The Allegheny County Administrative Code
does not identify speci?c types of goods or services for which
piggybacking is permitted or prohibited, nor does it establish a maximum
dollar amount for piggyback contracts. Second, the Chief Purchasing
Of?cer has the ability to establish purchasing policy, and is able to limit
the use of certain procurement methods even though their use may be
permitted by the County?s Administrative Code. However, the Chief
Purchasing Of?cer has not incorporated suf?cient controls to limit the use
of piggyback contracting into the County?s Purchasing Manual. The
Purchasing Manual also does not require County Departments in need of
goods or services to communicate their needs to Purchasing as soon as
possible. Doing so should enable Purchasing to utilize bid processes more
frequently, thereby reducing the extent to which the use of piggyback
contracting may be necessary. Third, it appears that adequate personnel
resources may not have been applied to the purchasing function. At the
time we initiated our audit, Purchasing only employed six purchasing
agents, which included the Deputy Purchasing Of?cer (who was also
serving as the Acting Chief Purchasing Of?cer at the time). Although we
were advised that needed goods and services were still being procured for
users timely, we were also advised that Purchasing was approximately
three months behind on its paperwork. As a result of all of these
in?uencing factors, piggyback contracting has been frequently used for
large County procurements as piggybacking an existing contract is
typically much faster and easier than soliciting and evaluating bids and
proposals.

The most signi?cant effect is that the frequent use of piggyback
contracting, a procurement method that lacks transparency, has exposed
(and continues to expose) the County to increased risk of procurement
fraud. Because piggyback contracting has been frequently used, and
foregoes an attempt to obtain the lowest price available in the open
market, it is also possible that the County has (taxpayers have) paid more
than was necessary for many of the goods and services purchased. In
addition, the frequent use of piggyback contracting has resulted in the
utilization of a large number of out-of?County suppliers which does not
serve to stimulate the local economy. The data provided by Purchasing
indicates that of the 234 active piggyback contracts under which County
personnel did in fact procure goods and services during our audit period,
151 were with out?of-County suppliers. The data also indicates that
the County procured more than $30,000 in goods and services from out-
of~County suppliers during our audit period under 95 of the active
piggyback contracts that had been utilized. The use of piggyback

 Findings and Recommendations

Recommendations:

Management?s
Response:

Controller?s Of?ce
Comments:

contracting has also resulted in the exclusion of MWDBES from
participation in the majority of County procurements over $30,000.

The Chief Purchasing Officer should:

Work with County Administration and County Council to ensure
that appropriate restrictions are established (codi?ed) for the use of
piggyback contracting. For example, it would be prudent to
prohibit the piggybacking of long-term open-ended service
contracts.

Incorporate suf?cient controls in the County?s Purchasing Manual
to limit piggyback contracting to appropriate instances in order to
reduce the County?s exposure to fraud risks and potentially higher
prices. This should include requiring County Departments in need
of goods or services to make Purchasing aware of those needs as
soon as possible in order to facilitate the use of bid processes.

Work with the County Administration to ensure that appropriate
personnel resources are applied to the purchasing function so that
bid processes can be conducted in all appropriate instances.

Work with other County Departments to help minimize the amount
of time necessary to complete a bid process so that bid processes
can be utilized more frequently to procure goods and services.

The response begins on page 29.

The Controller?s Office comments applicable to management?s response
begin on page 34.

 Findings and Recommendations

 

Criteria:

Condition:

Cause:

Finding #2

The Allegheny County Administrative Code and
Purchasing Manual Do Not Adequately Restrict

The Use of Piggyback Contracting

When piggybacking on existing contracts, Allegheny County is electing to
forego the solicitation of bids or proposals, which is an attempt at
identifying the best price available in the open market for the sought goods
and/or services. Piggybacking also leads to a lack of transparency, in that
solicitations for goods and services are not advertised, and the vendors that
provide goods and services under the piggybacked contracts are not
disclosed. A lack of transparency results in the County being more
susceptible to the risks of procurement fraud. In addition, because
piggyback contracting involves accepting the terms and pricing contained
in an existing contract, the terms of the existing contract typically cannot
be modi?ed to include MWDBE utilization goals. Consequently,
measures should be in place to help ensure that piggyback contracting is
only utilized when and to the extent that it is in the County?s (taxpayers?)
best interest to do so. These measures should include restrictions on the
use of piggyback contracting incorporated (codi?ed) into the Allegheny
County Administrative Code by those charged with governance, and/or
limitations on the use of piggyback contracting incorporated into the
County?s Purchasing Manual by the Chief Purchasing Of?cer.

The Allegheny County Administrative Code and Purchasing Manual
contain no restrictions or limitations on the use of piggyback contracting.
They do not identify speci?c types of goods or services that are permitted
to be procured or prohibited from being procured via piggyback
contracting, nor do they contain maximum dollar limits for piggyback
contracts. The data supplied by Purchasing indicates that piggyback
contracting occurred across a broad range of goods and services, and that
there were ten piggybacked contracts with expenditures during our audit
period in excess of $1 million, and twelve more with expenditures during
our audit period in excess of $500,000. (See Exhibit 3 on page 24 for all
County expenditures under piggybacked contracts during our audit
period.)

We also noted that the County?s Purchasing Manual does not require
Departments to communicate procurement needs to Purchasing as soon as
possible. Doing so should enable Purchasing to utilize bid processes more
frequently, thereby reducing the extent to which the use of piggyback
contracting may be necessary.

Incorporating restrictions on piggyback contracting into the Allegheny
County Administrative Code and/or modifying the County?s Purchasing
Manual to limit the extent to which piggyback contracting could be

10

 Findings and Recommendations

Effect:

Recommendations:

Management?s
Response:

Controller?s Of?ce
Comments:

utilized should result in more frequent utilization of bid processes for large
procurements. This means that personnel resources suf?cient to
accomplish bid processes in all appropriate instances would need to be
applied to the purchasing function. However, it appears that a desire to
keep County personnel costs low may have resulted in the application of
inadequate personnel resources to the purchasing function. Adding
restrictions or limitations on piggyback contracting would only serve to
prevent goods and services from being procured in a timely fashion while
inadequate personnel resources are being applied to the purchasing
function. It appears that County Departments are not required to
communicate their needs for goods and services to Purchasing as soon as
possible because a shortage of personnel resources would preclude
Purchasing from conducting bid processes in all appropriate instances.

Piggyback contracting is being excessively used absent documentation of
any of its bene?ts to Allegheny County taxpayers. There were ten
piggybacked contracts with expenditures during our audit period in excess
of $1 million, and twelve more with expenditures during our audit period
in excess of $500,000. Piggybacking was used in lieu of competitive
bidding, a process designed to ensure fair competition and the
procurement of high quality goods and services from vendors at the lowest
possible cost.

The Chief Purchasing Officer should:

0 Work with County Administration and County Council to ensure
that appropriate restrictions are established (codified) for the use of
piggyback contracting which will help to ensure the more frequent
utilization of public bid processes. For example, it would be
prudent to prohibit the piggybacking of long-term open-ended
service contracts.

0 Incorporate sufficient controls in the County?s Purchasing Manual
to limit piggyback contracting to appropriate instances in order to
reduce the County?s exposure to fraud risks and potentially higher
prices. This should include requiring County Departments in need
of goods or services to make Purchasing aware of those needs as
soon as possible in order to facilitate the use of bid processes.

The response begins on page 27.

The Controller?s Of?ce comments applicable to management?s response
begin on page 34.

ll

 Findings and Recommendations

Effect:

Recommendations:

Management?s
Response:

Controller?s Of?ce
Comments:

utilized should result in more frequent utilization of bid processes for large
procurements. This means that personnel resources suf?cient to
accomplish bid processes in all appropriate instances would need to be
applied to the purchasing function. However, it appears that a desire to
keep County personnel costs low may have resulted in the application of
inadequate personnel resources to the purchasing function. Adding
restrictions or limitations on piggyback contracting would only serve to
prevent goods and services from being procured in a timely fashion while
inadequate personnel resources are being applied to the purchasing
function. It appears that County Departments are not required to
communicate their needs for goods and services to Purchasing as soon as
possible because a shortage of personnel resources would preclude
Purchasing from conducting bid processes in all appropriate instances.

Piggyback contracting is being excessively used absent documentation of
any of its bene?ts to Allegheny County taxpayers. There were ten
piggybacked contracts with expenditures during our audit period in excess
of $1 million, and twelve more with expenditures during our audit period
in excess of $500,000. Piggybacking was used in lieu of competitive
bidding, a process designed to ensure fair competition and the
procurement of high quality goods and services from vendors at the lowest
possible cost.

The Chief Purchasing Officer should:

0 Work with County Administration and County Council to ensure
that appropriate restrictions are established (codi?ed) for the use of
piggyback contracting which will help to ensure the more frequent
utilization of public bid processes. For example, it would be
prudent to prohibit the piggybacking of long~term open-ended
service contracts.

- Incorporate suf?cient controls in the County?s Purchasing Manual
to limit piggyback contracting to appropriate instances in order to
reduce the County?s exposure to fraud risks and potentially higher
prices. This should include requiring County Departments in need
of goods or services to make Purchasing aware of those needs as
soon as possible in order to facilitate the use of bid processes.

The response begins on page 29.

The Controller?s Of?ce comments applicable to management?s response
begin on page 34.

ll

 Findings and Recommendations

lowest cost of all of the available contracts. There is also no place
for Purchasing Agents to document this information.

2. Fraud risks not addressed The form does not request
Departments to identify any known relationships between
Department personnel and the personnel of the proposed vendor, or
other potential con?icts of interest that could result in piggyback
contracting being inappropriate for the particular procurement.
There is also no place on the form for Purchasing Agents to
document this information.

3. Lack of accountability - Department Directors are not required to
sign the Piggyback Justi?cation Form to demonstrate that they
stand behind the representations made on the form. The form also
does not have a place for Purchasing Agents to document the steps
that they have taken to verify the assertions made by the
Departments in the form, or to document whether they believe,
based on their review of the form and the procedures that they have
performed, whether piggyback contracting is justi?ed for the
particular procurement, and why.

4. MWDBE goals not considered The form does not require
Purchasing Agents to document whether there are any certified
MWDBES able to do business in Allegheny County that would be
able to participate in the procurement if the procurement were to
be competitively bid. (The County?s MWDBE Department would
be able to help with this if it were provided information about

County procurements other than those that will be competitively
bid.)

The Cost of Conducting a Bid Process Was Not Determined

One of the factors that should in?uence whether or not the County
engages in piggyback contracting is the County?s cost associated with
conducting a bid process. This is because cost savings that may be
obtained by conducting a bid process (versus piggyback contracting) will
be reduced by the County?s cost associated with conducting the bid
process. Some specifications for goods and services are simple while
others are complex, which means that the time and resources needed to
complete every bid process will not be the same. However, developing an
estimate of the cost of an average bid process would assist Purchasing in
assessing whether cost savings that might be obtained from conducting a
bid process might make conducting the bid process advantageous. When
we initiated our audit, Purchasing had not developed an estimate of the
County?s cost of conducting an average bid process.

 Findings and Recommendations

Supervisory Review of Proposed Procurement Methods Does Not Occur

The Purchasing Agents assigned to specifications make their own
decisions about the procurement methods that will be recommended to
those charged with governance for the purchase of the goods and services
without review by and approval from the Chief Purchasing Officer. We
were advised that the Acting Chief Purchasing Of?cer has worked with
the other Purchasing Agents for some time and respects their judgment.
However, enabling all of the other Purchasing Agents to recommend
piggyback contracting to those charged with governance without a review
of the facts and circumstances associated with each procurement (such as
relationships and con?icts of interest that may exist) by the Chief
Purchasing Officer increases the likelihood of procurement fraud. We
also noted during our review of Requests for Executive Action during our
audit period that the rationale for the procurement method being utilized
was typically not included for those charged with governance.

Once Piggyback Contracting Has Been Approved, Purchasing Has Little
or No Involvement in the Actual Purchases Under Those Contracts

When contracts are established in JD Edwards, the County?s accounting
system, they are entered in one of two ways, either for payment via a
voucher process or for payment via purchase orders. Piggybacked
contracts for services, because the services are billed to the County as they
are provided, are typically paid via a voucher process. Because goods are
usually purchased on an as-needed basis, purchase orders are typically
used in connection with piggybacked contracts for goods.

When we tested a sample of procurements where piggyback contracting
was the method of procurement, we observed that prices for the goods and
services to be procured under the piggybacked contracts were usually not
included in the contracts, or in any other documents contained in the
procurement files. We were advised by Purchasing that because the
piggybacked contracts often span a period of years (and suppliers? costs
associated with the provision of goods or services change over time) the
pricing under the piggybacked contracts often changes over time. Under
these arrangements, the County would be required to call the supplier or
visit the supplier?s website when the County needs to make a purchase in
order to get the current pricing. Since the market pricing for goods and
services changes over time, it is possible that the County would be able to
obtain pricing from other vendors that is lower than the pricing available
from the piggybacked contract supplier at the time that the County
actually needs to make a purchase. This means that it may still bene?t the
County to comparison shop before making purchases under such
piggybacked contracts.

l4

 Findings and Recommendations

Cause:

Effect:

Once the contracts have been set up in the accounting system, Purchasing
has no involvement in actual purchases under piggybacked contracts when
a voucher process is used. This means that unless each County
Department making purchases under piggybacked contracts with pricing
that ?uctuates comparison shops on its own to compare the pricing
currently available under the piggybacked contract to the pricing currently
available in the market from other suppliers, the County could be paying
more than necessary for the goods or services. Purchasing does not verify
that County Departments are comparison shopping before making
purchases under piggybacked contracts. Since purchase orders are not
used when a voucher process is used, Purchasing does not know when
purchases are being made.

When piggybacked contracts are set up in the County?s accounting system
to be paid via purchase orders, the purchase orders prepared by the County
Departments are electronically routed to Purchasing for review and
approval. However, Purchasing advised us that their review is a cursory
review and that there are only a limited number of circumstances that
would result in a purchase order being rejected. Purchasing does not call
the supplier or check the supplier?s website to verify that the pricing on
the purchase order matches the pricing currently available from the
piggybacked contract supplier, nor do they routinely verify that the
County Departments comparison shopped to help ensure that the County
will be getting the best available pricing. We were advised that suppliers
sometimes advise the County that the pricing included on particular
purchase orders is higher than the pricing that was actually available from
the suppliers under the piggybacked contracts. However, when internal
controls can be easily implemented, the County should not be relying on
supplier review of pricing (an external control) to help ensure that the
County is getting the best available pricing.

The control environment is weak. Measures have not been taken to ensure
that appropriate internal control procedures are in place and functioning as
intended with reSpect to County procurement via piggyback contracting.

While procurement fraud is always possible, the use of piggyback
contracting without appropriate internal controls in place has elevated the
risk of fraud. It is possible that procurement fraud associated with
piggyback contracting has occurred and not been identified. In addition, it
appears that the weaknesses in and lack of control procedures over
piggyback contracting has resulted in piggyback contracting being utilized
when it has not best served the interests of County taxpayers.

15

 Findings and Recommendations

Recommendations:

The Chief Purchasing Of?cer should:

Modify the Piggyback Justification arm to require:

0 An analysis to assess whether piggyback contracting is
likely to result in the lowest cost to the County.

0 Documentation of known relationships and con?icts of
interest that may preclude piggyback contracting from
being a viable procurement method for the particular
procurement.

Department Directors to take responsibility for the
assertions that they make in the form by signing the form.

0 Purchasing Agents to document how they veri?ed the
assertions made by Department Directors, and their
rationale for concluding that piggyback contracting is
appropriate for the particular procurement (if they have).

0 Purchasing Agents (in conjunction with the MWDBE
Department) to determine and document whether any
MWDBES doing business in Allegheny County would be
available to participate in the procurement.

The Chief Purchasing Of?cer to review and sign the form
evidencing agreement with the proposed procurement
method before a Request for Executive Action is prepared
and submitted to the County Manager and other applicable
County of?cials for approval.

Develop an estimate of the cost of an average bid process, and use
that information to assist in determining whether piggyback
contracting is appropriate.

When identical items can be procured under multiple approved
piggyback contracts, or when purchases of commodities are at a
high volume but at a low unit cost such as furniture and computer
hardware, require Departments to obtain and submit to Purchasing
three price quotes for the items before approving their purchase
order requests.

Include the rationale for the procurement method in Requests for
Executive Action so that those charged with governance have
enough information to make decisions to approve or reject
procurements.

l6

 Findings and Recommendations

Management?s
Response: The response begins on page 29.

Controller?s Of?ce

Comments: The Controller?s Of?ce comments applicable to management?s response
begin on page 34.

17

 Findings and Recommendations

 

Criteria:

Condition:

Finding #4
Some Sole Source Contracting Does Not
Appear 0 Have Been Justified

Adequate measures should be taken to ensure that there is truly no
competition available before designating a procurement as a sole source
procurement. A failure to do so could result in the improper exclusion of
vendors from procurements, and could also result in the procurement of
goods and services at a higher cost than is necessary.

We tested a judgmentally selected sample of 25 purchases made under
sole source contracts during our audit period to determine whether the
Chief Purchasing Of?cer approved the sole source procurements (via his
signature on the Sole Source Justi?cation Form), whether the Sole Source
Justi?cation Form contained adequate justi?cation for sole source
procurement, and whether the goods and/or services being procured were
actually available from other suppliers. We determined that the Sole
Source Justi?cation Form associated with one of the 25 purchases 
was not signed by the Chief Purchasing Of?cer. We also determined that
the Sole Source Justi?cation Forms associated with three of the 25
purchases did not appear to contain adequate justi?cation for sole
source procurement, and that for these same purchases, it appears that the
goods or services procured were available to be purchased from at least
one other supplier.

The first of the three purchases was an in?atable pool obstacle course for
North Park. The County paid the sole source supplier based in Kentucky
$31,140 plus freight charges. The purchasing agent had documented in
the Sole Source Justification Form that he had ?contacted park playground
and accessories vendors that we work with and no one carried anything
similar. Also, conducted research on the internet but did not ?nd any
others designed for commercial use.? The purchasing agent did not
identify on the form the vendors that he had communicated with or the
internet sites that he visited. We performed an internet search and quickly
identi?ed an alternate supplier based in Wisconsin that sells such pool
in?atables designed for commercial use. Although we know such
in?atables were available from the alternate supplier at the time the
County?s purchase was made, we do not know the cost of the in?atables at
the time the County?s purchase was made. At the time we conducted our
search (after the County?s purchase was made) a comparable pool
in?atable was available from the alternate supplier at $20,500, a
signi?cantly lower price.

The second of the three purchases involved a Computational Fluid
Dynamics Modeling and Measurements Study. The County?s contract
with the sole source supplier is not to exceed $717,246. The Sole Source

18

 Findings and Recommendations

Cause:

Effect:

Recommendations:

Justi?cation Form prepared by the Allegheny County Health Department
indicated that the supplier was the only supplier eligible to
receive payments from the ACHD Clean Air Fund which would fund the
study. However, the supplier was the only supplier eligible to receive
payments from the Clean Air Fund because the supplier was the only
supplier listed on the Request for Executive Action prepared by the
ACHD when it sought approval to have the study paid for using Clean Air
Fund resources. Had the ACHD considered the need to conduct a Request
for Proposal process and refrained from Specifying a particular supplier,
other suppliers could have participated in the procurement. It appears that
the ACHD may have had a preference for the supplier that was designated
as the sole source supplier. This could have been communicated to the
Professional Services Review Committee and may have resulted in the
selection of the supplier if a Request for Proposal process had been
conducted.

The third of the three purchases involved services in connection with a
voucher program for the conversion of open hearth ?replaces to gas
burning ?replaces. The purchasing agent had documented in the Sole
Source Justification Form that ?initially, the Health Department and the
US. EPA believed that several service providers could be engaged to
participate in the project. However, after having issued the same Request
for Quote twice, only one vendor applied and subsequently signed on in a
letter agreement - this despite the project coordinators directly contacting
the other prospective vendors in an attempt to educate them about the
details of the RFQs and to encourage them to participate in the project."
The total amount of the voucher program was $70,000, in excess of the
threshold where a formal procurement process would have been required.
Had a Request for Proposal process been conducted, advertisements would
have been placed in two local periodicals which may have garnered more
attention from prospective suppliers than the Requests for Quotes posted
exclusively on the County?s website.

The supervisory review to ensure that there is adequate justification for
sole source procurements is not as vigorous as it needs to be.

Noncompetitive procurements have been conducted when more than one
supplier was likely available to provide the goods and/or services. The
County also may have paid more than was necessary for the goods and
services procured under noncompetitive procurements.

The Chief Purchasing Of?cer should carefully review Sole Source
Justi?cation Forms to ensure that the goods and/or services sought cannot
be procured from any other suppliers and document the review procedures
performed in the procurement files.

19

 Findings and Recommendations

Management? 3
Response: The response begins on page 29.

Controller?s Of?ce

Comments: The Contz'oller?s Of?ce comments applicable to management?s response
begin on page 34.

20

IV. Conclusion

 

In the current environment, there appear to be two predominant viewpoints with respect to
government procurement. Some believe that governments should continue to rely most heavily
on the utilization of public bid processes for procurement in order to minimize the risk of
procurement fraud, and to help ensure that governments obtain goods and services from local
suppliers at the lowest possible cost. Others believe that it is appropriate for governments to rely
more frequently on alternative procurement methods, such as piggyback contracting, to speed up
the procurement of goods and services and lower the cost of the procurement process. However,
relying more frequently on alternative procurement methods could only be appropriate when
governments have taken appropriate measures to mitigate the risks associated with those
procurement methods.

Governments that engage in piggyback contracting typically have implemented procedures to
identify any relationships and conflicts of interest that should preclude piggyback contracting.
Some governments have restricted their use of piggyback contracting to certain commodities,
and/or established maximum amounts for piggyback contracting. Some governments have
publicized their piggyback contracting in order to improve transparency and minimize fraud risk.
Some governments have developed an estimate of their cost to conduct a bid process in order to
assess whether conducting a bid process might generate a cost savings. While Allegheny
County?s procurements during our audit period indicate that the County favors the utilization of
alternative procurement methods, the County has not instituted any of the aforementioned
measures.

Allegheny County taxpayers should expect the County to do better than simply procuring goods
and services the fast and easy way, without adequate focus on procurement at the lowest possible
cost, the utilization of local vendors, the provision of opportunities to MWDBES, and the
prevention of procurement fraud. If Allegheny County intends to continue to utilize piggyback
contracting, even on a limited basis, it needs to design and implement internal control procedures
to increase the likelihood that the County will obtain the lowest possible cost, limit the extent
that out-of?County vendors are utilized, ensure that MWDBES are provided with opportunities to
participate in County procurements, and reduce the risk of procurement fraud. However, in our
View, public bid processes should be the default method of procurement when a single item over
$30,000 will be purchased or the estimated cost of a series of purchases exceeds $3 0,000.

21

Local Government Procurement Comparison Chart

 

Allegheny County, PA

Milwaukee County, WI

Erie County, NY Hamilton County, OH York County, PA Westmoreland County, PA

Washington County, PA

 

1,223,048

952,085

925,528 813,822 446,078 352,627

207,298

 

Pittsburgh, PA

Milwaukee, Wl

Buffalo, NY Cincinnati, OH York, PA Greensburg, PA

Washington, PA

 

302,407

595,351

258,612 301,301 44,132 14,299

13,566

 

$1,495,411,63 1

 

 

 

22

$645,387,000

$1,462,612,000 $704,593,000 $393,162,197 $185,964,538

$117,234,788

 

 

7 4 Not Provided Not Provided

 

Yes

 

 

 

Yes

Yes Yes Yes Yes

Yes

 

 

 

 

 

No

Yes Contracts >$10,000
must be competitively bid
unless exception is granted

by Board of Commissioners.

N0

 

Yes Piggybacking used

  

(See Audit Finding 

extensively, >523 Million

 

Yes Piggybacking
represents only about 10%
of total purchases (about
$12 Million)

 

Yes - Piggyback contracting
is only used for 1-2% of
total purchases

Yes - However bid
processes are preferred

Yes just one piggyback

. Yes
contract for uniforms

 

 

 

 

Yes However piggyback
contracting is seldomly
used

 

 

1Population estimate as ofJuly 1, 2017 per the United States

Census Bureau 

2Information for FY 2017, obtained from the respective County's Comprehensive Annual Financial Report.

3information obtained from inquiries with the respective County purchasing functions.

EXHIBIT I

 

EXHIBIT 2

PiQQi/bock Justification Form

elvecr??'ca tron De tails

Specification #2

Vendor Nainei
Requester?s Namei
Requester?s Titlei
Requester?s Department:
Purchasing Agent Alessio

0012 ?119 at De tails

Vendor #3

The Piggyback is Issued By3

PA State, GSA
PA cosraes 
US Communities 0 Lead Agencyi
Other

Agency?s Contract Number:
Date owaardi Start Datel



0 [:35 rung Agezioyf

Curre nt 11d ate:
Paym on If De ta 1'15

Estimated Annual Spendi

Paid Via: Purchase Order 6)
lfo Voucheri

Cost Center or Job Code? Object Codei

Voucher Both

8 uhle dgeri
Justi?ca 25012

What goods and services is this contract providing to the County?

 

 

 

 

Is this for a one-time purchase or will there he more purchases in the future? (If a

one-time purchase, please attach quote. If services are being provided, please
attach scope of work.)

Is this contract being used in conjunction with other piggyback contracts to
receive quotations for future purchases?

 

 

Is the supplier local to Allegheny County? (If n01 Are we aware of any company
local to Allegheny County, with a cozgoetitz?vely awarded contract, who can?)

 

 

23

24

TOTAL SPEND UNDER PIGGYBACK CONTRACTS DURING OUR AUDIT PERIOD

Telecommunications Managed Services

MCI Communications Inc dba Verizon

 

$3,794,689.86

 

State Piggyback for Of?ce Classroom Related Accessories

Staples Contract Commercial Inc dba Staples Advantage

2,739,298.13

 

COSTARS 3 - IT Hardware

CDW Government inc

2,047,830.23

 

State of Contract for Sodium Chloride (Bulk Road Salt)

American Rock Salt Co. LLC

1,911,917.03

 

48401

COSTARS 5 - Janitorial Supplies

Paper Products Co., Inc.

1,451,122.60

 

211244

Microsoft Enterprise Agreement 2017 - 2026

CDW Government Inc

1,425,096.84

 

47327

COSTARS 6 Software

CDW Government Inc

1,362,471.25

 

48022

Wireless Communications Service

Sprint Solutions, Inc.

1,266,690.02

 

48024

Wireless Communications Service

Verizon Wireless

1,213,169.22

 

47571

GSA for Information Technology

Mission Critical Partners, tnc.

1,097,011.23

 

48400

National IPA Piggyback for MRO Supplies

Grainger Industrial Supply

996,336.55

 

49073

Nationai IPA Piggyback for Systems Furniture, Free Standing Furniture, Seating, Filing
Systems/Equipment, interior Solutions and Rotated Product and Support Services

Eastey Rivers Inc.

811,033.50

 

49070

National IPA Piggyback for Systems Furniture, Free Standing Furniture, Seating, Filing
Systems/Equipment, Interior Solutions and Related Product and Support Services

Office Furniture Warehouse

784,488.24

 

130845

ITQ: Information Technology

Synerng Inc.

748,313.99

 

47583

PEPPM PB - Computer Hardware and Software

Advizex Technologies LLC

723,895.59

 

48448

COSTARS 25 - Municipal Work Vehicles

Equipment Co.

603,956.19

 

46589

COSTARS 10 - Voting Systems

Election Systems and Software Inc.

585,946.02

 

47157

COSTARS 3 IT Hardware

Hewlett Packard Company

571,578.74

 

48020

for Maintenance, Repairr and Testing for Surveillance, Security and Fire Systems Services

Tyco Fire Security Inc. dba Johnson Controls Security
Solutions

543,850.84

 

47477

COSTARS 6 Software

Synerng Inc.

527,134.78

 

48270

PEPPM Piggy back contract for Computer Hardware and Software

Mythics, Inc.

505,129.96

 

187229

PA State Contract for Surveiilance, Security, and Fire Systems

Simpiex Grinnell LP

500,150.28

 

47151

COSTARS 3 - 1T Hardware

Fire Fighter Sales Service Co. dba All Lines Technology

417,494.08

 

48036

COSTARS 25 Municipal Work Vehicles

Hunter Truck Saies Service Inc.

415,624.57

 

49022

State Piggyback for Municipat Work Vehicles

Hill International Trucks NA LLC

382,613.37

 

49253

COSTARS 13 - Emergency Responder Vehicles

Tri Star Motors Inc.

366,597.00

 

47142

COSTARS 3 - IT Hardware

Sirius Computer Solutions, Inc.

360,244.26

 

48223

COSTARS 20 Laboratory Supplies

Fisher Scientific

357,543.43

 

191926

GSA for Information Technology

Comcast

344,651.80

 

49385

COSTARS 25 Municipal Work Vehicles

Day Automotive Group dba Day Fleet Sales

335,195.00

 

48063

Eiectrical Supplies

Graybar Electric Co., Inc.

332,811.78

 

48452

National IPA Piggyback for Groundskeeping, Golf and Sports Field Maintenance Equipment

E.H. Griffith Inc.

299,710.24

 

190232

State of TN (Potk County) Piggyback for Optical Scan Voting Equipment

RBM Consulting LLC

298,775.16

 

49330

US Communities PB for Oracte Products, Services, and Solutions

DLT Soiutions LLC dba DLT Solutions

290.044. 72

 

49252

COSTARS 26 - Passenger Vehicles

Tri-Star Ford Inc.

284,050.00

 

47483

Software Reselling including Management of Microsoft Select

Dell Marketing LP

264,733.52

 

46537

MRO Supplies

Home Depot Credit Services

261,673.10

 

48384

Westmoreland COG

Day Automotive Group dba Day Fleet Saies

260,667.00

 

48527

COSTARS 5 Piggyback for Janitoriat Supplies

Janitoriat Services LLC

260,656.45

 

47146

COSTARS 3 - IT Hardware

ePlus Technology, Inc.

257,015.38

 

47287

GSA for Information Technology

Pictometry International

256,600.00

 

48521

COSTARS - 12 Emergency Responder Loose Supply

Team FOFCG

250,858.31

 

213172

PB Imaging Services

Pictometry international

241,107.80

 

47650

COSTARS 14 - Recreational Fitness Equipment

Pete Jeffrey and Associates

235,023.00

 

177090

Equipment Repair Maintenance Management Services

Specialty Underwriters LLC

234,612.50

 

179085

Electrical Maintenance Service for Bridge, Highway Lighting Tunnei Carbon Monoxide Monitor
System and Extra Work as Directed 

 

Allegheny City Electric Inc.

 

226,528.62

 

 

 

 

EXHIBIT 3

49126

PA PB for Body Armor

North Eastern Uniforms Equipment Inc.

 

221,096.46

 

49219

COSTARS 8 - Building Maintenance, Repair and Operation (MRO)

PPG Architectural Finishes Inc.

220,306.17

 

49298

COSTARS 26 - Passenger Vehicies

Whitmoyer Buick Chevrolet Inc.

216,900.00

 

47648

COSTARS 14 Recreational Fitness Equipment

Bitting Recreation Inc.

216,665.00

 

48177

State Piggyback for Carpet and Carpet installation

Steinberger Floors Inc.

215,259.60

 

49077

COSTARS t1 - Toiletries

Bob Barker 00., Inc.

210,572.71

 

47143

COSTARS 3 - IT Hardware

Dell Marketing LP

209,093.64

 

49279

COSTARS 25 Municipal Work Vehicles

Suppes Motor Sales Co. Inc Suppes Ford

208,837.00

 

48296

State Piggyback for Electronic Monitoring Equipment

Sentinel Offender Services LLC

206,931.21

 

47658

GSA for Information Technology

tmmix Technology Inc.

205,257.01

 

47774

COSTARS 14 - Recreational Fitness Equipment

General Recreation Inc.

204,649.00

 

49215

Mailroom Equipment

Pitney Bowes tnc.

204,519.68

 

48994

State Piggyback for Municipal Work Vehictes

Tristar Ford inc.

173,960.00

 

49195

COSTARS 8 - Building Maintenance, Repair and Operation (MRO)

Schaedler Yesco Distribution tnc.

165,581.00

 

48390

GSA for Information Technology

Caroiina Recording Systems LLC

163,620.00

 

483t0

COSTARS 8 - Building Maintenance, Repair and Operation (MRO)

Hite Co. Inc.

162,870.17

 

48546

Maintenance of Various Equipment

Ouatity Mechanical Services Inc.

161,008.51

 

48017

Surveiilance and Security Systems

Simpiex Grinnell LP

155,480.27

 

205960

State Piggyback for Electronic Monitoring Equipment

Track Group Americas Inc.

149,496.41

 

48018

Surveillance and Security Systems

Wacor Electronic Systems Inc.

131,027.03

 

49192

Agricultural/ Grounds Keeping Type Power Equipment

Bandit Industries Inc.

129,027.50

 

48278

PEPPM Piggy back contract for Computer Hardware and Software

Strategic Products Services LLC

128,754.40

 

48217

State PB - Agricultural Groundskeeping Type Power Equipment

John Deere Co.

124,806.34

 

204161

TCF Lease for Toro Equipment

TCF National Bank dba TCF Equip Finance

123,774.82

 

49325

COSTARS 34 Theater

Keyser Consulting

123,222.38

 

48968

Piggyback for Construction/Heavy Duty Power Equipment?Supplement

Murphy Tractor Equipment Co., inc.

123,197.04

 

49246

Two-Way Radio Communications Equipment

Motorola Solutions Inc.

113,516.16

 

214451

PA PB for Drug Alcohol Testing

Redwood Toxicoiogy Laboratory Inc.

104,625.95

 

48456

COSTARS 13 Piggyback for Emergency Responder Vehicles

Sabre Equipment

104,407.40

 

169224

Microsoft Enterprise Agreement

CDW Government Inc

102,888.00

 

47389

Document Management Products, Systems, Services and Solutions

Shred?It USA dba Shred?it Pittsburgh

102,408.73

 

49337

National IPA Piggyback for MRO Supplies

Lowes Companies Inc. Lowes Home Center

97,911.59

 

48396

PEPPM Piggyback for Copiers, MF Devices, Production Systems, and Software

Xerox Corporation

94,504.91

 

48333

State Contract Facilities Maintenance Services ITO DGS

Siemens Industry Inc.

92,970.47

 

49505

COSTARS 36 - Appliances, Cafeteria Equipment and Suppties

Curran Taylor Inc.

90,622.51

 

48264

COSTARS 35 - Furniture and Window Treatments

Granviile Associates Inc. dba Vision Business Products

88,113.72

 

48218

State Piggyback Agricultural Groundskeeping Type Power Equipment

Krigger Company Inc.

87,443.97

 

46862

Document Management Products, Systems, Services and Solutions

tron Mountain

87,118.27

 

47480

ITQ: Information Technotogy

Dagostino Etectronic Services

86,922.62

 

48311

COSTARS 8 - Building Maintenance, Repair and Operation (MRO)

Builders Hardware 8 Specialty Company

83,826.77

 

49187

State of MN for Computer Equipment

Hewlett Packard Enterprise Co.

79,197.49

 

49200

Drug Testing Equipment

American Bio Medica Corporation

77,947.01

 

48378

Genetic Parentage Testing

DNA Diagnostics Center Inc.

68,991.75

 

47448

COSTARS 8 (MRO)

Schaedler Yesco Distribution inc.

67,117.33

 

127673

Olathe Kansas IT Consutting Services Contract

Vetocity Technoiogy Solutions tV Inc.

66,730.44

 

49341

US Communities Contract for Online Marketplace - Amazon

Amazoncom LLC

66,455.32

 

200055

PA State PB for Moving and Storage Services

Debo Moving Storage Inc.

64,644.71

 

133649

Sole Source for EAM Software - Farragut

Farragut Systems

64,000.00

 

 

48440

 

COSTARS 12 - Emergency Responder Loose Suppiy

 

Witmeir Public Safety Group Inc.

 

 

63,940.65

 

26

100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128

129

130
131
132
133
134
135
136
137
138
139
140
141
142

  

48314

 

 

 

COSTARS 8 - Iding Maintenance, Repair and Operation (MRO)

Huckestein Mechanical Services Inc.

 

61,921.62

 

48957

COSTARS 8 - Building Maintenance, Repair and Operation (MRO)

Comfort Supply Inc.

59,644.98

 

49201

COSTARS 6 Software

Dell Marketing LP

59,556.64

 

49069

National IPA Piggyback for Systems Furniture, Free Standing Furniture, Seating, 
Systems/Equipment, Interior Solutions and Related Product and Support Services

Eastey 8t Rivers Inc.

57,782.34

 

48420

State Piggyback for Commercial Grade Food Service Equipment

Foodservice LLC dba Trimark SS Kemp

57,058.84

 

49023

COSTARS 8 Building Maintenance, Repair and Operation (MRO)

Fit Optimized Solutions

56,402.92

 

49293

COSTARS 12 Emergency Responder Loose Supply

Premier Safety 8 Inc.

56,364.00

 

47972

Janitorial Supplies, Equipment, Maintenance Repair (NCPA Contract)

Acuity Specialty Products, Inc. dba Zep Sales Service

56,244.56

 

48491

COSTARS 3 - IT Hardware

Dagostno Electronic Services

55,894.63

 

49353

COSTARS 26 - Passenger Vehicles

McCall Motors Inc.

54,247.00

 

49382

PB Less Lethal Duty Gear - Axon 5 Year Pian

Axon Enterprise Inc.

53,113.90

 

48292

State Piggyback for Less Lethal Duty Gear

Axon Enterprise inc.

52,485.78

 

47145

COSTARS 3 - IT Hardware

Anixter, Inc.

52,137.81

 

49214

Mailroom Equipment

The Wilson Group LLC

50,646.55

 

48587

ITQ: information Technology

Datacom Inc. dba Datacom

49,880.94

 

48046

COSTARS 25 Municipal Work Vehicles

Walsh Equipment Inc.

49,715.16

 

49256

COSTARS 26 - Passenger Vehicles

Tri Star Motors Inc.

47,980.00

 

49122

PA PB for Body Armor

Markl Supply Company

46,951.00

 

49334

PA Piggyback for Laboratory Supplies Equipment

VWR international inc.

44,213.62

 

48583

Liquid Caicium Chloride

SAL Chemical

43,872.14

 

49225

COSTARS 19 Medical Suppiies

Bound Tree Medical LLC

43,665.17

 

49255

COSTARS 25 Municipal Work Vehicles FORD

Tristar Ford Inc.

43,400.00

 

49369

NJPA Piggyback for Pie?Engineered, PrevCast Concrete Toilet Buildings and Vauits

CXT Inc.

42,931.00

 

203362

COSTARS 8 Building Maintenance, Repair, and Operation (MRO)

Automated Card Systems Inc.

42,755.00

 

49123

PA P8 for Body Armor

Witmer Public Safety Group Inc.

41,803.85

 

138674

Information Technology

ProTech Professional Technicai Services

40,000.00

 

188414

COSTARS 1 - Copiers, Document imaging and Multifunction Devices

eDocs Technologies LLC

39,467.00

 

48492

COSTARS 12 Emergency Responder Loose Supply

Universal Industrial Supply Inc.

39,302.13

 

205962

PASSHE PB for Design Services

Florida Consuiting LLC

39,250.00

 

49210

PA State Contract for Highway Inlet Boxes, Grates and Frames

East Jordan Iron Works inc. dba EJ USA Inc.

37,760.93

 

48140

Mission Oriented Business Integrated Services (MOBIS)

Inc.

37,749.00

 

49400

PEPPM PB - Computer Hardware and Software

NWN Corporation

37,362.00

 

48226

PEPPM Piggy back contract for Computer Hardware and Software

SMARTSqution Technologies LP

36,376.00

 

49265

COSTARS 34 Theater (Auditorium) Furniture, Fixtures, Audio, Visual Equipment and Musical
Instruments

Carousel Industries Of North America Inc.

35,850.00

 

49136

COSTARS 8 - Building Maintenance, Repair and Operation (MRO)

Johnson Controls Inc.

35,471.96

 

48306

COSTARS 8 - Building Maintenance, Repair and Operation (MRO)

Cleveland Brothers Equipment Co., Inc.

34,167.96

 

48291

GSA Piggyback for Scienti?c Equipment and Services

Thermo Scientific Portable Analytical

33,601.81

 

178445

Preventive Maintenance for Jail Chiller Plant II

Huckestein Mechanicai Services Inc.

33,471.00

 

49211

COSTARS 6 Software

NWN Corporation

33,249.55

 

49091

COSTARS 29 Grounds Keeping Services and Suppiies

8&8 Processing Inc.

32,577.22

 

49036

GSA for Information Technology

Mythics Inc.

32,479.23

 

48963

State Piggyback for Municipal Work Vehicles

Kenny Ross Chevrolet Inc.

32,306.61

 

48111

COSTARS 6 - Software

SHI Internationai Corporation

32,095.83

 

49243

Waste, Recycling Materials Handiing Containers

Kettle Creek Corporation

31,774.73

 

192715

COSTARS 8 - Maintenance, Repair and Operation Equipment Supplies (MRO)

Horizon information Services Inc.

31,230.25

 

47515

GSA for Information Technology

E-Innovative Services Group LLC

30,905.00

 

 

47521

 

COSTARS 8 Building Maintenance, Repair and Operation (MRO)

 

City Lighting Products Co., Inc.

 

30,876.54

 

 

27

143
144
145
146
147

148

149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
$64
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190

1E)
COSTARS 8 - Buiiding Maintenance, Repair and Operation (MRO)

 

 
    

Tobey-Karg Service Agency Inc.

 

 

30,740.12-

 

COSTARS 6 - Software

SBM Electronics inc.

30,620.00

 

COSTARS 16 - Waste Wastewater Treatment Plants Components/Equipment

Ferguson Enterprises Inc. #1599

30,393.32

 

PA PB for ITQ - Surveillance, Security, and Fire Systems Services

Access Control Systems, Inc.

29,302.54

 

COSTARS 8 Building Maintenance, Repair and Operation (MRO)

Filtech, inc.

29,284.14

 

ITO for of Surveillance, Security, Fire System Services

Vector Security, Inc.

28,709.00

 

COSTARS 3 - IT Hardware Contract

Connectivity Communications, Inc.

27,900.00

 

Piggyback for Construction/Heavy Duty Power Equipment?Supplement

Cleveland Brothers Equipment Co., Inc.

25,595.01

 

COSTARS 3 - tT Hardware

Southern Computer Warehouse Inc.

24,888.73

 

State Piggyback for Less Lethai Duty Gear

Markl Supply Company

24,330.10

 

PA State Contract Highway Glass Beads

Potters Industries Inc.

24,000.00

 

COSTARS 5 Janitoriai Suppiies

Randall Industries LLC

23,372.05

 

COSTARS $2 - Loose Supplies

Bear Communications Inc. dba Bearcom

23,340.38

 

48110

COSTARS 3 IT Hardware

Keyser Consulting

23,300.00

 

214750

COSTARS 6 Software

eDocs Technologies LLC

22,516.00

 

49288

COSTARS 17? Waste, Recycling and Materiats Handling Containers

BE Equipment, Inc.

22,466.85

 

48549

Commercial Furniture

Granville Associates Inc. dba Vision Business Products

22,222.46

 

47507

COSTARS 12 - Emergency Responder Loose Supply

Bob Barker Co., Inc.

21,625.05

 

47651

Enforcement, Security, Facilities Management, Fire Rescue, Clothing, Marine Craft

Security Detection, Inc.

21,450.76

 

48504

NJPA Piggyback for Floor Covering

Touch of Color Flooring Inc.

21,389.00

 

154296

ITQ Consulting Services

Maximus inc.

21,000.00

 

49401

COSTARS 12 - Emergency Responder Loose Supplies

Fire Force Inc.

19,900.00

 

48029

Commercial Furniture

All Steel Inc.

19,482.02

 

49024

Lab Supply and Equipment

VWR Internationat Inc.

18,133.16

 

47999

COSTARS 14 - Recreational Fitness Equipment

Recreation Resource Inc.

17,980.83

 

49407

PB GSA for Outdoor Recreation Items

Jamestown Advanced Products

17,694.50

 

49137

NJPA Piggyback for Construction 8: Agricultural Equipment

Smardt Equipment Inc.

17,645.36

 

49384

PA Piggyback for MRO

t~Con Systems, Inc.

17,356.66

 

49212

Construction/Heavy Duty Power Equipment Supplement

Groff Tractor Hotdings LLC dba Croft Tractor Equipment LLC

17,189.00

 

49282

Auto and Truck Parts With Related Auto and Truck Equipment, Accessories, Supplies and Services

North Hiils Auto Supply Inc.

17,182.04

 

49035

State Piggyback for Fire Extinguihsers, Maintenance Repair Services

Advanced Fire Company inc.

17,161.72

 

49004

US Communities

Cintas Corporation

16,905.53

 

49362

COSTARS 14 - Recreational Fitness Equipment

George Ely Associates Inc.

16,824.00

 

49251

COSTARS 12 - Loose Supplies

Staley Communications Inc.

16,551.38

 

214775

PB US Communities Rental of Uniforms

Cintas Corporation

16,378.60

 

49014

COSTARS 35 Furniture and Window Treatments

Caldwelis Windoware Inc.

14,678.00

 

49037

GSA for Information Technology

Combyte USA Inc.

14,177.61

 

49063

State Piggyback for Motor Oil, Lubricants, Antifreeze, and DEF

PPC Lubricants Inc.

13,798.50

 

49220

COSTARS 8 - Building Maintenance, Repair and Operation (MRO)

AB Specialties inc.

13,210.00

 

49413

PA State for Maintenance, Repair, Testing for Surviellance, Security, and Fire System Services

Wacor Electronic Systems Inc.

13,150.40

 

49257

COSTARS 13 - Emergency Responder Vehicles

Tristar Ford Inc.

12,829.23

 

196121

Mailroom Equipment

Francotyp Postaiia Mailing Solutions

11,134.01

 

47549

COSTARS 8 - Building Maintenance, Repair and Operation (MRO)

Combustion Service Equipment

10,736.78

 

204469

PA State Contract for Non-English tn-Person Interpretation Services

Language Services Associates

9,286.52

 

47118

Software Maintenance DLT Solutions (Oracie)

DLT Solutions LLC dba DLT Solutions

9,180.35

 

48550

NJPA Piggyback for Auto Auto Truck Parts

North Hills Auto Supply Inc.

9,070.73

 

145879

COSTARS 6 IT Software

General Code LLC

8,477.01

 

 

49209

 

PA State Contract for Highway InIet Boxes, Grates and Frames

 

Wine Concrete Products, Inc.

 

8,435.00

 

 

28

  

49408

 

 

 

Des
P8 US Communities Food Distr Products

US. Foodservice

 

8,283.81

 

49025

COSTARS 8 Building Maintenance, Repair, and Operation (MRO)

IDN~Hardware Sales, Inc.

8,107.29

 

49406

GSA PB for Outdoor Sports Equipment

Jamestown Advanced Products

7,967.90

 

49395

City of Pittsburgh Bid

SAL Chemical

7,600.90

 

48490

State Piggyback for Commercial Laundry Equipment

PAC Industries, Inc.

7,456.00

 

49387

PB McHenry, IL - Field Drug Kits

1 ?step Detect Associates

6,831.50

 

48482

COSTARS 37 Uniforms

Zytnick Ben dba Concept Uniform Co.

6,727.10

 

47649

COSTARS 14 - Recreational Fitness Equipment

Sport Suppty Group inc. dba BSN Sports

5,858.27

 

48028

Commercial Furniture

Hon Co. Mt. Lebanon Office Equipment

5,740.66

 

189077

State Piggyback for Tree ?trimming and Stump Removal

Sidelines Tree Service LLC

5,600.00

 

49015

State Piggyback for Uniforms

North Eastern Uniforms Equipment

5,511.38

 

47446

COSTARS 8 - Building Maintenance, Repair and Operation (MRO)

Efny Corporation dba Batteries Plus Pittsburgh

5,457.84

 

49340

NJPAHCPN Contract for MRO

Midwest Motor Suppty Co, Inc. dba Kimball Midwest

5,389.64

 

49013

State Contract

Highway Equipment Co.

5,248.80

 

213863

State of Ftorida

Enterprise Rent-a?Car

4,935.00

 

48580

COSTARS 20 - Laboratory Supplies

Perkin Elmer Health Sciences Inc.

4,796.72

 

48221

Enforcement, Security, Facilities Management, Fire Rescue, Clothing, Marine Craft

CEEA USA LTD

4,300.00

 

49338

State of PB for Bridge Highway Maintenance Materials

George L. Witson 8 (30., inc.

4,275.07

 

49079

COSTARS 8 - Building Maintenance, Repair and Operation (MRO)

Johnstone Supply

4,036.56

 

48019

Surveillance and Security Systems

Eltech Security Systems

3,830.33

 

49280

COSTARS 14 Recreational Fitness Equipment

Kelly's Sports, Ltd.

3,715.00

 

49283

Auto and Truck Parts With Related Auto and Truck Equipment, Accessories, Suppiies and Services

NAPA Auto Parts of White Oak

3,572.09

 

48516

State Piggyback for Motor Oil, Lubricants, Antifreeze, and DEF

Tri County Petroleum, inc. dba Petro Choice

3,548.60

 

49074

National IPA Piggyback for Systems Furniture, Free Standing Furniture, Seating, Filing
Systems/Equipment, Interior Solutions and Related Product and Support Services

Franklin Interiors, inc.

3,358.56

 

49412

NJPA Piggyback for John Deere Retaii Sales

Murphy Tractor Equipment Co. Inc.

2,365.10

 

48199

Commerciat Grade Food Service Equipment

Singer Equipment Company

2,348.69

 

48579

COSTARS 3 - IT Hardware

Zones, Inc.

2,342.07

 

48344

State Piggyback for Commercial Grade Food Service Equipment

TMP Company inc.

2,081.20

 

49264

PB Road Flares

Standard Fusee Corp. dba Orion Safety Products

1,998.40

 

108337

US Communities - Equipment Rentat

HERC Rentais, inc.

1,943.50

 

47659

Breast Pumps

Medela Inc.

1,684.36

 

49213

COSTARS 17- Waste, Recycling and Materials Handling Containers

Busch Systems International Inc.

1,308.65

 

48030

State Contract Envelopes

Cenveo Corporation

1,058.00

 

49124

PA PB for Body Armor

Safety League Inc. dba Atlantic Tactical

981.44

 

47631

COSTARS 3 - IT Hardware

SBM Electronics, Inc.

764.00

 

49060

National Piggyback for Janitorial Suppiies, Equipment, Maintenance, and Repair

EcoLab Inc.

526.01

 

48245

National JPA Contract Pre~Engineered, Pro-Cast Concrete Buiidings

CXT Incorporated

441.00

 

49092

COSTARS 5 - Piggyback for Janitorial Suppiies

Janitors Supply Inc.

322.66

 

47696

COSTARS 24 Traffic Signs

US Municipal Supply, Inc.

280.00

 

48234

Drug Atcohoi Screening Products

Orasure Technologies Inc.

237.60

 

49383

PB GSA for Law Enforcement Solutions

Sirchie Finger Print Laboratories

211.56

 

48444

National Contract

Autozone Parts LLC

89.99

 

49068

National Piggyback for Systems Furniture, Free Standing Furniture, Seating, Filing
Systems/Equipment, Interior Solutions and Rotated Product and Support Services

Bulidog Office Products, Inc.

84.66

 

 

49410

 

State Piggyback for Fire Extinguihsers, Maintenance 8 Repair Services

 

Advanced Fire Company Inc.

 

56.00

 

Total Spend Under Piggyback Contracts During Our Audit Period:

$43,082,42386

 

 

 

is a?iniigiht?iri

 

April 18, 2019

The Honorable Chelsa Wagner
Aliegheny County Controller
436 Grant Street

104 County Courthouse
Pittsburgh, PA 15219

Re: Performance Audit Report on the impact of Piggybacking Method of Procurement on Ailegheny
County and the Utilization of Local Business for the period January 1, 2017 through iune 30, 2018

Dear Controller Wagner:

Thank you for the opportunity to respond to the above?referenced anaiysis of the effects of piggybacking
procurement for the period of January 1, 2017 through June 30, 2018. Instead of addressing each finding
point?by-point, wiil be responding giobaliy as believe it provides a more accurate picture of our efforts.

As a starting point, there is a mischaracterization that piggyback contracting excludes local companies.
We have not found that to be true at ali. in fact, of the 234 piggyback contracts in this period, 42.30% are
within a 30?miie radius of the City of Pittsburgh and 56.80% are iocated within the Commonwealth of PA.
Even had these contracts gone through our local bid process, there is no assurance that a Eocai company

will be successfui. There are many out?of~state companies enrolled in Public Purchase which is the venue
through which the Purchasing 8i. Supplies Division receives bids.

There is also an implication that using the option for piggybacking on a contract does not allow for an
MWDBE component. That is simply not accurate. Although not all bidding entities have MWDBE goals,
they do encourage minority participation. Any entity with MWDBE goats that bids 3 piggyback contract
binds the awardee to those same goais when any other entity piggybacks on it, so that minority
participation spreads across ail users. Additionally, selecting that contract doesn?t preciude further
negotiation. As just one example, the county has used the piggyback contract for supplier Staples but
negotiated with the company to meet the county?s MWDBE goats. That contract, and the corresponding
county goais met through it, is also used by the City of Pittsburgh, Pittsburgh Public Schools, the Airport
Authority, and the county Housing Authority. The printer and copier paper acquired from Stapies is
ordered through their minority paper supplier. There are aiso MWDBE firms that have been awarded
piggyback contracts such as The Wiison Group, a minority supplier of toner cartridge and other office
supplies, which provided $50,646.55 of items via a piggyback contract during the audit period.

 

 

Jenny DTRECTOR
OF SERVKZES
202 COD?woos; 436 GRANT STREET 6 Pm?seunoi?i. PA i521 
{4i 2) 3506 'i 09 a FAX (A: i 2.) 350-43925 a 

29

Page 2 of 3 mAprii 13, 2019
Piggyback Contracts Audit Response

Piggyback contracts and cooperative purchasing are also good for the taxpayer. industry leaders have
indicated that piggyback contracts used nationally can save as opposed to a singular solicitation.
The Purchasing Division joined forces with several local agencies on purchasing contracts. These include
the City of Pittsburgh, the Airport Authority, ALCOSAN, the county Housing Authority, the Community
College of Allegheny County, the Port Authority, the City of Pittsburgh Parking Authority, and the joint
Sports and Exhibition Authority. The group meets several times a year to determine what could be a joint
purchase bid. Air fitters, grass seed, paving materiais and paint have all been mentioned as potential items
the county and authorities use and could collectively seek. There has also been discussion of leveraging
the Port Authority to buy bulk fuel for the vehicles the county and authorities own and use. This
cooperative purchasing is not unique as other locai agencies have done the same. For instance, the Quaker
Valiey Council of Governments recently contracted with Waste Management to provide garbage and
recycling for each of the 1S municipalities it represents.

To ensure the taxpayers of Allegheny County are receiving the lowest price for goods and services, the
Purchasing Division will review piggyback contracts even if an invitation for Bid was solicited. A recent
example is for bottied water. The successful bidder was D.S. Waters. Given greater scrutiny, it
was determined W.B. Mason had a contract with the Commonwealth of PA that provided greater
discounts that would further benefit taxpayers.

An analysis of that review is attached (Attachment A), but what we found was that the cost to the county
was far less when using the state contract and, in some cases, provided items that the invitation to bid
did not include.
a The rental of a hot/cold unit ranged from $1.74 to $5.85, depending on the contract, with W.B.
Mason being the lowest cost.
a A unit with refrigeration wasn?t included in the Waters bid.
a The deposit for a S?galion water bottle was $6 for D.S. Waters, but there was no cost for it under
the W.B. Mason PA contract.
While there were other items in which 0.5. Waters bid at a better price than W.B. Mason, when looking

at the entire contract and the needs of the county, the annual cost savings from piggybacking on the state
contract was estimated at $19,421.

A few other items of note:

a in reviewing your attached schedule titled ?Exhibit the expense of $43,082,423 over 18 months
seems significant but we took a closer look at the contracts in excess of $500,000. ?those expenses
total $26,211,111 and are for items such as wireless communication, Microsoft licenses, lT hardware
and furniture. Many of the commodities are proprietary in nature and were vetted by State and
National Purchasing Cooperatives. As l?m sure you are aware, in many cases, there is not a local
presence for Verizon, Sprint and Microsoft.

a Additionaliy, the sample used by your office reflects $43 million in contracts over an 18?month period.
A scheduie is also attached (Attachment B), showing while that is a significant amount on its own,
when viewed in context of the county?s entire spend in 2017 ($1,169,690,336) and 2018
it?s rather smali comparatively.

Page 3 of3 Apri! 18, 2019

30

Piggyback Centracts Audit Response

0 A review of the exhibit related to piggyback contracts prepared by your office contains four contracts,
representing nearly $500,000 of the total, which were acquired through the invitation for Bid process
NOT a piggyback contract. The list of those contracts follows:

0 Contract 179085: Eiectrical Maintenance Service with Aliegheny City Eiectric; awarded under
in 2015 (expired in 2017) found on line 46

0 Contract 48583: Liquid Calcium Chloride with SAL Chemical; awarded under in 2015
(expired in 2018) found on line 115

0 Contract 49395: listed only as "City of Pittsburgh bid;? awarded under City of Pittsburgh
for Caicium Chioride (Non?Liquid) on December 1, 2017 and adopted by the
county in February 2018 found on line 194 [Please note that the county, Airport Authority,
the City Parking Authority, CCAC, and the SEA were all partners to this bid. SAL Chemicai is a
local company and the contract is subject to the City?s requirements]

0 Contract 48546: Quality Mechanical Services; awarded under WES-7427 in 2016 for

maintenance of various kitchen, refrigeration, laundry, boiler, hot water, and HVAC
equipment.

We know that ideaily every solicitation would be bid, every award would be locai, and every price wouid
be the lowest in the country. That?s not reality, however, and our Purchasing Division has a difficult
baiancing job. Each day, they foilow ail of the ruies and regulations that apply to purchasing, whiie striving
to meet the goals of the county, finding appropriate commodities and services, pursuing the lowest price
possible for the taxpayers, and ensuring a fair, transparent process. i?m proud of the work that they do

while maintaining that delicate baiance and know that they will continue striving to improve their
performance each day.

Sincerely,

i 

in . i
rarer? ?atness?



i

am.

Jerry Tyskiewicz, Director

cc: The Honorable Rich Fitzgerald, County Executive
The Honorable John DeFazio, County Councii President
Jennifer Liptak, Chief of Staff to the County Executive
William D. McKain, County Manager
Mary C. Soroka, Director of Budget and Finance
Ruth Byrd~Smith, Director of MWDBE
Frank Alessio, Chief Purchasing Officer
Kenneth J. Varhola, Chief of Staff to County Councii
Sarah Roka, Budget Manager, County Council
Lori A. Churiila, Assistant Deputy Controlier of Auditing

Attachments (2)

31

Attachment A

 

WATER PRICE 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.5. Waters W3. Mason PA City of Pittsburgh
Item TABS STATE CONTRACT CITY CONTRACT
Rental Hot/Coid Unit $2.99 $1.74 $5.85
Rentai Hot/(201d Unit w/Refrig. No Bid $4.74 $6.45
5 Gallon Water Bottle $3.49 $2.94 $6.00
3 Gallon Water Bottle $3.49 $2.94 $7.75
1 Gallon Distilled Water $1.16 $1.94 No Bid
Deposit 5 Gallon Water $6.00 $0.00 No Bid
Deposit 3 Gallon Water $6.00 $0.00 No Bid
items Not on W.B Mason State Contract
item 0.5. Waters W.B. Mason Lewes Staples
10 oz. Rolied Rim 124.79/case 
Paper Cups .0623 each
7 02. Cone Cups $3.49/sleeve $183.97/case $52.19 Med Line
.0349 each .0367 each $69.91 Dart
4.5 oz Cone Cups No Bid $61.99
4.0 02. Cone Cups No Bid $67.47
Bottled Water $4.99 24/case $4.88 24/case $3.58 32/cs 
16.9 oz Bottles .207 each .203 each .111 each
Cost Analysis
Item 0.5. Waters W.B. Mason Lewes Staples
Water Cooler $5,781.90 $2,401.20 
Rentals Hot/Cold
Filtration Units
Bottled Water 5 $39,121.89 
3 Gallon $54,813.94
Bottled Water $1,225.55 $1,195.60 $877.10 
16.9 02:
Total $61,821.39 $42,718.69 $877.10

 

 

 

 

 

 

 

Total Annual Savings - $19,421.20

 

32

 

 

Attachment 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount Paid
2017
DErect Pay Purchase Orders 11,719,14613
Non?Encumbered Contracts 1,065,224,635.24
Purchase Orders 37,265,065.10
Encumbered Contracts $5,481,490.26
1,169,690,336.73
2018
Direct Pay Purchase Orders 12,300,11839
Non?Encumbered Contracts 1,120,952,73654
Purchase Orders 34,287,722.88
Service Contracts 
1,233,548,37325
2,403,238,70998

 

 

 

33

VII. Controller?s Of?ce Comments Applicable to Management?s Response

in consideration of management?s response dated April 18, 2019, we believe that there are a few
items that we need to address to improve the characterization of our audit findings so that
management and other users of our report will be able to more clearly understand the
de?ciencies that we have identi?ed, as well as the need for corrective action.

First, our audit report does not indicate that piggyback contracting excludes local companies.
We are aware that 83 of the 234 piggyback contracts with expenditures during our audit period
involved companies located within Allegheny County. We are also aware that the utilization of
public bid processes does not guarantee that local companies will always be awarded County
contracts. However, public bid processes, advertised locally, are more likely to result in the
awarding of County contracts to companies situated within Allegheny County, or at least in its
vicinity. As we noted in our audit report, 151 of the 234 piggyback contracts with expenditures
during our audit period involved out-of?County suppliers. Had the County engaged in less
piggyback contracting, it is likely that the utilization of companies situated within Allegheny
County or in its vicinity would have been higher.

Second, our audit report does not indicate that piggyback contracting cannot involve MWDBE
participation. Some cooperative purchasing organizations utilized by governments may have
MWDBE utilization goals or requirements which may or may not be enforced. However, neither
Purchasing nor the MWDBE Department are capable of monitoring and do not monitor the
MWDBE utilization associated with piggybacked contracts. It is important to note that the goal
of Allegheny County?s MWDBE program, as stated in Section 435-3 of the Allegheny County
Administrative Code, is ?to assure the success and growth of minority, women, and socially and
economically disadvantaged businesses, business concerns, or business enterprises in the
County. . As we noted above and in our audit report, 151 of the 234 piggyback contracts with
expenditures during our audit period involved out~of~County suppliers. Even if a piggybacked
contract does contain an MWDBE goal or requirement, and that goal or requirement is actually
enforced, there is not a high likelihood that out-of?County suppliers will select MWDBEs within
Allegheny County to participate in contract awards (and also no guarantee that piggybacked
contract suppliers situated within Allegheny County will also select MWDBES situated within
Allegheny County to participate). Consequently, the utilization of piggyback contracting
typically does not provide the best opportunity for Allegheny County to achieve its MWDBE
program goals.

With respect to the four particular contracts referred to on page 3 of the response, we have
reviewed the available documentation for those contracts and agree that three of those contracts
(#179085, #48583, and #48546) were awarded via a public bid process. However, contract
#49395 appears to have been a piggybacking of a City of Pittsburgh contract. We had initially
attempted to identify on our own the populations of approved piggybacked contracts and
piggybacked contracts with expenditures during our audit period, but the County?s accounting
system does not track the procurement method associated with each County contract.
Consequently, we needed to obtain those populations from Purchasing. The utilization of
piggyback contracting is so commonplace that Purchasing had not tracked the extent to which it
was used during our audit period (or for any other period). We requested that Purchasing
identify the population of approved piggybacked contracts during our audit period for us, which
it did. The aforementioned four contracts were included in the population provided to us by

34

VII. Controller?s Of?ce Comments Applicable to Management?s Response

 

Purchasing. We did not identify any other contracts that were awarded via a public bid process
in any of the samples that we actually selected for testing.

Finally, our audit report does not indicate that piggyback contracting is always bad for Allegheny
County taxpayers, or that the County should completely abandon piggyback contracting. Our
primary concern is that adequate controls have not been designed and implemented to ensure that
piggyback contracting is a Viable procurement method, and the most appropriate procurement
method, for each particular procurement where piggybacking is being utilized. We strongly
recommend that the Department of Administrative Services and its Division of Purchasing and
Supplies again review the recommendations that we have provided in our audit report and take
steps to implement them.

35