DAR File No. 28133

Administrative Services, Fleet Operations, Surplus Property

R28-1

State Surplus Property Disposal

NOTICE OF PROPOSED RULE

DAR File No.: 28133
Filed: 08/09/2005, 01:27
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The reason for the change is to define the distribution process for donating technology equipment to persons with disabilities defined by H.B. 188 (2004 session). (DAR NOTE: H.B. 188 (2004) is found at UT L 2004 Ch 342, and was effective 05/03/2004.)

Summary of the rule or change:

This rules makes the following changes: 1) clarifies the donation procedure required to comply with Section 63A-9-801.1 which is the distribution of technology and computer equipment to persons with disabilities; 2) modifies related party language to comply with the Attorney General's recommendation; 3) modifies the language regarding payment and remuneration accepted by Utah's State Agency for Surplus Property to include purchasing cards, et al; and 4) allows the surplus manager or designee to waive the 30-day hold on property if deemed in the best interest of the state.

State statutory or constitutional authorization for this rule:

Section 63A-9-808.1

Anticipated cost or savings to:

the state budget:

This changes is estimated to reduce state surplus revenues by $30,000 annually.

local governments:

This change has no fiscal impact on local government because the rule only applies to state agencies.

other persons:

This change has no negative fiscal impact on any other persons. Persons with disabilities are able to receive used state technology equipment by donation which has a positive fiscal impact.

Compliance costs for affected persons:

This change has no negative fiscal impact on any other persons. Persons with disabilities are able to receive used state technology equipment by donation which has a positive fiscal impact.

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

This rule is being modified as a result of Legislation (H.B. 188 (2004)). This rule will have a fiscal impact on the State Surplus Property program only. D'Arcy Dixon-Pignanelli, Executive Director

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:

Steve Saltzgiver at the above address, by phone at 801-538-3452, by FAX at 801-538-1773, or by Internet E-mail at ssaltzgiver@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:

10/03/2005

This rule may become effective on:

10/04/2005

Authorized by:

D'Arcy Dixon Pignanelli, Executive 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. Similarly, the USASP is authorized to donate computer equipment received as surplus property from agencies to schools that have submitted requests for computer equipment directly to the USASP.

E. Pursuant to the provisions of section 63A-9-808.1, state-owned information technology equipment may be transferred directly to Non-profit entities for distribution to, and use by, persons with a disability as defined in subsections 62A-5-101(4)(a)(i) and (ii). However, interagency transfers and sales of surplus property to state and local agencies within the 30-day period under section 63A-9-808 shall have priority over transfers under this subsection. The 30-day holding period may be waived if shown to be in the best interest of the state.

F. Requests for state-owned information technology equipment from non-profit entities shall be:

1. Submitted, in writing, on the non-profit entity's official letterhead, to the Department of Human Services, Division of Services for People with Disabilities (DSPD);

2. Reviewed and approved by DSPD and forwarded to the USASP manager to properly track and arrange for distribution.

G. State agencies transferring state-owned information technology equipment to non-profit entities for distribution to, and use by persons with a disability as defined in subsections 62A-5-101(4)(a)(i) and (ii), shall provide the USASP with completed SP-1 forms in order to account for the transfer of said equipment. In such cases, the USASP will not assess a fee to the donating agency.

H. Pursuant to the provisions of subsection 63A-9-808.1(4), the USASP shall prepare an annual report to DSPD containing the names of non-profit entities that received state-owned information technology equipment under subsection 63A-9-808.1(2), and the types and amounts of equipment received.

[E]I. 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]J. 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 online, but are regulated and accomplished by the U.S. General Services Administration.

[G]K. 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.

R28-1-4. Related Party Transactions.

A. The USASP has a duty to the public to ensure that State-owned surplus property is disposed of at fair market value, in an independent and ethical manner, and that the property or the value of the property has not been misrepresented. A conflict of interest may exist or appear to exist when a related party attempts to purchase surplus property.

B. A related party is defined as someone who may fit into any of the following categories pertaining to the surplus property in question:

1. Has purchasing authority.

2. Has maintenance authority.

3. Has disposition or signature authority.

4. Has authority regarding the disposal price.

5. Has access to restricted information.

6. Is perceived to be a related party using other criteria which may prohibit independence.

C. Owning state agencies [must]may list any recommended purchasers on the standard form SP-1 [and specify whether they are considered to be a related party.]Final decision rests with USASP as to selling price and buyer.

D. When a prospective purchaser is identified or determined to be a related party, the USASP will employ one of the following procedures:

1. The USASP may require written justification and authorization from the Department or Division Head or authorized agent. Justification may include reference to maintenance history, purchase price and the absence of conflicts of interest. If the related party is an authorized agent, a higher approval may be sought.

2. The USASP may choose to hold the property for sale by public auction or sealed bid. The prospective buyer may then compete against other bidders.

3. The USASP may hold the property for a 30[]-day period before allowing the related party the opportunity to purchase the property, thus allowing for purchase of the property in accordance with the priorities listed below. The 30-day holding period may be waived if shown to be in the best interest of the state.

R28-1-5. Priorities.

A. Public agencies are given priority for the purchase of state-owned surplus property.

B. Property received by the USASP that is determined to be unique, in short supply or in high demand by public agencies shall be held for a period of 30 days before being offered for sale to the general public. The 30-day holding period may be waived if shown to be in the best interest of the state.

C. For this rule, the entities listed below, in priority order, are considered to be public agencies:

1. State Agencies

2. State Universities, Colleges, and Community Colleges

3. Other tax supported educational agencies or political subdivisions in the State of Utah including cities, towns, counties and local law enforcement agencies

4. Other tax supported educational entities

5. Non-profit health and educational institutions

D. State-owned personal property that is not purchased by or transferred to public agencies during the 30-day hold period may be offered for public sale. The 30-day holding period may be waived if shown to be in the best interest of the state.

E. The USASP Manager or designee shall make the determination as to whether property is subject to the 30-day hold period. The decision shall consider the following:

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 bankcard and ]may not be accepted for amounts exceeding $200. [Personal checks that are not guaranteed with a bankcard, or]Two[2]-party checks shall not be accepted.

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

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. 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".

B. In the event that a check is returned to the USASP is returned for "insufficient fund," the USASP may:

1. Prohibit the debtor from making any future purchases from the USASP until the debt is paid in full.

2. Have division accountant 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

(b) 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. 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 assigned by USASP management. The 30-day holding period may be waived if shown to be in the best interest of the state.[applicable, as described 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, 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 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

[November 17, 2004]2005

Notice of Continuation March 5, 2004

63A-9-801

63A-9-808.1

ADDITIONAL INFORMATION

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For questions regarding the content or application of this rule, please contact Steve Saltzgiver at the above address, by phone at 801-538-3452, by FAX at 801-538-1773, or by Internet E-mail at ssaltzgiver@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.