August 7, 2012

Review of Md. procurement practices called ‘better late than never’

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Board of Public Works: Treasurer Nancy Kopp, Gov. Martin O'Malley, Comptroller Peter Franchot

Board of Public Works: Treasurer Nancy Kopp, Gov. Martin O'Malley, Comptroller Peter Franchot

By Dana Amihere
dana@marylandreporter.com

Gov. Martin O’Malley has said that he wants to review the state’s procurement practices to find a better, more efficient system, and the chair of House of Delegates government operations subcommittee, Del. Dan Morhaim, said that while the suggestion comes late in the governor’s term, it’s “better late than never.”

Gov. Martin O’Malley suggested a review of the state’s procurement process at the July 11 Board of Public Works meeting. The state needed outside procurement experts to “pull this apart and tell us how we can put it back together in a way that prevents fraud and abuse, but also allows us to make more timely and intelligent, predictable procurements,” O’Malley said.

While there have been procurement workgroups and task forces over the years, several headed by Morhaim himself, the delegate said that in the end, it’s an executive agency decision.

The Board of Public Works is charged with considering most state contracts exceeding $200,000. Most procurements are routine –– capital improvements, land and water preservation, sale or purchase of property, school construction projects –– but others can raise eyebrows.

In June, the Board approved up to $8.5 million for the Juvenile Services Department to place less than 20 youth out-of-state over the next three years. Last month, the University of Maryland, College Park’s business school was awarded up to $3.7 million over two years for events’ catering –– a service which could be provided by the university’s dining services.

O’Malley’s remarks came on the heels of a controversial Human Resources Department contract.  While the Board extended a $4.3 million contract for a child support enforcement call center, the Department wishes to look for new bidders.

Combined purchases save money

“For all intents and purposes, the State operates like one big company from a taxpayer’s point of view,” Morhaim said. “There’s no reason in the age of instant communication that this (procurement system) can’t be fixed,”

At one time, all 24 jurisdictions’ schools bought things separately. Establishing a school buying consortium bill, which allowed public and private schools to purchase together, launched him into the procurement world.

“Buying 10 basketballs there and 20 basketballs there is still a basketball so why not buy together and pass on the savings?” Morhaim said. The move saves 8-10% on purchasing costs per year, or about $400 million.

“It’s a very complicated area, pretty boring and can be tedious, and for that reason it’s often overlooked and under-appreciated. But even a small improvement in efficiency, like say 1%, can result in savings of tens or hundreds of millions of dollars.”

The overall state budget is $34 billion; 1% would be $340 million.

  • Jakemohorovic

    Delegate Dan Morhaim is the right guy for this task.  Dan for Governor too!

  • abby_adams

    Sounds as though Del. Morhaim’s ideas have finally been acknowledged. But will his common sense approach result in cost savings for the taxpayer? With so many “special interest” groups & donors, how will the state get around ruffling local feathers to get the best deals? It should be interesting to watch.

  • Hungrypirana

    Gov. O’Malley is frustrated. The state’s BCA throws out an award of a large call-services contract because the State made three fatal errors during the procurement, when one such error probably was sufficient to overturn. And out of frustration, O’Malley now says he wants to review the procurement system and make changes. O’Malley doesn’t elaborate. But there’s talk of centralizing Maryland’s procurement function.

    According to the BCA decision, two of the three fatal errors were made by the BUYER’S technical people, not the procurement officer/s. Hence, O’Malley’s best course of action insofar as these two fatal errors s is to discipline or demote the responsible technical people. Centralizing the procuring function won’t help because deep involvement by the BUYER’S technical people is vital to this type of procurement.

    Del. Morhaim evidently holds himself out as an expert in State procurement matters. That’s not to say he knows how to eliminate redundancies and save the taxpayers money, but I will give him the benefit of the doubt. I urge Morhaim in the strongest terms to evaluate the current need for the Board of Public Works and, if it is not necessary, work on the steps needed to eliminate it. After all, the board was created almost 150 years ago and has been duly wasting money for about the last 100 years.

    Waste? What does this Board do? For one, it (comprised of Governor, Comptoller, and Treasurer and I’m guessing a staff of about a dozen workers) needs to approve state contracts exceeding $200k!! Getting O’Malley, Franchot and Kopp, to approve two hundred pages of contract awards every other week clearly wastes money. Approvals are the responsibility of lower-level workers. And the Board’s other functions (see http://www.bpw.state.md.us/General_Information/FAQs/) are duplicative and I see no need for them or the Board.

  • Hungrypirana

    The problem the Borad of Contract appeals identified was one where two of the three fatal errors were committed by the BUYER’S technical people, not the PCO (procuring contract officer.) As such, O’Malley’s best bet is to discipline or demote those BUYER officials who were carless. The State would be foolish to reform procurement by centralizing because the BUYER is a vital part of the procurement decision so he can’t be put within some central-service bureaucratic entity.

    The Board of Public Works, a curious entity composed of Gov O’Malley, Treas. Kopp, and Compt. Franchot, and having a staff of about 15. It is a relic of the Civil War period whose current need must be evaluated. Do the governor, treasurer and comptroller really need to approve contracts exceeding $200k, and meet twice a month, poring over two hundred pages of contract data to do so?

    I realize the board is a constitutional body, but wouldn’t its members if they were cost conscious, wonder why they need to get into the weeds to this extent?

    This board and its staff have been wasting taxpayer money for more than 100 years if one is to believe the responsibility for internal control over proper contract awards rests firmly with executive agency management. Mr O’Malley, please be informed the state need not fear Civil War profiteering.

  • Odd. In Montgomery County the public school system doesn’t always use contracts. Doesn’t put out RFPs or ask for bids on major procurements. They just call up the vendor and buy.