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UW Procurement Contracts – Approving, tracking and reporting

January 25, 2022 Download this report as a PDF »

Founded in 1861, the University of Washington (UW) is one of the oldest universities in the western United States. It has 20 schools and colleges located across three campuses, and employs about 36,000 faculty and staff. In fiscal year 2020, UW’s budget was about $8.25 billion. Overall, it spent more than $1.6 billion on goods and services. Like other universities, UW uses contracts to purchase goods and services to support its departments and operations.

Public agencies like UW have an obligation to spend public funds responsibly. It follows that the public has a reasonable interest in knowing how the university uses this money. Furthermore, agencies must to take steps to reduce their financial and legal liability, and to prevent service issues that risk their operations. This legislatively mandated performance audit examined two UW procurement offices. It asked whether employees who made purchases did so following UW’s rules. It also considered whether UW could make its contracts more transparent to the public.

Read a two-page summary of the report.

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 Report Credits Report Number 1029710

State Auditor’s Office contacts

State Auditor Pat McCarthy
564-999-0801, Pat.McCarthy@sao.wa.gov

Scott Frank – Director of Performance and IT Audit
564-999-0809, Scott.Frank@sao.wa.gov

Justin Stowe – Assistant Director for Performance Audit
564-999-0809, Justin.Stowe@sao.wa.gov

Tania Fleming – Principal Performance Auditor
564-999-0823, Tania.Fleming@sao.wa.gov

Olha Bilobran – Senior Performance Auditor
564-725-0025, Olha.Bilobran@sao.wa.gov

Holland Kitchell, Performance Auditor
564-999-0842, Holland.Kitchell@sao.wa.gov

Robert Evashenk – Performance Auditor
564-201-2959, Robert.Evashenk@sao.wa.gov

Kathleen Cooper – Director of Communications
564-999-0800, Kathleen.Cooper@sao.wa.gov

Key results

The audit found that although unauthorized contracts for goods and services were rare, UW could improve how it tracks and prevents them. Less than 1 percent of the 3,400 contracts that Procurement Services managed in 2020 were unauthorized. Unauthorized contracts at UW Medicine Supply Chain also appear to be rare. However, because it does not track unauthorized contracts, it is unclear how often they actually happen. Both procurement offices have gaps in how they prevent, track and respond to unauthorized contracts.

The audit also found that UW could be more transparent by providing complete and accessible contract information to the public. State law requires all state agencies, including UW, to report their contracts for goods and services annually to increase transparency. The public does not have all of the information about UW’s procurement activity because UW did not report all of its contracts to the Department of Enterprise Services (DES).

Background

UW spent more than $1.6 billion for goods and services in fiscal year 2020. To support its complex operations, two offices help university employees with procuring goods and services. They are: Procurement Services and UW Medicine Supply Chain. These two offices must approve all purchases for goods and services more than $10,000. Additionally, a limited number of employees within these two offices have the authority to sign contracts more than this amount. UW considers a contract unauthorized when an employee makes a purchase of more than $10,000 without prior approval from either of these offices.

In 2019, Legislature passed a bill that required the State Auditor’s Office to conduct a performance audit examining UW’s contract management practices, including contract tracking and reporting. This audit examined two specific issues:

  • Whether UW employees signed unauthorized contracts
  • Whether UW can make information about its procurement contracts more transparent and accessible to the public

Gaps in tracking processes

The audit found gaps in the way both offices track unauthorized contracts. For example, while Procurement Services tracks unauthorized contracts, it does not collect the information it needs to understand why they happen. On the other hand, UW Medicine Supply Chain has yet to develop a way to track unauthorized contracts or gather the information it needs to understand why they happen. Unlike UW, other universities auditors researched usually respond to unauthorized contracts with corrective action plans to prevent them from happening again.

Gaps in public reporting

The audit also identified gaps in the publicly available information concerning UW contracts. For example, Procurement Services does not report all of its contracts to DES because it misinterpreted DES policy. Additionally, UW Medicine Supply Chain reported all but a few of its contracts. Both offices rely on manual processes that are subject to human error with the result that some contracts have been left out of the annual report. UW also does not provide specific details or spending information about its contracts on its website.

However, UW is implementing a new financial system that may improve how it publicly reports information about its contracts.

Recommendations

We made a series of recommendations to the Procurement Services and UW Medicine Supply Chain offices to address issues with preventing unauthorized contracts, including understanding why they happen. We also made recommendations to these offices about how to make contract information more transparent and accessible to the public.