Office of Compliance and Ethics

Karol Riedman MPA CPA CIA CCEP

1700 Schafer Street #222
Bismarck, ND 58501

Summary Investigative Report

June 11, 2021
Sources of Complaint Eide Bailly Fraud Hotline
Additional Direct Reports
Date(s) of Complaint 2/26/2021, 3/14/2021
3/21/2021, 5/4/2021
Allegation Improper procurement
Institution Dickinson State University
Policy referenced N.D.C.C. §54-44.4 State Purchasing Practices
NDUS Procedure 801.3 Purchasing
Conclusion Results of investigation support the allegation.
Investigator Karol Riedman, Dirk Huggett

Background Information
The NDUS Compliance Office received multiple reports of an alleged improper procurement of
a contract for Instructional Services during July 2020. These reports were received from
anonymous sources, or the person reporting the concern requested anonymity.

ALLEGATION: The procurement process for an instructional assistance contract awarded to

Learning Corps was improper due to (but not limited to) any or all of the following:
1. The campus president had a prior association with the vendor, a potential COI.
2. The campus provided information to one vendor that was not available to the other
vendors.
3. Information was provided to one vendor via email and meetings before the request for
information/bids was sent out, including specifics of the contract and the amount of the
contract funds available.
4. Vendors were requested to answer four informational questions, which did not include
price.
5. One of two vendors that responded provided general information and requested a meeting
to share further information, but campus did not respond.
6. The ND State vendor list was not used for this procurement, and potential additional
vendors were not contacted besides three chosen specifically by one of the campus staff.
Detailed Review
I engaged Dirk Huggett, NDUS/CTS Assistant CIO for Admin to assist me in this investigation
by evaluating the procurement process in detail. Mr. Huggett is a Level IV Procurement Officer
and has extensive experience in managing and reviewing all levels of procurement. Mr. Huggett
reviewed the allegations and all documents relative to the procurement, including emails
between various DSU personnel and the potential vendors, and among various DSU personnel.
Mr. Huggett’s review follows and is an integral part of this summary report.

Investigation and Findings

Mr. Huggett concluded that DSU’s July/August 2020 procurement for Instructional Design was
not conducted in accordance with N.D.C.C., SBHE Policy, NDUS Procedures and common
acceptable public procurement practices. He stated that DSU was in violation of at least seven
(7) laws or procedures and did not use any common procurement templates available to the
institutions.

He also noted that, even though DSU had representation on the CTS team developing a multi-
award bid for the same services during the same time frame, they did not participate in the CTS
bid and did not identify Learning Corps LLC as potential vendor. This resulted in duplication of
effort and foregoing the possibility of favorable pricing and scheduling through the NDUS-wide
shared bidding and award process.

One of the DSU representatives above reported that they were involved in the pre-bid process, so
were aware of the various vendors and the potential requirements, however, this employee is not
typically involved in procurement, and has only a Level I procurement certification.

When discussing these points with DSU President Easton, he stated that DSU will be improving
its procurement procedure but emphasized that this occurred during a unique time when
instructional design services were urgently needed, service providers were in high demand, and
the window of time available to select a vendor and start the work was extremely short.

(The first allegation regarding a potential conflict of interest between the president and the
awarded vendor is addressed in a separate report and was found to be unsupported. )

Conclusion
The allegations regarding improper procurement for Instructional Design July/Aug 2020 were
supported by the investigation. The contract was completed by the end of 2020, but to reduce the
likelihood of similar concerns in the future, and due to the multiple violations, recommendations
to improve training, process and oversight of the procurement process were discussed with DSU.

DSU has proposed the following plan to bring DSU’s procurement into compliance:

1. All purchases of $10,000 or more will require prior written approval of the Chief
Financial Officer or Controller.
 2. This approval cannot be given unless all procurement rules are fully complied with,
including all documentation requirements.
3. The additional approval process will be worked into DSU’s computerized purchasing
approval system if possible.
4. DSU is requesting on-campus procurement training for staff, faculty and administration,
covering all levels of procurement.

In addition to the above plan proposed by DSU, the following steps are strongly recommended:

1. Standard templates including procurement process and steps be used for all DSU
purchases and procurements of $10,000 and above. These templates are available from
CTS.

2. All purchases or procurements of $10,000 or higher must be reviewed by a Level IV

procurement officer at CTS, NDUSO or an NDUS institution other than DSU for a
period of six months ending approximately December 31, 2021, with review of the
improved processes at that time.

I appreciate the opportunity to be of assistance to DSU, NDUS and the SBHE regarding this
matter.

Karol K Riedman MPA, CPA, CIA, CCEP

NDUS Chief Compliance Officer

Final: 6/24/2021