DAR File No. 27440

Administrative Services, Fleet Operations, Surplus Property

R28-1

State Surplus Property Disposal

NOTICE OF PROPOSED RULE

DAR File No.: 27440
Filed: 09/20/2004, 02:29
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The changes are designed to: 1) make the rule conform with current Utah State Agency for Surplus Property (USASP) practice of charging no fees on the transfer of state-owned information technology equipment to public institutions; 2) to conform with statute by eliminating Utah Correctional Industry's (UCI) role in the transfer of computers to public institutions, and permit the USASP to directly donate computer equipment received as surplus property to schools that have submitted requests for computer equipment directly to USASP; 3) to clarify that federal surplus property auctions are conducted on-line and regulated by the United States General Services Administration; and (4) to make rules regarding the collection of bad debts conform with statutory requirement that bad debts be assigned to the Office of State Debt Collection.

Summary of the rule or change:

The changes include: 1) removing "donating agency" in the third sentence of Subsection R28-1-3(D); 2) removing all sentences in Subsection R28-1-3(D) that refer to UCI and replace it with "schools that have submitted requests for computer equipment directly to USASP."; 3) adding "primarily" and "on-line" to the last sentence of Subsection R28-1-3(F); 4) eliminating "locally" and "a representative of", and the word "unguaranteed" from the last sentence of Subsection R28-1-7(A) and adding the phrase "that are not guaranteed with a bankcard"; 5) moving the phrase "the USASP shall initiate formal collection procedures" to the beginning of Subsection R28-1-8(A); 6) replacing the phrase "The USASP shall initiate the following procedures to collect a bad debt" in Subsection R28-1-8(B) and replacing it with the phrase "In the event that a check is returned for "insufficient funds," the USASP may"; 7) adding the word "Prohibit", and eliminate the phrase "may not make" and replace with "from making" in Subsection R28-1-8(B)(1); 8) eliminating the phrase "The USASP shall" from Subsection R28-1-8(2), and reformatting Subsection R28-1-8(2) to include Subsections (a) and (b); 9) the former Subsection R28-1-8(B)(3) is renumbered as Subsection R28-1-8(2)(b) and the phrase "the letter shall also state" is eliminated from said subsection; 10) eliminating provisions of Subsection R28-1-8(C) and replace with "Debts for which payments have not been received within the 15 day period referred to above, shall be assigned to the Office of State Debt Collection in accordance with statute."; 11) removing the word "above" from Subsection R28-1-9(A) and replace with "in R28-1-5."; and 12) adding the phrase "other acceptable method" to the first sentence of Subsection R28-1-9(B), as well as eliminate "as a vendor" in the last sentence.

State statutory or constitutional authorization for this rule:

Section 63A-9-801

Anticipated cost or savings to:

the state budget:

There are no anticipated costs or savings to the state budget as a result of the amendments. The amendments are designed to make rules conform with current practices and statutes, and do not affect current rates charged by USASP.

local governments:

Costs or savings to local government are unknown. Public institutions receiving surplus information technology equipment will "save" as a result of low acquisition costs associated with surplus information technology equipment. However, the magnitude of savings will be directly related to the amount of surplus equipment obtained.

other persons:

There are no anticipated costs or savings to others as a result of the amendments. The amendments to Section R28-1-8 make the rules conform to statutory provisions regarding the collection of bad debts. The amendment to Section R28-1-9 expands methods by which surplus property can be sold to the public.

Compliance costs for affected persons:

Compliance costs for affected persons are unknown. Compliance costs for entities receiving surplus information technology equipment would depend on the quantity received.

Comments by the department head on the fiscal impact the rule may have on businesses:

The fiscal impact that the amendments may have on businesses is unknown. Providing surplus information technology equipment to public institutions may have an impact on demand for information technology equipment. However, the magnitude of the impact on business resulting from the provision of surplus property to public institutions is unknown. Amendments to Section R28-1-8 regarding the collection of bad debts are made to comply with statutory provisions.

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Direct questions regarding this rule to:

Sal Petilos at the above address, by phone at 801-538-3091, by FAX at 801-538-3844, or by Internet E-mail at spetilos@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

11/15/2004

This rule may become effective on:

11/16/2004

Authorized by:

Steve Saltzgiver, Director

RULE TEXT

R28. Administrative Services, Fleet Operations, Surplus Property.

R28-1. State Surplus Property Disposal.

R28-1-3. Procedures.

A. State-owned personal property shall not be destroyed, sold, transferred, traded-in, traded, discarded, donated or otherwise disposed of without first submitting a properly completed form SP-1 to and receiving authorization from the USASP.

This rule applies to and includes any residue that may be remaining from agency cannibalization of property.

B. When a department or agency of state government determines that state-owned personal property is in excess to current needs, they will make such declaration using Form SP-1. State-owned personal property shall not be processed by the USASP unless the appropriate form is executed.

C. A standard form SP-3 is required when it is determined that state-owned personal property should be abandoned and destroyed. The SP-3 is generated by the USASP after receiving a form SP-1 and reviewing the property being disposed of by the agency.

D. State-owned information technology equipment may be transferred directly to public institutions, such as schools and libraries by the owning agency. However, a form SP-1 must still be completed and forwarded to the USASP to account for the transfer of the equipment. In such cases, the USASP will not assess a fee[ to the donating agency]. Similarly, the USASP is authorized to donate computer equipment received as surplus property from agencies to [the Utah Correctional Industries (UCI) for refurbishment and upgrade. Subsequent to refurbishing and upgrading, UCI may sale the equipment to public schools. In such cases, the costs associated with refurbishing and upgrading the equipment shall be borne by UCI and subsequent sale to public schools shall be governed by the Department of Corrections.]schools that have submitted requests for computer equipment directly to the USASP.

E. Prior to submitting information technology equipment to Surplus Property, or donating it directly to the public institutions, agencies shall delete all information from all storage devices. Information shall be deleted in such a manner as to not be retrievable by data recovery technologies.

F. Federal surplus property is not available for sale to the general public, on a day-to-day basis. Donation of federal surplus property shall be administered in accordance with the procedures identified in the State Plan of Operation for the Federal Property Assistance Program. Public auctions of federal surplus property are authorized under certain circumstances and conditions. The USASP Manager shall coordinate such auctions when deemed necessary or appropriate. Federal surplus property auctions are primarily conducted [locally]online, but are regulated and accomplished by [a representative of ]the U.S. General Services Administration.

G. The USASP Manager or designee may make an exception to the written authorization requirement identified in paragraph A above. Exceptions must be for good cause and must consider:

1. The cost to the state;

2. The potential liability to the state;

3. The overall best interest of the state.

R28-1-7. Payment.

A. Payment received from public purchasers may be in the form of cash and/or certified funds, authorized bank credit cards, and business or personal checks. Personal checks must be guaranteed with a bank[]card and may not be accepted for amounts exceeding $200. [Unguaranteed] [p]Personal checks that are not guaranteed with a bankcard, or 2-party checks shall not be accepted.

B. Payment received from state subdivisions shall be in the form of agency or subdivision check.

C. Payment made by public purchasers shall be at the time of purchase and prior to removal of the property purchased. Payment for purchases by state subdivisions shall be within 60 days following the purchase and removal of the property.

D. The USASP Manager or designee may make exceptions to the payment provisions of this rule for good cause. A good cause exception requires a weighing of:

1. The cost to the state;

2. The potential liability to the state;

3. The overall best interest of the state.

R28-1-8. Bad Debt Collection.

A. [If]The USASP shall initiate formal collection procedures in the event that a check from the general public, state subdivisions, or other agencies is returned to the USASP for "insufficient funds"[, the USASP shall initiate formal collection procedures].

B. [The USASP shall initiate the following procedures to collect a bad debt]In the event that a check is returned to the USASP is returned for "insufficient fund," the USASP may:

1. Prohibit [T]the debtor [may not make]from making any future purchases from the USASP until the debt is paid in full.

2. [The USASP shall ]send a certified letter to the debtor stating that:

(a) the debtor has 15 days to pay the full amount owed with cash or certified funds, including any and all additional fees associated with the collection process, such as returned check fees[.]; and

[3.](b) [The letter shall also state that if]If the balance is not paid within the 15 day period, the matter will be referred to the Office of State Debt Collection for formal collection proceedings.

C. [The USASP Director or designee may make exceptions to the collection provisions of this rule for good cause. A good cause exception requires a weighing of:

1. The cost to the state;

2. The potential liability to the state;

3. The overall best interest of the state.]Debts for which payments have not been received in full within the 15 day period referred to above, shall be assigned to the Office of State Debt Collection in accordance with statute.

R28-1-9. Public Sales of Surplus Property.

A. State-owned surplus property may be purchased at any time by the general public, subject to any 30-day holding period that may be applicable, as described [above ]in R28-1-5.

B. At the discretion of the USASP Manager, any state-owned surplus property may be sold to the general public by auction, [or ]sealed bid, or other acceptable method. Property to be auctioned may be consigned out to an auction service. If a consignment approach is considered, the USASP Manager must ensure that the auction service is contracted by and authorized [as a vendor ]by the Division of Purchasing.

C. Federal surplus property auctions to the general public may be accomplished on occasions and subject to the limitations as indicated previously.

D. The frequency of public auctions, for either State-owned or federal surplus property will be regulated by current law as applicable, the volume of items held in inventory at the USASP, and the profitability of conducting auctions versus other approaches to disposing of surplus property.

KEY: state property

[June 1, 2000]2004

Notice of Continuation March 5, 2002

63A-9-801

ADDITIONAL INFORMATION

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For questions regarding the content or application of this rule, please contact Sal Petilos at the above address, by phone at 801-538-3091, by FAX at 801-538-3844, or by Internet E-mail at spetilos@utah.gov

For questions about the rulemaking process, please contact the Division of Administrative Rules (801-538-3764). Please Note: The Division of Administrative Rules is NOT able to answer questions about the content or application of these administrative rules.