A Review of Mississippi Delta Community College’s Processes for Procuring Leases and Personal Services
On May 2, 2012, PEER received a complaint from two legislators (later joined by eight more) regarding allegations that had been made to them of possible mismanagement of Mississippi Delta Community College (MDCC) in Moorhead. Attached to the complaint was a “Document of Concern,” which contained excerpts of alleged conversations involving the board members and selected staff of MDCC. Much of what was contained in the document was of a derogatory nature, containing racial slurs and innuendo.
At the heart of the concerns were allegations that the board of the community college or certain individuals might have used resources for purposes that might not be in the best interests of the college, its students, or the public at large.
PEER notes the difficulty of determining whether many of the comments in the Document of Concern, derogatory and otherwise, were actually made and if so, whether writing about them would be the proper subject for legislative oversight. Consequently, this review did not focus on racial epithets, personal management styles, or allegations of individual wrongdoing that might better be addressed through courts of law or before administrative bodies, but focused on whether the process by which MDCC procures personal services and leases could be easily exploited to achieve ends not necessarily in the best interest of the college, its students, or the general public.
Legal Status of Community Colleges
Community colleges in Mississippi are not state agencies and are not bound by the regulatory restrictions imposed on state agencies. MISS. CODE ANN. Section 37-4-1 (k) (1972), which makes a declaration of policy regarding the state’s community colleges and the Mississippi Community College Board, makes clear the community colleges’ relationship to state laws that regulate state agencies. Specifically, this provision states:
The Legislature finds and determines that the social, cultural and economic well-being of the people of Mississippi, and hence the state, are enhanced by various educational experiences beyond the elementary and secondary school years. The Legislature hereby provides a means for the continuation of a system of community and junior colleges and declares the following to be the policy of the State of Mississippi:
(k) Community and junior colleges shall be considered agencies of local government rather than agencies of the state.
Consequently, regulations imposed on state agencies to ensure the openness and competitiveness of their contracting processes do not apply to community colleges.
Additionally, while the Mississippi Community College Board, created by MISS. CODE ANN. Section 37-4-3 (1972), exists to oversee the movement of state and federal funds to the community colleges and to approve the creation of branches and vocational programs, general governance is not a responsibility of that board. Therefore, the community colleges, their boards, and their staffs are accountable to the local appointing authorities (i. e., county boards of supervisors) rather than to the state. Any additional accountability for a community college would have to be the subject of general law adopted through the legislative processes.
Sources of Best Practices for Procurement by Community Colleges
In the absence of mandated standards, PEER reviewed MDCC’s contracting and leasing processes in light of what it considered to be the best practices for contracting and leasing processes for a public body. PEER derived these “best practices” from those competitive processes required of state agencies and contracting practices recommended by the American Bar Association in its Model Procurement Code for State and Local Governments.
By using these best practices as criteria, PEER is not proposing that community colleges should be made subject to state regulation. However, these best practices, if followed, would help to ensure a degree of openness and competitiveness that all public bodies should have when using taxpayer funds.
Conclusions Regarding Mississippi Delta Community College’s Leasing Practices
In recent years, MDCC has not consistently used open and competitive processes when seeking to lease property for its branch facilities. In instances in which the college did use a competitive process, there were weaknesses in the process related to the development of specifications and the analysis of proposals.
Currently, Mississippi Delta Community College is a party to three leases--two by which the college leases property to use for branch campus facilities in Drew and Greenwood (i.e., MDCC as lessee of facilities) and one by which the college leases excess land to an agricultural concern in Greenville (i. e., MDCC as lessor of land).
PEER reviewed the methods by which these leases were entered into to determine how open and competitive MDCC was in its practices. For best practices in leasing, PEER looked to standards in state law and regulations that would have controlled the processes of leasing if MDCC were a state agency under the oversight of the Department of Finance and Administration (DFA).
Generally, DFA’s policies require that agencies publish notice to potential lessors, seek out potential lessors, obtain proposals, evaluate the proposals after their receipt, and apprise the Division of Real Property Management of the top two proposals so that the division can review the proposals and select the one that it believes will best serve the interests of the agency.
MDCC’s Leasing of Facilities in Drew and Greenwood (i. e., MDCC as Lessee of the Facilities)
Regarding MDCC’s lease of the branch facility in Drew, PEER found no evidence of a competitive process being used to select the facility. The MDCC Board’s minutes mention discussions or consideration of other sites, but no mention is made of actual proposals other than the successful proposal from Drew Enterprises.
Regarding the Greenwood lease, the college did utilize a competitive process for the selection of the leased facility. This included publication and the receipt of proposals. However, MDCC staff did not conduct a documented analysis of proposals, including a ranking of the proposals, and neither the minutes nor any other MDCC records express a clear basis for the board’s action.
Board and Staff Members Related to an Offeror
The Document of Concern raises the possibility of a conflict of interest regarding the members of the Abraham family and its involvement in the leasing of the Greenwood facility.
PEER notes that Sam Abraham, a member of the board of trustees, and Magdalene Abraham, an MDCC staff person, are siblings of Lee Abraham, who is President of Mercantile, Inc., the current lessor of the Greenwood branch facility.
The attorney for the MDCC Board sought and received on November 4, 2011, an Ethics Commission opinion regarding the participation of persons related to a lease offeror in the lease selection process of a community college. The commission opined that a foundation member is not subject to the Ethics in Government Law and that no violation of MISS. CODE ANN. Section 25-4-105 (1) (1972) should occur if the college trustee and the employee fully recuse themselves from any matter that would result in a pecuniary benefit for their financially independent siblings.
Based on a review of MDCC’s minutes, the Ethics Commission opinion, and other documents, PEER cannot conclude that members of the Abraham family involved in MDCC administration have engaged in wrongdoing.
MDCC’s Leasing of Land in Greenville (i. e., MDCC as Lessor of the Land)
PEER believes that MDCC has leased excess land at its Greenville campus in a competitive manner. The college periodically publishes an invitation for interested parties to file proposals on the property. The college plans to develop the land for educational purposes in the future.
Conclusions Regarding Mississippi Delta Community College’s Personal Services Contracting Practices
MDCC’s procurement process for personal services from FY 2007 through FY 2012 did not comport with best practices and as a result, the college cannot ensure open competition for its personal services contracts and cannot justify some of its large contract decisions. Additionally, contracting is highly decentralized at MDCC, leaving different staff members or offices with discretion to follow such practices as they consider appropriate.
In evaluating the process MDCC has used to procure contractors, PEER utilized the standards that Mississippi’s state agencies would follow for procuring contractors and treated such as “best practices.” PEER also considers the American Bar Association’s Model Procurement Code for State and Local Governments as best practices for public bodies procuring personal services contracts.
The state’s Personal Service Contract Review Board (PSCRB) requires state agencies to employ competitive practices to obtain personal services contracts. For such procurements, the higher the dollar value of the proposed contract, the stricter the PSCRB’s requirements are regarding solicitation of potential contractors, evaluation of proposals, and documentation of the agency’s efforts. The Model Procurement Code establishes principles for government procurement that emphasize fair and open competition, which reduces the opportunity for favoritism and inspires public confidence that contracts are awarded equitably and economically.
PEER found that from FY 2007 through FY 2012, MDCC did not use competitive processes in awarding several personal services contracts of $50,000 or more. For these contracts, the college either solicited a single bid, retained a previous vendor, or negotiated for bids. For contracts for the amounts these contracts represented, the PSCRB would have required a state agency to obtain competitive quotes from three vendors.
MDCC’s practices result from the lack of a formal, written board policy mandating that the college use competitive procurement processes and operate in accordance with specifically set dollar thresholds for procurements. When entities such as community colleges do not exercise open and competitive procurement practices, they leave themselves open to criticism that favoritism is the basis for awarding personal services contracts.
PEER also found that from FY 2011 through FY 20121, MDCC paid $282,200 for personal services without establishing written contracts with defined deliverables and specified payment amounts.
Also, MDCC does not keep copies of all personal services contracts in a central location; thus, neither MDCC Business Office staff nor an independent third party such as PEER can efficiently locate and review contracts for analysis.
MDCC should adopt formal personal services and leasing policies that:
1 Records were available only for October 1, 2010, through June 30, 2011, for FY 2011 and July 1, 2011, through May 31, 2012, for FY 2012.
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