Consortium short shrifts Louisiana

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From 2005 through 2010, public entities in Louisiana purchased more than $595 million in computers, computer equipment and peripherals from Dell Computers of Round Rock, Texas, often paying more than the same equipment can be purchased online.

The state, parishes and municipalities bought the technology through the Western States Contracting Alliance (WASC), a consortium formed in 1993 by 15 states’ purchasing directors.

Membership has since expanded to 18 states: Alaska, Arkansas, California, Colorado, Delaware, Georgia, Hawaii, Iowa, Louisiana, Minnesota, Missouri, Nebraska, Nevada, New Mexico, New Jersey, South Carolina, South Dakota, Utah and Wisconsin.

The program requires a designated lead state negotiator issues the solicitation and awards contracts based on each state’s statutory requirements and processes. WSCA receives 1/20th of 1 percent of all sales to cover its administrative costs, according to WSCA Program Manager LeAnn Pope.

WSCA, however, does not participate in the actual sales but serves only to negotiate agreements with companies to serve as vendors. Since 1999, WSCA has negotiated contracts that resulted in sales totaling $18.6 billion – sales that earned $9.3 million for WSCA.

While Louisiana is a member of WSCA, purchases are not made through the consortium but instead are made directly from the computer company – in the majority of cases, Dell Computers – and without the necessity of taking competitive bids as normally required with major purchases.

Consortiums are able to provide states savings, especially when serving as clearinghouses for major purchases. However, states only profit if members are able to negotiate the best discounted prices.

Such does not seem to be the case with the state of Louisiana.

In October 2010, for instance, the state purchased 640 Dell laptop computers (Model E6410) at a unit price of $1,641 – $1.05 million total. The laptops were for the state library system.

The same model was listed on Dell’s website for $699, which would have cost taxpayers $428,160 for all 640 laptops.

The savings would have totaled $621,990 or 59.2 percent.

In February, Capitol News Service learned that a state agency requested quotes for two Dell E6420 computers. Dell quoted the price at $1,448.71 each. The same model was offered on the company’s website for $670.

That prompted an email to CNS from a Baton Rouge information technology (IT) salesperson and former company owner, who was highly critical of the state’s bidding process on computers, tech equipment and peripherals. The WSCA deal, he argued, essentially cost the state more and prevented state-based businesses from bidding.

“As a local technology provider for over 20 years, I have watched this practice go on for over a decade,” the email read. “It’s time to take a really hard look at the millions of dollars spent each year on no-bid purchase orders for IT equipment.

“There is zero oversight in this area and no regulation,” the email continued. “According to the current WSCA/NSPO contract website Louisiana spent almost $90,000,000 in 2010 on Dell computer equipment off the WSCA state contract which includes PCs, servers, and other miscellaneous equipment. This does not include networking or other types of gear either. In other states such as Mississippi, there is legislation in place that requires Dell to resell their gear through local tech firms but, not here. WSCA is not a contract it is a catalog, so basically there is no contract.

“It is so frustrating to hear politicians wring their hands about why there are no technology jobs in Louisiana and come up with various ideas about how to attract business in that field,” the missive reads. “There are no jobs because even our own state government doesn’t use local tech firms to procure products from the other vendors that support local partners such as HP or Lenovo for PCs, to name a few. Dell sells direct and every single dollar goes directly to Austin, Texas, to the Dell coffers. There are no jobs created and no one makes any money except the sales reps from Dell and Michael Dell in Austin. If the price is the same – or better– why wouldn’t the state buy equipment from manufacturers that use local partners as their agents?

“All of this is done under the table and I hear rumors that the state of Louisiana has in place some unpublished volume pricing agreement from Dell,” the email said. “Personally I can’t find a copy of that agreement anywhere on the OIT website. Was there an RFP to award this contract? The answer is a big fat NO! As you can see, the so-called volume deal is no bargain. Comparable products from other major computer manufacturers are much lower and if there were there are no bids ever that go out so who knows? If there were a bid process, then it would be a win-win because it would be competitive. There are so many roadblocks to competitive bidding and Dell gets all the business, it doesn’t matter who I work for or how much I try, it is impossible to get even a small piece of the state IT business.

“It would be very helpful to our economy and our future if someone would do something about this. There would be no need for layoffs or spending freezes if the state would just get bids– and I mean real bids that are published on LAPAC for PC products,” the author concluded. “At least level the playing field. I love competition so I am happy to play and I am betting so are all the PC manufacturers in the state– if given a chance.”

Capitol News Service made a public records request for a Dell price list used by the state. The Division of Administration responded with a web link to Dell’s price list, a document consisting of 30,524 pages.

Computer purchases are not the only problem; sometimes there are problems keeping track of those already purchased. At one school in the Recovery School District in New Orleans, for example, the school began the school year with 94 computers; however, at the end of the year, it was 94 computers short. No one could explain to state auditors what happened to the computers.

Likewise, when the Office of Public Health in New Orleans moved into the Benson Towers, nearly $1.3 million in state property turned up missing, including computers valued at nearly $400,000.