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Monday, May 14, 2018

Reigning in the cozy relationships

The following article is interesting for the revelation of a statewide undeveloped procurement system that is finally seeing the light. It heralds new procurement reforms in the State of Arizona, "massive changes to how public schools will be allowed to hire builders for large construction projects, as well as harsh new penalties for malfeasance that occurs during the selection process". 

The things discussed in this article were mostly already dealt with long ago under Guam's procurement laws, taken from the ABA Model Procurement Code.

I only make reference to parts of this for its procurement lessons, so you should read the full article at the link.

Arizona upends school procurement laws in effort to cool cozy relationships with builders
Some in the construction industry, which was not consulted on the changes and fears a return to a system that prioritizes cost above outcomes, say the changes are a legislative overreaction to scandals that have roiled the Scottsdale Unified School District since late 2017.

The most significant change involves how construction companies will be selected. Beginning July 2019, instead of using a process that allows districts to subjectively score and select a construction manager to manage the entire project, builders will be selected based solely on who promises the lowest cost.
Comment: The new system can provide a lot of the accommodations allowed by the old one by use of the "multi-step" competitive sealed bid procurement method. It has been used extensively in recent times (some say too much so), which is known as the LPTA (Lowest Price, Technically Acceptable) source selection method. It involves two phases, the first of which is to assess the offers of the bidders to determine which qualify, followed by opening of sealed price bids. The first phase allows discussion to enable "potentially acceptable" bidders submit an acceptable bid.
Other provisions aim to prevent undue influence over the procurement process by restricting who gets to be part of the selection process and banning gifts given by contractors to district officials. Gifts from contractors to district procurement officials will be prohibited. “It was all aimed at trying to address corruption in financial management and procurement practices,” said House Speaker J.D. Mesnard, R-Chandler.
Comment: Guam law's ethics provisions prohibit the giving of gifts, gratuities and even "favors", deminimus benefits that may not even benefit a person but the organization. It is meant to stem paying to play relationships.
•Contracts will be awarded based on lowest price from a qualified bidder
•No contractor or subcontractor providing services to a district will be allowed to serve on a procurement selection committee
•Procurement officials will be prohibited from receiving a benefit to create a procurement specification in a particular way, such as to benefit a single company
•School districts must keep records that prove construction vendors are properly licensed.
The competitive sealed bid method is the preferred source selection model. Conflicts such as this are prohibited by ethics rules, and rules preventing non-government who consult in the preparation of specifications from being allowed to bid or have an interest in the bid. Procurement officials are required to keep extensive records related to procurements, which are public documents.
The Guam Supreme Court just published today a decision that held a solicitation had to be cancelled for failure to keep a the required record, thereby impeding a proper review of the conduct of the solicitation. Teleguam Holdings LLC v. Guam, 2018 Guam 5.
Charter schools will be exempt from the new rules.
Not on Guam, where the bulk of their money comes from public funds. Guam professes its purposes and policies of procurement to include to provide for increased public confidence in the procedures followed in public procurement; to ensure the fair and equitable treatment of all persons who deal with the procurement system; to provide increased economy in territorial activities and to maximize to the fullest extent practicable the purchasing value of public funds of the Territory; to foster effective broad-based competition within the free enterprise system; and, to provide safeguards for the maintenance of a procurement system of quality and integrity.

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