City often passes on lowest bids

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Nearly every month, Augusta commissioners vote to buy equipment and contract for services, usually without questioning why. It's an omission costing taxpayers big bucks.

The Augusta Chronicle looked at dozens of contracts from 2006 and 2007, finding 23 in which the lowest bidder was rejected.

The extra cost to taxpayers: $2 million, almost enough to give sheriff's officers the raises the sheriff requested to keep trained officers from leaving.

That total does not include the potential savings or expenses incurred from five contracts in which only one bid was obtained. It also doesn't include the cost of defending a minority procurement system that city officers knew had serious legal problems.

The Chronicle 's investigation began last year, building on the work of attorney Robert A. Mullins on behalf of various disgruntled taxpayers. Several lawsuits have been filed, one of which the newspaper joined in its efforts to review public documents of bids and purchases made through the city's Procurement Department.

The spotlight on the Procurement Department started with Hiram Thompson, who co-owns Thompson Building Wrecking Co., with his brother, Glen. They sued over a contract to tear down an abandoned building on Telfair Street, and a judge ruled their failure to include the proper bond documentation was a technicality commissioners could overlook.

Most of the commissioners didn't, however. They voted to give the contract to J&B Construction.

Taxpayers paid $328,258 extra for J&B to do the site-clearing work for the future downtown library instead of Thompson, according to the city's Finance Department records.

This case wasn't the only incident where the city ignored lower estimates because of technical errors in the bid process.

Another of the contract files The Chronicle reviewed was for scientific testing at the Highland Avenue water plant. Because the lowest bidder sent the Procurement Department only six copies of his proposal instead of the required seven, that bid was thrown out. The contract approved cost taxpayers $119,130 more.

Commissioner Joe Bowles said he was surprised to hear about that. Commissioners do have the bid and price information when they vote on purchasing recommendations, but they don't get price information about bids deemed "noncompliant."

"I think we should overlook something that was probably a clerical error," said Mr. Bowles, a certified accountant. "To save the county nearly $120,000 -- I think we owe the taxpayers."

Mr. Bowles couldn't recall a purchasing recommendation that commissioners rejected, explaining that they trust the people making the recommendations to do their best to get the right goods or services at the best price.

The rejected bid for the Highland Avenue contract was made by a local company, CSRA Testing. The company awarded the contract for $241,130 was MC Squared, a Marietta, Ga., company and a registered Disadvantaged Business Enterprise company owned by a woman.

The city's Disadvantaged Business Enterprise program caused a federal court battle. The Thompson brothers and three other business owners sued the city, alleging the program was unconstitutional. A federal judge agreed in March, ruling that the city couldn't justify a program that gave preference to businesses owned by minorities based on a disparity study that was more than 12 years old.

The city spent thousands of dollars defending the program, which commissioners knew was in legal jeopardy.

In June 2006, they learned the program could be successfully challenged because the disparity study was old. The commission approved a motion 10-0 to start the process of getting a new disparity study.

In July 2006, Mr. Bowles asked whether the city was at risk for a lawsuit for continuing to use the old program measures without a new study. The city attorney said yes, according to minutes posted on the city's Web site.

When Thompson filed a federal lawsuit months later, commissioners opted to pay the attorneys to defend the program instead of settling immediately.

The city was forced to settle when the judge ruled that the program was unconstitutional. The legal defense cost taxpayers $174,000, not counting the city attorney's fees.

A study in question

In April, the city's procurement office opened bids for a new comprehensive disparity study. On qualifications, the two highest-scoring companies were MGT of America, asking for $411,125, and NERA Economic Consulting, asking for $586,265. The bid by NERA, which was $175,140 higher, was chosen.

The study bids were reviewed by a committee made up of city purchasing employees, Small Business Committee members, Mr. Shepard and Tom Beck, who volunteered. MGT and NERA both have extensive experience in such work, and both have been successful in building studies that withstood legal challenges. Neither company is local, nor in Georgia.

According to notes of the committee's May 31 meeting, at least two members spoke highly of MGT, the low bidder. But another said she would feel more comfortable with NERA and thought their response would be quicker. Two complained that MGT would take too long and require the procurement staff to do most of the work.

Neither is true, however.

MGT's timeline was shorter than NERA's, and MGT would collect certain data that NERA requires the city to gather, according to procurement documents.

In the recommendation, commissioners were told the "decision was based on the qualifications of the firm and not the lowest competitive price of the project."

There are legitimate reasons to reject the lowest bidder, said Bill Woods, a director of the U.S. Government Accounting Office's acquisition team. There's quality, past performance or special features, to name a few, but such reasons must be detailed and explained, Mr. Woods said.

The Augusta Engineering Department gave a detailed reason for rejecting the low bidder for a drainage improvement contract. Department Director Abie L. Lason told commissioners in a June 5 meeting that he couldn't tell whether the lowest bid included fencing, that the bidder had no prior experience with similar projects and that the cost estimate was questionably low.

Hiram Thompson, whose lawsuit prompted the new disparity study, was appalled to learn that commissioners usually don't have all of the price information before voting on contracts.

"Whatever is collected in the front door (in taxes) is being thrown away through the back door with the Procurement Department," Mr. Thompson said.

In 2002, the Richmond County special grand jury issued a scathing report about the Procurement Department. It called for a performance audit of the department and a new department head. City commissioners cried foul, and then-City Administrator George Kolb complained that the jury's presentment was an unwarranted personal attack on Geri Sams, the department's director.

Nearly six years later, however, The Chronicle 's investigation revealed that many of the same problems still exist. Contracts for the city's new library provide several examples.

Work needed to assess the amount of potential hazardous materials at the site before demolition began, such as asbestos, cost the city $86,900 in 2005. A local firm had bid $17,500 for the job.

The project was rebid after concerns were raised about the initial project requirements. The local company didn't resubmit the bid because it was the one who had raised the concerns with the Procurement Department and dealt with those issues in its initial bid, the owner said.

Last year, a company picked to deal with underground gas tanks left on one portion of the library site cost taxpayers $85,608. A second company bid $64,157. A selection committee chose Cosby Everett & Wright for reasons that aren't included in public documents.

City comparisons

Because The Chronicle joined an Open Records lawsuit against the city, Ms. Sams declined to talk to the newspaper. City Administrator Fred Russell said city attorneys recommended he not speak about the Procurement Department while the lawsuit was pending.

The Chronicle joined the suit after formal requests made under the state's Open Records Act were met with such responses as: "It will be approximately one week before I can assign this task," which Ms. Sams wrote in response to a request to look at five contract files. She also attached a $143.65 price tag for having an assistant pull the files off a shelf and watch a reporter look through them.

Purchasing officials in similar-size Georgia cities operate their departments differently.

To save Savannah money, Peggy Joyner said, she can waive formalities most of the time as long as it is not changing a price and it isn't a major project.

If she finds her office forced into the position of rejecting the lowest bidder, she can reject all of the bids and rebid the project. Why, she asks, would she accept the next lowest bidder if it meant Savannah taxpayers would spend an extra $30,000?

In at least two contracts reviewed by The Chronicle , cheaper equipment was rejected because their products didn't match written specifications. For example, a piece of equipment was 5 feet instead of 7, or the rotation was 45 degrees instead of 60 degrees.

When a Savannah city department requests an item with written specifications that limits the number of potential bidders, purchasing employees will research products to try to find similar ones, Ms. Joyner said.

"That's our job," she said.

In Augusta, The Chronicle noted complaints from potential bidders about specifications that were so narrowly drawn as to eliminate competition. A number of contract bidders were rejected because they offered options for too many of the specifications.

For example, commissioners voted in December to accept the recommendation to hire Neilsen Building Systems to build a fire department training tower for nearly $1.32 million.

There was another bidder, but the loser had "numerous exceptions to the construction design and materials ... leaves some doubt in our mind as to hidden cost and the final cost of their bid." Its bid was $620,172 less than the winner's.

No competition

Several other contracts the newspaper reviewed had only one bidder. The contract to fix the roof and windows on the municipal building is one example.

Many companies attending a pre-bid conference last spring expressed interest in the project, but only one submitted a bid: Midwest Maintenance, for $2.27 million.

According to city documents, the bid was recommended because the repairs were urgently needed.

When other companies were asked afterward why they didn't bid, one of the reasons cited was that they didn't believe they could compete because the contract had a provision that gave preferences to Augusta-based firms.

Midwest, however, is based in Ohio and its local office isn't in Augusta. It's in Columbia County.

Scott Callan, who runs Gwinnett County's Purchasing Department, said his office has a policy to deal with single bids.

His county will postpone the bid opening for three days if it gets only one offer. His staff then contacts those who could have submitted bids to find out why they passed. If the county could get a better price, he can put the project out to bid again, Mr. Callan said. He tries to ensure every contract has at least five bidders.

In one case, Augusta's Procurement Department put out for bid again a contract that only had one offer, but it wasn't to get more competition. The bid on park pavilions was rejected because the company didn't submit the pricing in the proper format.

The project still got only one bid, from a different company, which charged $3,325 more.

The purchasing departments in Savannah and Gwinnett County ensure they have competition for contracts by maintaining a list of all potential bidders and alerting them whenever a bid comes up that they might be interested in.

In response to requests to see Augusta's list of vendors, Ms. Sams responded in court documents that no such list exists. However, she cites the creation of a vendor list as an accomplishment in her 2005 employee evaluation.

Government purchasing must be done by the regulations, in the open, transparently, fairly and without any favoritism, said Mr. Woods, the Government Accounting Office official.

Being a good shopper is part of the process, but being fair is also an element of governmental purchasing, he said.

In court documents, Ms. Sams denied allegations that certain bids have been awarded unfairly. Her department works diligently to ensure all purchasing is done lawfully and by the established rules, she contends.

The Thompson demolition company has done business with the city for at least 35 years, Hiram Thompson said. Never, until he bid on the job of tearing down the old Telfair Street candy factory, had he felt cheated in those dealings.

"If I'm not the low bidder, then that's fine. I just look to the next job," Mr. Thompson said. "But when you have one taken from you, that's a whole different story. I don't want to be treated any way but fairly."

Reach Sandy Hodson at (706) 823-3226 or sandy.hodson@augustachronicle.com.

IT ALL ADDS UP

The Augusta Chronicle looked at dozens of contracts from 2006 and 2007, finding 23 in which the lowest bidder was rejected.

Product Chosen Rejected Difference
Disparity study $586,265 $411,125 $175,140
Firefighters suits $32,043 $27,500 $4,543
Toner cartridges $54,939 $47,782 $7,157
Bulldozers $473,413 $450,000 $23,413
Candy factory demolition $771,150 $442,892 $328,258
Candy factory inspection $86,900 $17,500 $69,400
Shelving $64,000 $52,000 $12,000
Work stations $153,258 $148,742 $4,516
Excavator $71,725 $51,245 $20,480
Pavilions $105,725 $102,400 $3,325
Bus cleaning $46,988 $10,102 $36,886
Correction Institute uniforms $29,825 $28,362 $1,463
Newsletter and promotions $68,012 $48,523 $19,489
Airport fencing $67,466 $62,437 $5,029
Airport runway $815,095 $627,012 $188,083
Highland Avenue water plant testing $241,130 $122,000 $119,130
Steel valves $409,000 $125,622 $283,378
Floating mixer $474,208 $459,205 $15,003
Wireless consultant $86,572 $49,500 $37,072
Environmental services at library site $153,465 $139,624 $13,841
Gas tank removal at library site $85,608 $66,937 $18,671
Bucket truck $87,088 $80,794 $6,294
Fire training tower $1,315,461 $620,172 $695,289
Total: $2,087,860

SINGLE-BID CONTRACTS:

- Turner Associates, architects for new judicial center, $4.45 million in 2003, $4.5 million in 2006


- Municipal building roof and windows replacement, $2.27 million


- Mobile computers for patrol cars, $150,000


- Park pavilions, $105,725


- Playground equipment, $68,967

Source: City procurement records.

THE BOTTOM LINE

COSTING TAXPAYERS: If the city had taken the lowest contract bid for suiting up its firefighters, it could have saved taxpayers $4,543. Twenty-two other contracts in 2006 and 2007 were not awarded to the lowest bidders, costing taxpayers an additional $2 million.


COSTING BUSINESSES: The last time a business owner complained publicly about a bid process was in 2005. One business owner interviewed by a special grand jury in 2002 said he was dropped from a notification list not long after criticizing the purchasing department for accepting the highest bids for fire department equipment.

Comments (44) Add comment
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WhiskyDick
0
Points
WhiskyDick 01/27/08 - 05:54 am
0
0
Where there's smoke, there's

Where there's smoke, there's fire.

Interested Citizen
0
Points
Interested Citizen 01/27/08 - 06:06 am
0
0
Certainly a good article and

Certainly a good article and an EYE opener. No wonder our taxes are raised at every opportunity to do so....assessments and millage rates. This is an absolute shame and disgrace for the city of Augusta. Do we have people with no common sense?

getalife
4
Points
getalife 01/27/08 - 07:19 am
0
0
Someone must be getting some

Someone must be getting some kick-back money or services. Sounds as if this procurement department needs to be fired and new competent people hired. Are the people in this department related to or friends of some of the commissioners?

Augusta resident
1368
Points
Augusta resident 01/27/08 - 07:26 am
0
0
When are we voting on SPLOST

When are we voting on SPLOST V?

pointstoponder
153
Points
pointstoponder 01/27/08 - 07:57 am
0
0
The Procurement Department is

The Procurement Department is not without problems. However, in spite of the judges rulling to the contrary, I cannot name one reputable contractor that would consider not including the bid bond as a minor informality. Had that contract been awarded to Mr. Thompson, there would have been legal challenges which another judge would have likely recognized. Mr. Thompson is quite disingenuous. Ask him about he and others in his business routinely calling the EPD on competitors when they know no violations have occurred.

pointstoponder
153
Points
pointstoponder 01/27/08 - 08:08 am
0
0
Oh and by the way. The fee

Oh and by the way. The fee for the design of the Judicial Center was negotiated after a committee made up of Judges, staff and Commissioner selected Turner as the most qualified out of several firms submittingstatements of qualification. Contracts for design are not typically bid in Augusta or elsewhere. Selection is based on qualifications.

jus sayin
0
Points
jus sayin 01/27/08 - 08:27 am
0
0
Wow. Sometimes a lot things

Wow. Sometimes a lot things about the contractor must be taken into consideration such as work ethics and quality of work, but to pay an extra 30 plus thousand for bus cleaning, get real. Even the military take the lowest bidder, Augusta get with it, and then you wonder why there is no money left in the budget for other things that could greatly improve the city.

ConsiderThis
0
Points
ConsiderThis 01/27/08 - 08:52 am
0
0
I am not sure if this article

I am not sure if this article places the story in the entire context, but I do know that you can not just except the lowest bid. If the lowest bid is missing something that was a part of the specifications, then the tax payer may still have to pay additional money because the missing item would have to be purchased later. It is best practice to include why a recommendation is being made for someone or something that is not the lowest bid so the public and decision makers can understand why. Best practice is to select the item that has the combination of best quality and best price, not just the lowest because you get what you pay for and sometimes the lowest will require replacement sooner which results in more cost. The article does raise some important questions about the quality of the process, however just focusing on taking the lowest bid whithout addressing several other issues that should be a part of the process could also create problems and extra cost.

a crazy old man
30
Points
a crazy old man 01/27/08 - 09:15 am
0
0
Cheaper don't mean better.

Cheaper don't mean better. Look @ 401

intheknow
16
Points
intheknow 01/27/08 - 09:19 am
0
0
thanks observer and crazy.

thanks observer and crazy.

Riverman1
78407
Points
Riverman1 01/27/08 - 09:26 am
0
0
You have Commissioners

You have Commissioners siphoning out county gas with hoses. What do you expect?

crackerjack
143
Points
crackerjack 01/27/08 - 09:31 am
0
0
After the Jail fiasco, built

After the Jail fiasco, built by a company in the northern states, I wouldn't mind the commissioners taking a higher bid, if it was a local company, or at least a company that hired locally a majority of their workers. Then we would see a return that would outweigh the increase in price.

JimCox
7
Points
JimCox 01/27/08 - 09:36 am
0
0
Check the ethnicity of the

Check the ethnicity of the contract winners and you might find the reason for the award.

patriciathomas
42
Points
patriciathomas 01/27/08 - 09:41 am
0
0
The one context this article

The one context this article does place right is the fact that there is no oversight of the procurement department. And it brings into question the competency of the management of the department. Isn't it just a little unusual for a business or government agency to determine spending practices with no oversight? And was there a fight to enforce the sunshine laws? Isn't anyone responsible for this blockade? These questions alone would lead one to ask "to what levels has the misconduct penetrated?". It seems like it's past time for a GBI investigation.

WHATDIDIDO
0
Points
WHATDIDIDO 01/27/08 - 09:41 am
0
0
Give me a break. I read that

Give me a break. I read that THOMPSON got a majority of the contracts. WHAT ETHNICITY ARE THEY? SOME OF YOU PEOPLE.

Iceman
0
Points
Iceman 01/27/08 - 09:47 am
0
0
No; low bid is not always

No; low bid is not always best bid, but clearly there is incomptence at a minimum in the ARCC procurement department/process. This Geri Sams person needs to be fired tomorrow if the story's assertions about her are true.

getalife
4
Points
getalife 01/27/08 - 10:01 am
0
0
Maybe the JAIL contract was

Maybe the JAIL contract was won by the highest bidder! I agree you can't always take the lowest bidder and there are many things to consider. I think PT hit the nail on the head with her comments.

dani
12
Points
dani 01/27/08 - 10:30 am
0
0
pointstoponder.. Do you by

pointstoponder.. Do you by any chance work for the procurement department?
Sounds like you are on the inside. Just asking.

dani
12
Points
dani 01/27/08 - 10:48 am
0
0
IMHO the big problem with the

IMHO the big problem with the jail is that apparently the contract made no provisions for the quality of the contractor's work. The building was a disaster in the beginning and no one demanded the company redo their shoddy construction. Are contracts made with no liability of the contractors for the work they do?. Aren't these companies checked out before giving them the bid.
This is just so like the same old thing all over again.

Chuchi
2
Points
Chuchi 01/27/08 - 11:01 am
0
0
While it is true that often

While it is true that often the lowest bidder can't be awarded the contract because he wouldn't do the best job for the city, nevertheless it seems highly suspect that the city consistently awards jobs to companies that charge a great deal more than these lowest bidders. And why doesn't the ARC procurement department do the research that other counties do in order to keep the bidding competitive? That plus the fact that the records department attempts to circumvent the law and deny legitimate access to the records makes me wonder if all of this is corruption or merely gross incompetence. Keep digging, Augusta Chronicle; good work, keep us all informed.

kai@reasontostand.org
1
Points
kai@reasontostand.org 01/27/08 - 11:02 am
0
0
Why don't we just ask New

Why don't we just ask New Orleans how always choosing the lowest bidder works out?

dani
12
Points
dani 01/27/08 - 11:10 am
0
0
kai After the way the Mayor

kai After the way the Mayor and other officials handled things in N.O. I hardly think they would be of much help. Richmond County is not that hard up yet.

WHATDIDIDO
0
Points
WHATDIDIDO 01/27/08 - 11:34 am
0
0
I believe that KAI was trying

I believe that KAI was trying to make the point that sometimes you get what you pay for and that is what might have happened in N.O.

LordSesshomaru
0
Points
LordSesshomaru 01/27/08 - 11:43 am
0
0
Oh for God's sake..can we

Oh for God's sake..can we have one story that ethnicity doesn't get talked about? I'll check back in a couple of hours confident that the usual comments about people being racists will have been posted. When can we lame the real enemy for things like this and all problems....RAP MUSIC!!!

Edward B. Turner
69
Points
Edward B. Turner 01/27/08 - 12:26 pm
0
0
In Richmond County, if it's

In Richmond County, if it's not incompetence, it's crookedness. Fellow citizens, for the most part the article tells it like it is. Bowles is a certified accountant? I'm glad he's not mine. We need a REAL businessperson to run this part of our city, one with common sense. Oh, and yes, I guess we do award bids to "disadvantaged" bidders, like women as stated above? Do "disadvantaged" ladies get preferential rates on their Richmond County taxes? No. Then why do they qualify to win bids when their prices are higher? Another SAD day for our sorry county.

dani
12
Points
dani 01/27/08 - 12:33 pm
0
0
LordS I thought it was

LordS I thought it was George Bush.

robaroo
660
Points
robaroo 01/27/08 - 01:29 pm
0
0
I've done some contract

I've done some contract administration work (but not for the City of Augusta). I don't know the details of the contracts mentioned in the article, but ... Low bid is not always the best. Sometimes a Best Value selection is better. The problem is how you write the specs for a contract. It's very difficult to capture all the real requirements. Sometimes, a vendor can take a very "creative" interpretation of what was meant. It costs money, time, and legal fees if you want to contest the way they met the requirement. Sometimes a company will deliberately lowball a contract if they think there is likely to be a lot of very expensive change orders. Bottom line - if you have a choice and the cost is not a lot higher, Best Value beats Low Bid.

WHATDIDIDO
0
Points
WHATDIDIDO 01/27/08 - 02:04 pm
0
0
Good post @ ROBAROO.

Good post @ ROBAROO.

dani
12
Points
dani 01/27/08 - 02:16 pm
0
0
robaroo.. All the more reason

robaroo.. All the more reason for the procurement department to know what they are doing.

Chuchi
2
Points
Chuchi 01/27/08 - 02:58 pm
0
0
Precisely, dani. Robaroo has

Precisely, dani. Robaroo has a good point, but the procurement department does have to know what it is doing. And in many cases listed by the AC here, the procurement department did not try very hard to make sure there were a reasonable number of choices in all cases, plus the costs of the winning bids were a whole lot higher. So it seems that the Best Value did not necessarily beat the Low Bid. Thanks for keeping us informed, AC. Keep letting us in on these numbers; I, for one, appreciate it.

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