I have been writing a lot about buy boards that our local governments have been using. Contrary to what some of our local officials are claiming, the contracts on these boards are not competitively bid. Some may be but most are not. That of course is my opinion. Read this post and draw your own conclusion.
The ones I have written about recently are run by government agencies like the State of Texas or the Harris County Department of Education (Houston). They let other agencies (like our City and County governments and school districts) buy under their contract without conducting a separate bidding process.
The buy boards do this to make money for themselves.
They do this for a fee that is paid by the vendor. Some of them charge 4% of the value purchased. The vendor pays the fee to the buy board. The 4% is a cost of doing business for the vendor. It makes sense to me that if the vendor did not have to pay the 4% the price that is charged to the buying agency we could buy that much lower.
They pick the brand they want
The buy board goes through the process of issuing a request for proposals (RFP) and then awards contracts to the companies that they judge to be worthy. Often they do not award a contract only for the proposal that they judge to offer the best value, but to several companies that they judge to be worthy.
An RFP should provide specifications for a product or service that the agency wants to get. “A four door two wheel drive sedan” is an example. The buy boards typically do it differently. They ask “how much will you charge us for your product”? You and I both know that a Chevrolet sells for less than a Mercedes. Here is an example of an awarded contract. The vendor simply promises to sell a particular brand of equipment for a percentage of discount off of list price!
With this example the next thing we would see is some local government official driving around in a Mercedes. They would claim that they got it through a competitive bid! (I did not want to call out anyone in particular so I used this example because I do not know of anyone driving around here in a government owned Mercedes). But our local governments actually do use these buy boards to pick the brand they want instead of the most cost effective brand. This costs us money.
The court says
There has not been a lot of action in the courts over this issue recently. That is probably because the 1951 Texas ruling in Sterrett v. Bell was pretty clear. In discussing competitive bidding the court wrote:
“Its purpose is to stimulate competition, prevent favoritism and secure the best work and materials at the lowest practicable price, for the best interests and benefit of the taxpayers and property owners. There can be no competitive bidding in a legal sense where the terms of the letting of the contract prevent or restrict competition, favor a contractor or materialman, or increase the cost of the work of of the material or other item going into the project”
Let’s see:
- They pick the product they like
- The price may be higher than the competent competition
- The price is inflated (at least by the buy board’s fee)
I cannot see how this can be competitive bidding.
We deserve better.
elpasospeak 