The Truth About Yorktown's Procurement Policy

How the Town of Yorktown spends our tax dollars will likely be the first controversial issue to be debated by the new Town Board. At stake are hundreds of thousands of dollars.

At issue is the Purchase Order (PO) system, a basic financial management tool used by businesses, government agencies and non-profit organizations to save money. The system accomplishes this goal by placing controls on purchases not subject to competitive bidding. It:

1. Ensures that the town gets the lowest  possible price for the goods and services it purchases.              
2. Safeguards against favoritism, extravagance, fraud and corruption              
3. Prevents unauthorized expenditures 

Before Yorktown had a PO system, departments could purchase whatever they wanted, whenever they wanted and from whomever they wanted without regard for the financial consequences to the Town and its taxpayers. Simply put, there were no enforceable controls over purchasing.

All that changed with the introduction of the PO system in March, 2010. The PO system put an end to uncontrolled purchasing. Now, before a department can place an order, the Finance Department has to issue a PO. And Finance can’t issue a PO unless it first verifies that there are sufficient funds in the budget line and second, that the department has checked for the lowest possible price. Simply put, the PO system puts the missing controls in place.

But the PO system is under attack, and the attack is based on a failure to understand how the system works, misinformation, and, at least for some town employees and officials, a reluctance to accept change -- and controls.

Myth: The PO System was adopted in response to the New York State auditor’s report.

Fact: False. The Town adopted the PO System more than a year before the state comptroller’s audit report -- and with the support of the full Town Board. Bennett Kielson, the Town’s outside auditors for more than 15 years, consistently recommended that the Town adopt a PO system as a way to control expenses. And, the Town’s failure to adopt a PO system as a way to control expenditures was cited as far back as the state’s 1996 audit report.               

Myth: The PO System created the need for three quotes.

Fact: False. The requirement for three quotes was part of the Town’s Procurement Policy long before the PO system was adopted. The problem was that, in practice, there was no system to monitor compliance with the requirement. The PO system enforces the requirement since the Finance Department cannot issue a PO without the required quotes.   

Myth: It takes too long to get a PO.

Fact: False. The typical turn-a-round time from requisition to purchase order is three days, assuming that the Finance Department receives the requisition with all the required documentation. If there’s a delay in issuing the PO, the problem is not with the PO system but with the department that didn’t follow a very clearly set out procedure. 

A PO system requires departments to think ahead and anticipate what they will need to replace depleted inventory or for an upcoming planned project. At the same time, the system is flexible and permits emergency purchases without a PO or price quotes.  Running out of stock items that will be needed throughout the year is not an emergency; it’s poor planning and poor management.

Myth: The PO system takes too much staff time.

Fact: The argument that the PO system “takes too much time” and “creates more paperwork” is not a justification for not taking the time to seek out the lowest possible price. Remember, town employees are spending taxpayers’ money. Their job is to save taxpayer dollars, not make their jobs easier.

Myth: The extra paperwork costs more in staff time than the money saved by getting three quotes.

Fact: False. The Town Comptroller has stated that as a result of the new purchasing controls, the Town saved approximately $400,000 in 2010 That’s the equivalent of a 2.4% reduction in the tax rate. 

Over the past 21 months, all town departments except one have learned to live with the PO system, just as they’ve learned, reluctantly, to live with other rules and regulations imposed on them by outside government agencies. From a taxpayer’s perspective, it’s regrettable that the one department that has consistently fought the system has seen fit to authorize thousands of dollars of overtime on Saturdays and Sundays (at time and a half and double time) to have an employee do “price checks.”

Is the PO system perfect? No. Since it was introduced in 2010, it’s been modified and adjusted to meet the specialized purchasing needs of individual departments. And changes should continue to be made when necessary.

If our elected officials are serious about wanting to limit future tax increases while maintaining the Town’s current level of services, they need to make sure that the Town is spending our money wisely and efficiently. That means keeping the existing purchase order system -- and strengthening it -- by creating the position of purchasing agent and making that person responsible for getting price quotes, issuing purchase orders, and preparing competitive bid documents, RFPs, and annual contracts. Centralizing purchasing would maximize efficiency, reduce clerical demands on department heads and staff, enabling them to be more productive, and lead to even greater savings.

And, in order to avoid having to add another full salary and benefits package to the town budget, the purchasing agent position could be created by realigning current staff.

There’s a big difference between tweaking a system to make it work better and throwing it out all together because some employees want to go back to the good old days of no controls. 

Stay tuned for the debate.