Cooperative roofing spoofing?

Price gouging on school projects must stop by Helene Hardy Pierce. ( Helene Hardy Pierce is vice president of the board of the Coalition for Procurement Reform.)

School districts in Pennsylvania have been victims of a very expensive waste of taxpayer money for the past decade or more. This is a national problem, and it is very serious in Pennsylvania.

Certainly they can save money when they use cooperative purchasing for items like pencils and computers. But since at least 2005, our schools have lost millions of dollars when they purchased roofing through this kind of system. Like their counterparts across the commonwealth, Lancaster-area school districts have overpaid for roofing projects.

How is it that school districts have been paying twice as much they should for roofing projects?

A survey by Ducker Worldwide found that Pennsylvania schools that purchased roofs through the Association of Educational Purchasing Agencies drastically overpaid for roofing projects. According to the Ducker study, from 2005 to 2010, schools spent $100 million more than they would have spent through public competitive bidding. You can find the survey, as well as studies in other states, at bit.ly/ProcurementSurvey.

This wasted money could have purchased 33 million school lunches for low-income students, or 100,000 school computers.

Pennsylvania in not alone. These anti-competitive, wasteful practices have been uncovered in many states, including Maryland, New Jersey, California, Texas, Indiana, Massachusetts, Virginia and others.

Pennsylvania is one of 23 states that contract for roofing projects through AEPA, which funnels the projects through Tremco, a national roofing contractor. Tremco’s parent company, RPM International Inc., recently settled for $65 million a lawsuit that charged it defrauded the General Services Administration and other government entities by overcharging for roofing contracts as far back as 2002.

Separately, Slippery Rock School District brought a defective materials suit against Weather Technologies, a Tremco company that sold material to the district through AEPA cooperative purchasing.

It’s unfortunate that a process that allows the manufacturer to act as designer, contractor and installer was allowed to exist. It not only led to wasteful spending, it also disregarded quality and best practices.

Fortunately, the kind of oversight needed is being advanced in Harrisburg. Republican state Rep. Kerry Benninghoff, of Centre County, has introduced legislation in both the House and Senate to reform this process.

Once passed, it will be a new day in Pennsylvania for roofing contractors, who will compete openly and honestly for roofing projects, and our taxpayers will support fair prices for quality work.

The Coalition for Procurement Reform provides a list of audits and studies relating to cooperative procurement at this link. 

For the record, I make no endorsement of or objection to the work of the Coalition; I know nothing of them or their work and have not taken any time to review their materials. Maybe I'll get around to it some day. Maybe you might, too.

And whilst on the subject of cooperative purchasing vs procurement (aren't we?), there is a recent appellate decision which, though fairly deep in the weeds for a novice, goes to some lengths to distinguish, under federal law but using common concepts, cooperative agreements from procurement agreements.  Hymas v. US, 810 F. 3d 1312 - Court of Appeals, Federal Circuit 2016  The antagonist and loser in that case has just recently hit another roadblock before the GAO. 

When cooperating isn't as good as competing

An Editorial from the Pennsylvania TribLive:


Tribune-Review | Monday, April 10, 2017, 11:00 p.m.
Costs through the roof: Require competitive bidding

Closer scrutiny of how tax dollars are spent on school roofing jobs could well help taxpayers keep roofs over their own heads.

Pennsylvania is among 23 states participating in the Association of Educational Purchasing Agencies, “which funnels roofing projects through” national contractor Tremco, writes Robert Dziuban, Coalition for Procurement Reform executive director, in a PennLive column. He notes a survey that found Pennsylvania school districts buying roofs through the AEPA “spent $100 million more on the projects from 2005 to 2010 than they would have through public competitive bidding” — and that other studies have shown “the process of overcharging continues.”

Tremco corporate parent RPM International in 2013 paid $65 million to settle a whistleblower lawsuit filed by the U.S. Justice Department. The lawsuit alleged RPM “defrauded the General Services Administration and other government entities by overcharging on roofing contracts as far back as 2002,” according to Mr. Dziuban.

Cooperative group purchasing works for pencils and computers. “(B)ut construction projects are not commodities,” Dziuban reminds. State Rep. Kerry A. Benninghoff, R-Centre/Mifflin counties, agrees, saying “each school building is unique.”

Mr. Benninghoff is drafting legislation to require competitive, local-level bidding for roofing projects. Enacting such a law is a no-brainer. The sooner that happens, the better for Pennsylvania taxpayers.

The pork in the piggy backs

I have had so many posts about the abuse of the so-called "cooperative purchasing" method of source selection see, eg, here and here and here, of which "piggy-backing" is one type, that I've decided to start a new tag/label: "Cooperative purchasing".

Please read the entire article below at the link; I tend to cut and rearrange and alter the context, so you really must read the original. It's hard to believe (or is it?), and don't take my word for it.

Dropped jaws, protests over another no-bid Motorola contract

The broadband deal that Motorola secured in Harris County, Texas, offers a case study in how the company almost magically avoids head-to-head bidding on many contracts.

“I would never have thought Motorola could do this, but Motorola came in and told me such a great story, I couldn’t not go with them,” said Harris County systems architect John Chaney, according to two attendees, who were not authorized to speak for the record.

In the audience were representatives of Motorola competitors who didn’t get a chance to tell their stories.

A county attorney winced and shook her head, then tried to explain why the contract was open and fair under Texas law, even though no other company was invited to bid, the attendees said.

In a recent phone interview, county officials contended that the $7.5 million contract (the county put up 20 percent of the money) was competitively bid because it was added to a two-way radio contract awarded by the Houston-Galveston Council of Governments that Motorola won competitively in 2007.

Piggybacking on competitively bid contracts in different jurisdictions – even in other states – has become an accepted mechanism for local governments to bypass potentially lengthy and contentious procurement processes. The Houston-Galveston contract also was used by Fort Worth and Washington, D.C., to award Motorola deals worth tens of millions of dollars without taking bids from other vendors.

n the fall of 2011, Florida-based Harris Corp. and another cellular broadband player, Alcatel-Lucent USA, filed formal protests over the contract award with Texas Attorney General Greg Abbott.

To buy “wholly new technology” without inviting bids is “doing so illegally to the detriment of taxpayers,” Steve Marschilok, president of Harris’ Public Safety and Professional Communications unit, wrote Abbott.

Marschilok also said that other cities and counties were proposing to purchase broadband networks via the old Houston-Galveston contract, according to a copy of the protest obtained by McClatchy.

Perhaps as a result of those complaints, Harris County elected to invite bids for the network’s eventual expansion to cover the full county, a project that could be worth much more money.

But Motorola now had new advantages. The company not only had put together the pilot network, but it also was operating the system’s $3.3 million core, stationed at Texas A&M University. A core’s operator usually writes software rules determining what kind of equipment can work with a network and, perhaps more importantly, which equipment can’t, government and industry officials said.

When Harris County invited bids for the larger project, only one company responded: Motorola.

Motorola’s Schassler said that the county has yet to move forward with expanding the network.

Read more here: http://www.bellinghamherald.com/2015/01/27/4100927/dropped-jaws-protests-over-another.html#storylink=cpy

McClatchy has been following this story-line for a while, as has your blawger.

See this.