Articles - June 2023

What is an ‘Administration Fee’?

by Contracts Team

Mohave is a nonprofit corporation and public procurement unit, which solicits contracts for use by Arizona schools, governments, and eligible nonprofit organizations. Mohave does not receive direct tax dollars. Our operation is funded solely through a 1% administration fee remitted by the contract vendors on the majority of Mohave’s contracts. The fee is based on the total amount of usage on contracted goods and services provided to members. This administration fee is built into the pricing you see on our website and remitted from our vendors once the invoice is paid (except for E-rate and leasing contracts).

The administration fee is not charged on items our contract vendors do not make a profit on, such as:

• Bonds
• Delivery (also includes handling when listed as one line-item charge with delivery)
• Freight (also includes handling when listed as one line-item charge with freight/shipping)
• Pass-through Fees
• Pass-through Rentals
• Sales Tax
• Temporary Up-charges/Surcharge applied as a % after discount is applied, or as a flat fee.
• Third-party leases: Where contract vendor is acting as leasing agent, (e.g., copiers or bus contracts with in-house leasing)
• Travel costs: lodging, per diem, meals and incidental expenses (M&IE), parking

How do Mohave Members Benefit from the 1% Administration Fee?

• Contract Management:
  • Mohave reviews submitted end-user agreements to ensure they comply with the solicitation’s terms and conditions.
  • Mohave helps mediate issues between the members and the contract vendors.
  • Mohave provides timely customer service to answer pricing and contract specific questions.
  • Mohave reviews the contract vendors’ ongoing performance throughout the year before issuing contract modifications/renewals.
  • Mohave reviews newly submitted pricing to ensure that it complies with the approved pricing methodology and includes approved products and services.
  • Mohave annually reviews the federal System for Award Management (SAM) for contract vendors who might be excluded from doing business with the federal government during the contract modification/renewal process.
  • Mohave annually reviews contract vendors’ licenses during the contract modification/renewal process.
  • Mohave annually requests updated EDGAR Certifications from the contract vendors during the contract modification/renewal process.
  • Mohave performs a cost/price analysis and has enacted a cost reasonableness process for awarded contracts.
  • Mohave’s Due Diligence packages are consistently praised for the organization of the required information.
  • Mohave has achieved sixteen consecutive years of Procurement Compliance Audits with no findings.
• Procurement Assistance:
  • Mohave’s Procurement Specialists spot check every Purchase Order/Quote for:
    • Valid signed purchase order which encumbers the correct quoted amount.
    • Quoted contract pricing.
    • Language on the quote which may violate the contract terms and conditions.
    • Items that are not within the scope of work of the contract.
    • Items on the quote which are not approved on the contract.
• Compliance Review:
  • Mohave’s Compliance Specialists review select orders to ensure they comply with the contract by checking:
    • Unit price on every item, pricing extensions and invoice total.
    • Payment terms.
    • After the fact purchases.
    • Item substitutions and non-contract items.
    • Bond, shipping, and travel rates.
    • Available volume and quick pay discounts.
    • Language on the invoice which may violate the terms of the contract.
  • Mohave’s contract vendors do a great job complying with their contracts, but so far this fiscal year, Mohave’s Compliance Specialists have found almost $13,000 in member credits.