Main entrance to the Montoya administration building. The porch covering of this entrance was part of the renovation process that resulted in audit findings. Valley Daily Post photo
NNMC Capital Project Mistakes Result In Audit Findings
The Northern New Mexico Board of Regents took up an issue at their Oct. 22 Board meeting regarding a recent audit conducted by the New Mexico Higher Education Department (HED) into a building remodeling project at the campus in Espanola.
In July of this year the HED informed the administration at NNMC that they were conducting a capital project audit on activities regarding the Montoya Building renovation project which took place in 2013.
The results of this audit, which were published Oct. 1, found two issues of concern that HED advised NNMC to correct in any future projects. The audit acknowledges that NNMC cooperated with HED during the audit process and was completely forthcoming in providing the information that resulted in two findings.
The 2013 renovation project of the Montoya Building, NNMC’s administrative building, were broken into several stages, each taking on a different part of the building. These included the bookstore, the board room, the president’s office and student services.
Northern New Mexico College's bookstore in the Montoya building. Valley Daily Post photo.
The first finding identified in the HED audit was in regards to the contract awarded for the bookstore renovation. State Procurement Code requires any contracts valued over $60,000 to be made through a competitive bidding process. NNMC itself has even stricter purchasing procedures dictating that any project over $25,000 go through an RFP bidding process. The only exception to this provision under State Procurement Code is if the school utilizes contractors approved in the Cooperative Educational Services (CES), a nonprofit purchasing cooperative that solicits bids on behalf of members.
The audit finds that NNMC solicited three bids from contractors that they believed to be in the CES system. Two contractors submitted bids for the bookstore project and in July 2013 NNMC awarded the contract to the low bidder, Blue Sky Builders for the amount of $208,721. Change orders to the contract eventually increased total cost of the bookstore project to $271,708.
The problem for NNMC was that Blue Sky Builders was not yet a CES approved contractor. Blue Sky Builders was added to the CES list of contractors in October 2013 but that was after the contract had been awarded, meaning NNMC violated both school purchasing procedures and State Procurement Code.
The HED audit identifies the cause of the problem to be that NNMC had previously eliminated the Capital Projects Director’s position due to “financial hardship” and instead had divided the duties of managing capital projects between five staff members. The fact that the awarded contractor was not yet approved in the CES system slipped past NNMC’s purchasing system.
The HED audit recommended that NNMC create a single position to ensure all procurement activities at NNMC are performed in compliance of code and school policies. HED notes in the audit that NNMC hired a College Purchasing Agent in October 2013 to fill that role.
The Audit also noted that the awarded contractor, Blue Sky Builders is partially owned by a NNMC employee, creating the perception of possible favoritism. NNMC’s Athletic Director and head basketball coach Ryan Cordova owns a 10 percent stake of Blue Sky Builders.
The audit also found school purchasing procedures to be broad and lacking detail to ensure compliance. The audit recommended they be rewritten to provide more controls on purchasing. Ricky Serna, Vice President for Advancement at NNMC stated that the school is working on a full rewrite of its purchasing policy which should be completed in early 2016.
The second finding identifies inappropriate employee participation in contract approval process for renovations of the Board Room and front porch cover at the main entrance to the building.
Domingo Sanchez, Vice President for Finance and Administration normally handles all final contract approvals. The audit finds that he was on leave during the period of time when some renovation orders were being signed. Sanchez apparently instructed a NNMC Executive Administrative Assistant to authorize a purchase requisition with Blue Sky Builders for the front entrance porch in the amount of $24,690 and to sign the contract with Blue Sky Builders for board room renovation in the amount of $17,824.
The audit finds that this individual lacked signing authority for any such contract, thereby creating a violation of State Procurement Code. But of bigger concern in the audit is the fact that the Executive Assistant, Brandi Cordova is married to Athletic Director Ryan Cordova, part owner of Blue Sky Builders, thereby creating perceptions of a conflict of interest.
HED recommended in the audit that NNMC clearly define signature authority for all purchases. In September 2015 the NNMC Board of Regents proactively implemented an institutional purchasing policy naming signature designees for all contracts and purchase agreements. In addition the Board instructed the administration to fully develop a school policy that formally assigns signature authority for all procurement processes. As mentioned earlier Serna reports that this process is underway and a full policy should be in place sometime in early 2016.
When asked to comment on the audit Serna stated “The institution has spent the last four years making sincere and documented gains in control of its financial resources. Audits like this are the best way for us to learn where improvements can be made. So we continue to welcome like these on how we can better manage the institutions funding and how to use it better for the benefit of our students and mission of the institution.”