NWFD ONE OF BUDGET CHAIR'S BEST CUSTOMERS - The Explorer: Import

NWFD ONE OF BUDGET CHAIR'S BEST CUSTOMERS

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Posted: Tuesday, August 7, 2001 11:00 pm | Updated: 7:46 am, Thu Mar 24, 2011.

In the last two years, Northwest Fire/Rescue District has bought about $280,000 in equipment from United Fire Equipment, which equates to about 80 percent of the district's fire fighting supply purchases over that period, according to documents obtained from the district.

Daniel Matlick is the president of United Fire Equipment, one of Arizona's two major sellers of fire fighting equipment, uniforms and supplies.

The past four years, Matlick, who lives in the district, has been a member of NWFD's budget committee and Emergency Services Commission.

Both advisory boards, whose members are appointed by the district's board, determine the details of the district's operating budget and make recommendations to the board.

Matlick has chaired the two advisory boards the past two years.

At advisory and district board meetings, Matlick has been an advocate of district growth. On May 22, he stood before the board and argued for this year's 24 cent tax hike to fund the hiring of 27 new fire fighters, the purchase of new fire trucks, increased funding in all departments and eliminating the district's $2.7 million debt.

This year's $13.8 million budget is a $4 million increase from last year.

NWFD's expanding boundaries and budget will prompt more fire equipment purchases, of which Matlick's company will receive a majority of the business, according to Matlick and Northwest Fire District Chief Jeff Piechura.

Tucson-based United Fire is an equipment provider to hundreds of fire districts and departments throughout the Southwest and northern Sonora, Mexico. The company also has a branch office in Tempe.

United Fire's closest competitor is First In Fire Equipment, located in Phoenix.

While First In is second largest provider of equipment and supplies to NWFD, the fire district only buys about $30,000 from the company annually.

Although Piechura said there is no direct connection between United Fire's business with the district and Matlick's leadership role on the committees, State Procurement Office Director John Addler disagrees.

"That's pretty clear. He would be required to recuse himself," Addler said, referring to the state's conflict of interest laws.

But Matlick said since he does not make any decisions on the budget, he doesn't think he's violating state law.

"If I thought it was a conflict of interest and I was jeopardizing my business with Northwest Fire, I wouldn't do it," Matlick said. "I've only agreed with staff's recommendations. Beyond that, it becomes a trade off of accusations of conflict of interest versus having one of the best technical experts in the field."

Piechura said one of the reason's United Fire receives almost all of the district's fire equipment business is the convenience of having a major seller so close that it can drive bulky tools and other supplies to the district without the cost of freight.

In terms of what Matlick does for the district, Piechura said no one is doing anything wrong.

"Dan has the best interest of the community at heart," Piechura said. "Dan was appointed by the fire board and elected by peers. He doesn't campaign for those positions."

PURCHASING PRACTICES

As a tax-based agency, Northwest Fire's procurement policy should fall along the same lines as the state's, Addler said. But state procurement law has a number of loopholes when it comes to fire districts.

District purchasing policy requires purchases for more than $10,000 be put to bid, in which the item or service to be purchased is advertised, and prospective bidders submit what they would charge to the district in sealed envelopes, which are only opened after the advertised deadline has passed.

Purchases for less than $10,000 do not require a sealed bidding process, instead the district can check prices from vendors by phone.

But some of the district's purchases for more than $10,000 are made without sealed bids, or even checking prices from other fire equipment sellers. Instead the purchases are made with a "blank purchase order account," district policy states.

A blank purchase order lets districts make several purchases without checking prices from other vendors, even if the combined amount would normally require a sealed bidding process and board approval.

United Fire is the only fire equipment seller that has such an arrangement, NWFD's Purchasing Agent Mary Jo Furphy said.

The district stopped making blanket orders with First In eight months ago due to changes in the company's accounting practices, she said.

An examination of the district's vendor files showed that in the 1999-2000 fiscal year, the Northwest Fire Board approved individual purchases of $43,603 and $45,900 from United Fire for an array of items.

The purchases were not approved by the board in advance, rather they are normally presented with all other purchases made by Northwest Fire during a one month period, Boardmember Linda Christopherson said.

Boardmember Jane Madden said she doesn't like the board not approving the purchase of bulk equipment ahead of time, but has made no complaints during recent board meetings and has voted to approve the expenditures.

Piechura defended the practice saying that none of those individual items exceeded the $10,000 threshold and didn't require a bidding process.

"Not if there's a bunch of receipts attached, it's just a monthly bill," Piechura said.

But these bulk purchases from United Fire do not appear to be "monthly bills" as Piechura has said. Individual invoices within these transactions are scattered over a four month period.

A check for $45,900 was approved by the board and written to United Fire on Dec. 12, 1999 with invoices for purchases made dating back to August 1999.

But separate from that transaction, nine other purchases were made during the time period for fire fighting equipment for several thousand dollars more.

District records are unclear if any of these purchases were preceded by the district calling other potential providers for competitive quotes, a sealed bid or if they were done with blanket purchase orders.

During the same time period, 11 transactions were made with First In, totaling only about $20,000. None of those totaled more than $10,000.

Though loosely guided by its own procurement policy, Piechura said deciding what method the district uses to seek out the best price is left to Furphy.

He added that sometimes Furphy knows the district will receive the best price from United Fire and just places the district's order with it rather than making the calls to other vendors as required by district policy.

One of the district's challenges in finding the best price for fire equipment comes from its need for all the equipment to be compatible. This often requires the district to buy one brand for things such as hoses and air packs.

As a result of bids won by United Fire in the past, a majority of NWFD's required brands are carried by United Fire and not by First In, Piechura said.

Sometimes one brand of an item that is carried by United Fire and not by First In can guarantee a myriad of purchases of other items that don't have any prerequisites.

District records show a written bidding process conducted in December asked for price quotes on a list of several items. Three companies, United Fire, First In and Canyon State Fire Equipment, sent in quotes.

First In had the lowest bid, $5,920, but United Fire Equipment's $6,340 bid was accepted because First In was not offering the brand of rechargeable light bulbs the district used.

The light bulbs were one of the smaller items on a list of 10, but their inclusion virtually assured that all the purchases would be from United Fire. Furphy acknowledged that she knew this before she started making calls for bids.

Since the purchase was for less than $10,000, boardmembers didn't find out about it until after the purchase was made. But even if it had totaled more than $10,000, it is unlikely the information would have been given to the board until a month after the equipment had already been received because of the district's use of blanket purchase orders.

As common place as the use of blank purchase orders have become with Northwest Fire, they are rare and even illegal for other public agencies, Auditor General Special Investigative Unit Manager George Graham said.

School districts and counties are required to follow state procurement law, which makes no mention of blank purchase accounts.

"Blanket purchase order is a term of art. You're not going to find a reference in the law," Addler said. "I've been doing this 25 years and I've never heard of a blanket purchase exemption."

But state law gives more breathing room to fire districts in establishing its policies, Graham said.

"Fire districts don't have a lot of written guidelines from the state that put a big brother over their shoulder," Graham said. "(Fire district's) rules are going to be skimpy."

Graham said he isn't sure why state law varies between these types of state agencies and referred questions about the law to Bill Whittington, a Prescott attorney who specializes in representing fire districts.

Whittington could not be reached for comment by presstime.

Rather than having state law dictate what NWFD's spending controls are, the district board is supposed to establish and maintain those limits, Graham said.

If there are procurement violations, Graham said, the freedom awarded fire districts makes them difficult to find and even harder to punish.

"It's real tough, these are independent governments," he said.

While there is a fire district organization, its intent is to support fire districts, not monitor them.

The Arizona Fire District Association is a lobbying organization that interprets how state law applies to fire districts and does not oversee the practices of its members. Piechura is an AFDA boardmember.

The only real oversight of fire districts is from the public through its elected officials who Graham said should ask "Is this really a good business practice?"

At the July 2 budget hearing to set this year's tax rate, the boardmembers did a line-by-line review of the budget in an attempt by Madden to cut about $800,000 from the outlined expenditures.

Boardmembers were asking basic questions about items in the budget and after the meeting both Piechura and Matlick said they weren't sure the boardmembers had read all the materials provided them.

At an earlier meeting, Board Chairman Patrick Quinn admitted that he and the other boardmembers hadn't read all their materials concerning a large-scale loan restructuring of NWFD's debt and therefore didn't fully understand what they were committing the district to.

Now Madden has begun action against the board, filing a complaint with the Pima County Attorney's Office concerning what she claims are mistakes made during a March 27 meeting.

At that meeting, Piechura said that the district needed more money than the budget was projected to provide "to get the job done," the March 27 minutes state.

Quinn said he would favor a $2.50 tax rate. Prior to that, the budget committee had been working with a $2.32 per $100 of assessed value tax rate figure to buy new fire trucks and eliminate the debt.

Matlick attended the meeting and said he took Quinn's statement as board direction. The committee began building a budget around the higher tax rate to add more staff.

By the regularly scheduled April board meeting, 27 new fire fighters had been added to the budget that had never been discussed in open meeting before.

Madden is claiming Quinn's action at the March 27 meeting was illegal because the state's requirement to give sufficient notice to residents that a tax hike was to be considered was not met.

Since United Fire no longer sells fire trucks, NWFD is purchasing three new fire engines from First In, for a total of about $850,000, Piechura said.

On top of that, it will cost another $100,000 to outfit all three with the necessary equipment.

OTHER DISTRICTS

Neither the Auditor General's Office, nor the State Procurement Office can do anything about fire districts' blank purchase accounts, Graham said.

But he said he would advise them to at least set up agreements that guarantee a price reduction based on the number and size of the purchases.

Golder Ranch Fire District Spokesman John Sullivan said that no matter what the purchase is for, any transaction for more than $10,000 goes out to a sealed bidding process and is approved by its board before the money is spent.

Sullivan said that Golder Ranch has the same procurement policy as NWFD and that Northwest Fire could handle its purchasing in the same manner.

Rural/Metro is a private fire service company that also contracts with public fire districts, some, like Scottsdale and Green Valley, being quite large. Through the contract, the company also buys equipment for the public agencies and Barbra Briggs, a Rural/Metro senior buyer, said written bids are sent out for everything bought.

Instead of blank purchase accounts, Rural/Metro has contracts with all the major providers in the Western United States, she said.

"The product (purchases) are spread out over several different suppliers," Briggs said.

Piechura said he sees no reason to change the district's procurement practices since it does not violate state law.

It is also likely that United Fire will receive most of the purchases associated with the new fire fighters and future district growth, Piechura said.

"We have the checks and balances in place. We're not giving carte blanche access to these vendors," he said.

This year's budget for repairs and maintenance has increased 36 percent, up to $573,990. Some of those funds will go toward the purchases of medical supplies. A majority of the calls NWFD goes out on are medical emergencies rather than fires.

But with the addition of 27 new fire fighters during the next three years, much of those funds will likely be funneled into new fire fighting equipment, Piechura said, which will directly affect a growth in the number of purchases from United Fire.

Nonetheless, boardmembers didn't express concern about the district's budget or how it is spent.

"There are certain parameters we have to go by," Christopherson said. "We try, of course, to stick to those."

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