Arizona Department of Administration - Arizona State Purchasing Cooperative Program

The Arizona Department of Administration (Department) administers the Arizona State Purchasing Cooperative Program (program), which allows its members to purchase goods and services from state-wide contracts. Statute authorizes the Department to establish a program fee that covers the costs of administering the program. However, the program fee revenue has exceeded the program’s administrative costs. Not only has the Department used program fee revenue to administer the program, it also has used this revenue to pay for most of the cost of the state electronic procurement system, ProcureAZ, and to pay the salaries and benefits of more than half of the Department’s procurement staff. Therefore, the Department needs to better align the program fee with the program’s costs. In addition, the Department has not established adequate policies and practices for collecting program fee revenue, and thus cannot ensure that all state-wide contract vendors report and submit these monies. The Department should develop policies and procedures to help ensure program fee revenue is appropriately remitted. Finally, the Department lacked several cash-handling controls that the State of Arizona Accounting Manual requires. The Department has begun taking steps to strengthen its controls and should continue with these efforts.