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Wednesday, February 1, 2017

End corruption; adopt the ABA Model Procurement Code

This editorial comes from The Weekly Northside Sun, in Jackson, Mississippi, USA. Of course, I slice and dice articles presented here to make instructional emphasis of procurement issues for my own didactic purposes. Read the article at its link to get the full content and expression of the author.

The time has come for procurement and bidding reform
A recent study claimed Mississippi to be the most corrupt state in the country. The Epps prison scandal is a perfect example. It all stems from Mississippi’s awful bidding and government procurement laws. They are the worst in the nation.

There is a simple solution: Do what 16 progressive states (also including America's Territory in Asia, Guam) have already done. Adopt the American Bar Association’s Model Procurement Law. We just need the political will to do it. It would transform our state from a bastion of corruption to a model of good government. Large companies would cease fearing coming to Mississippi because of our notorious home cooking.

Tupelo Rep. Jerry Turner and Columbia Sen. John Polk are taking a crack at procurement reform as respective chairmen of their chamber’s committees on accountability, efficiency and transparency. A bill is being debated in the state House and Senate that is supported by Turner and Polk. The bill is a step in the right direction, but more decisive action is needed.

Rather than tweak our jumble of existing procurement laws and their infinite loopholes, we need to start from scratch with a new board and a new law. Rather than reinvent the wheel, we need to adopt the ABA’s model procurement law, which has become a national standard for good government.

The first step is to consolidate dozens of governmental entities that currently oversee procurement and bidding. The multiple agencies and governmental units should be consolidated into a single independent agency. Turner’s bill does this in part, but it doesn’t go far enough. For instance, the revamped Public Procurement Review Board still won’t have authority to review public procurement by cities and counties, only state agencies.

Here’s the problem: If our bidding laws are hashed out by the Legislature, there will be political manipulation by contractors and their lobbyists. A better way would be to let an independent board adopt the model procurement law. Such a process would have a better chance at reducing corruption.

Let’s take the bidding laws for the Mississippi Department of Corrections. These laws are buried deep in the MDOC state code. As it turns out, unidentified legislators exempted MDOC from competitive bidding and nobody knew about it. It may have been the very legislators who pushed through the exemptions were later involved in the shady contracts.

The same is true of the Mississippi Department of Transportation, the airport authorities and dozens of other agencies. Bidding and procurement laws have been buried in the codes of these specific agencies, making it easy for manipulators to water down without anyone noticing.

A better way is to have a statewide standard for bidding and procurement. All bidding laws should be consolidated in one section of the code. The same code should apply to all agencies and governmental entities. That would make it far harder to manipulate.

Right now we have a hodge podge of agencies and regulations: The Mississippi State Personnel Board, the Personal Services Contract Review Board, the Office of Purchasing, Travel and Fleet Management, the Bureau of Building, Grounds and Real Property Management, the Mississippi State Board of Contractors, MDOT . . . just to mention a few. Each has its own rules and regulations.

Title 31 Chapter 7 of our code has bidding laws that govern cities and counties but the law is weak at best, allowing contracts to go to the “best” bid rather than the “lowest responsive bidder” as most states do.

Making matters worse, the cities and counties, unlike state agencies, have no oversight at all. The only recourse is a lawsuit in which a losing bidder must prove that they were the “best.” Tough to do given such a vague standard.

How much money is on the line? Well the total budget for the state of Mississippi, including special purpose and federal funds, is over $20 billion. Billions of these dollars are paid to private companies contracting with the government. Transparent, competitive procurement laws could save hundreds of millions in lower prices for taxpayers. Imagine how much money is wasted by our cities and counties as the politically connected get sweetheart contracts.

Then there are the exemptions: for service contracts, single-source suppliers and emergencies. There’s so much wiggle room and lack of oversight, it’s just a free for all money grab. The taxpayers lose.

Just look at the city of Jackson. The wastewater treatment sludge removal bidding process has its own unique bidding laws different from any other such laws. Why? Instead, these contracts should have to follow standard bidding practices and get approval from the procurement board. It would have saved Jackson taxpayers millions on just that one contract. It would have prevented crony contracts at inflated prices.

Time and time again, the city of Jackson issues a “Request for Proposal” instead of following a competitive sealed bidding process. The politically connected contractor gets the business in a negotiated contract instead of competitive bidding. This is going on throughout our state, inflating the cost of governmental services by hundreds of millions of dollars.

This type of crony capitalism scares off the legitimate contractors. I know a dozen excellent companies that won’t even bid in Jackson because they know it’s rigged. The Northside Sun hasn’t bid on publication of the legals for 15 years. No point. It’s rigged.

But it’s worse. Not only does this corruption cost taxpayers millions, it gives our state the reputation of corruption, scaring away excellent national companies from locating plants here.

We have got to quit running our state like a private club for the politically connected and embrace open, efficient, transparent government. Only then will we begin to make progress.
The MPC was first adopted in 1979, and its core principles and processes have remain unaltered. It has been revised once, in 2000, and its regulations amended in 2002. Since its initial promulgation, there "has been great experimentation and variation among the state and local governments in the methods by which equipment and services have been procured. The proliferation of “local content” procurement regulations has, in turn, created a multitude of arcane differences among the thousands of jurisdictions buying such equipment and services on an annual basis. The resulting trends were negative, because complex, arcane procurement rules for such acquisitions by numerous jurisdictions discouraged competition by raising the costs to companies of understanding and complying with different rules in each jurisdiction. These costs are recovered in the prices offered by a smaller pool of competitors, resulting in unnecessarily high costs to state and local governments" (See the Introduction to the 2000 ABA MPC.)

And as the Commentators to the 2000 MPC noted, "The 2000 Code revision process has shown that many of the obstacles procuring agencies and officials encounter are those that have been written into the Code by enacting jurisdictions." (§ 2-503, Commentary 1.)

I'm also a true believer in transparent, accountable, uniform procurement laws. Guam adopted its version, falling very close in line with the ABA MPC, in 1982, and I've been witness to it's lifespan. Guam's procurement has also been tinkered and played with, by both the legislature and the executive, sometimes to good effect, others not so much. But, on the whole, from its very specific fundamental principles, the "purposes and policies" of procurement through it structured if not wholly centralized architecture and administrative as well as judicial review processes, the MPC does offer a framework yielding more than usual competition, transparency and integrity.

All that said, it must be understood that no procurement regime will negate dispute nor guarantee efficient satisfaction of government needs, nor immunize the government from corruptible influences or practices. Independent auditing, robust protest procedures and public access to almost all records of procurement (as required under the MPC) have to fill in a lot of the blanks. The public must be vigilant and demanding that exceptions and exemptions are eliminated. For instance, disclosure requirements and outsourced essential government services should not get shielded by tiered layers of contracts and ownership hiding behind LLCs and corporate structures, including "non-profit" entities owned by government agencies.

As the author of the article above reminded us, "We just need the political will to do it." And, "it" is an ongoing and never ending story. Unfortunately, it's part of the dirty work of democratic structures.

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