PACIFIC COUNTY — The county’s public utility district didn’t comply with 2018 state bid law, according to a recent audit.
In 2018, Pacific County Public Utility District No. 2 didn’t comply with the state’s bid law when purchasing almost $600,000 worth of materials, according to Washington State Auditor’s Office.
PUD No. 2’s general manager disagrees with the auditor’s finding.
“We’re disagreeing because they’re changing their interpretation of the law,” said Jason Dunsmoor, general manager for PUD No. 2. “The law didn’t change, the interpretation did.”
State law requires the PUD to obtain competitive bids for purchases of $15,000 or more, according to the auditor’s office. This includes advertising to all interested parties; opening and reading bids publicly at a fixed time and place, like a regular meeting; and awarding the contract to the lowest responsible bidder.
The PUD is also able to choose its vendors through a PUD Commissioner-approved vendor list.
During 2018, the PUD awarded three contracts without competitively bidding for purchases, or using a commissioner-approved vendor list. The contracts were for utility meters, utility vaults and conductive wire.
Awarding contracts without competitive bidding is an issue because the PUD can’t prove it received the best possible price for its materials, according to the auditor’s office.
This is the first time the auditor’s office has found the PUD’s bidding processes to be out of compliance with state law. However, the PUD experienced a similar issue in 2015 when the auditor’s office changed its interpretation of laws regarding materials, Dunsmoor said.
“It’s possible it’s been an issue in the past we didn’t see because we were looking at other issues,” said Bryson Bristol, project manager for the auditor’s office. Bristol leads the team which audited the PUD.
The issue wasn’t found to be a problem for surrounding counties, according to the auditor’s office website.
The PUD went to bid for meters in the 1990s, ultimately choosing Landis & Gyr. The vendor’s meters aren’t compatible with other vendors’ systems, Dunsmoor said.
In 2014, Landis & Gyr updated its meter system, no longer supporting the technology the PUD purchased in the 90s.
In 2018, new meters were purchased for $205,051. When buying the meters, the PUD purchased its meters again from Landis & Gyr.
“The new meters are the only kind that work with our system,” Dunsmoor said.
The PUD didn’t advertise for meter bids because the Landis & Gyr system chosen in the 90s has since been working, Dunsmoor said.
Yet, both the auditor’s office and the PUD disagree with the others’ reasoning.
“Brand name specification does not alleviate the district’s procurement requirements,” according to the auditor’s office.
The PUD has purchased vaults on an as-needed basis since 2015, Dunsmoor said.
“We try to keep inventory down. I buy quarterly or even less often when possible,” Dunsmoor said. “We’re doing everything possible to keep rates low.”
In 2018, new utility vaults were purchased for $124,893, according to the auditor’s office. When buying the vaults, the PUD only got two vendor quotes, despite PUD policy requiring three quotes.
Because of Pacific County’s location, only two manufacturers will bid on concrete vaults, Dunsmoor said.
“We’re a small, rural utility that has a hard time getting vendors,” Dunsmoor said. “Most vendors won’t ship out here; it doesn’t make sense for them to.”
Only two vendors will serve Pacific County’s cable needs, Dunsmoor said. The vendors are Okonite and Kerite Cable companies. The district usually purchases Okonite cables because Kerite vendors typically haven’t responded to bids.
Like its other needed materials, the PUD purchases cable on an as-needed basis, Dunsmoor said.
“By purchasing material on an as-needed basis, [the PUD] is able to reduce inventory and forego the added expense, five to 10 percent of the bid price, of the formal bid process,” Dunsmoor said.
In 2018, the PUD bought conductive wire four times, totaling $220,000. When buying the wire, the PUD only got one vendor quote.
“Factors such as system compatibility and past vendor experience are not an allowable exemption for applicable bid laws,” according to the auditor’s office.
In July 2019, new procurement laws were adopted. PUD No. 2 will work with the Municipal Research and Services Center to follow the new laws, Dunsmoor said. The MRSC serves small governments in Washington state.
“Going forward, we’ll do what they say and still get the best price,” Dunsmoor said. “We’ll make them happy next year.”
The new laws require the PUD to publish its vendor lists twice a year, and advertise for bids.
“It’s clear in the district’s response that they take their responsibilities to safeguard public resources seriously,” Bristol said. “We appreciate their efforts, and hope our report is helpful to them in future procurements.”
The PUD wasn’t deemed to be non-compliant with state law during the district’s last three procurement cycles, Bristol said.
Within the last two years, the auditor’s office has been emphasizing risk-based approaches with local governments, Bristol said.
“Procurement laws are always evolving,” Bristol said. “Procurement is the number one high-level topic we write findings for.”
The PUD wasn’t out of compliance in other areas the state auditor’s office reviewed.
The office reviewed the following subjects; accounts receivable (utility billing and adjustments); tracking and monitoring of theft-sensitive assets (such as computers, tools and equipment); procurement (purchases); self-insurance (unemployment compensation); financial condition and fiscal sustainability; and open public meetings (documentation of minutes and executive sessions).