You Can't Bid Everthing

One thing I learned early on working for NJ Government for 39 years, is that nothing is free. Everything comes with a price, even if its hidden initially.

Take for example the practice years ago of offering people like me (contracting and procurement officers - well managers anyway), box seats at a Phillies, Giants or Jets game. Or the free trinkets and pens (with company logo) offered at the ubiquitous trade shows, some just blocks from my office, or those I attended at the Philly Convention Center or New York City hotels. Scarfing down the trinkets was a favorite past time of us government attendees until the State Ethics Committee finally said (correctly), "No more." Ah, what's wrong with a pen for God's sake? Well, when you use it around the office, or heaven forbid outside, it can give the wrong impression with IBM in big letters on its side. Now that's picayune. That's crushing the mice while the elephants stomp past. "How's a pen going to alter my judgement?" all the managers would ask.

Case in point, "The Pilot Project." Someone gets a bright idea and just happens to know of a vendor who can implement it. The vendor comes in with six flunkies in suits, sometimes with a pretty woman in a business suit, and gives a big dog and pony show - glossy folders and handouts, maybe a Powerpoint, either way, no matter how carefully crafted, its a sales pitch. Some in state government trusted positions have committed fraud for thousands or even millions of dollars. Yet vendor meetings are above board. And vendors come in and do this for managers, assistant directors and directors all the time. Especially legislators. Almost weekly. Why? Supposedly its free, no obligation, and the excuse is always given "We're just investigating options. We need to be informed since we don't have the expertise ourselves."  In Washington they're called lobbyists; in New Jersey they're just "vendors."

And I was the guy that had to write the special request to the Treasurer's Office (but if he or a deputy was involved, it was all a snap), to the Office of Management and Budget to approve the funding, and to the State Purchasing division to procure these "pilot" products and services. Illegal? Certainly not. Fair and free competition? No.

One example: The electronic device that attached to the base of any light bulb, and cut electricity use by 10%. It cost $1.80 each. Supposed payback less than six months. How did they demonstrate this miracle?  With a black box with two lightbulbs, one with the device attached, the other without. And the vendor's question when he flipped the switch on? "Notice how you can't see any decrease in lumens (light output). Its not even noticeable, but yet its saving energy." That's a hell of a proof, isn't it? And I had to write-up and walk-thru the paperwork for $25,000 worth of these "miracles." Personally, as an energy manager, I tried to stay mum about the whole fiasco. After all, the Chief of Staff of a major state agency was pushing this -- let him tell the other agencies.

These types of backroom deals, especially with big vendors like Microsoft and others, resulted in millions of dollars in expenditures. Why? Because someone up above was sold on the idea. "It will save you money in the long run," the vendors said. Only problem? No one, no one, ever did the follow-up to prove their savings estimates. 

I was lucky. The thirty folks in Treasury Fiscal and Administration I dealt with on a daily basis were all honest. Yes, we might bend the rules, or force them to the outer limit, but never break them. And those bendings were rare -- and justified, and signed off at the highest levels. And they cost millions of dollars. None of my contracts were for less than $1 million. These "pilots" always ended up being much bigger within months; thousands of software licenses bought initially for example, then tens of thousands within months. All necessary to keep the State running. Yes, without a doubt. All necessary.

So what do you do? My motto for me and staff was to know more about a product or service then the vendor. Dealing with a vendor, when using state funds, is a matter of trust. We knew they had something up their sleeve, but could rarely catch them in the act of deception. All vendor reps had great explanations when questioned. Hell, they were trained to overcome objections; we weren't trained in recognizing untruths, or how to verify their claims. Oh, we did our homework on comparison products and costs when we could, talked to agencies or other companies that dealt with the vendor to see how above board they were, and if they were fairly priced. Of course, we could never know as much as the vendor -- they always had the advantage. But we could ask the hard questions.  I was the bad cop to my staff's good cop. After all, it was my name (and others), on Form PB-129 "Request for Waiver of Advertising" which authorized these procurements.

Most of the deals I dealt with were "Sole Source." By definition there was only one source of supply. Hard to believe in today's world of innumerable shopping sites, huh? But this system of requesting waivers and justifying sole source, or technical compatibility, for me, went on prior to 1979 when I started. Way before the Internet, Wikipedia or Google searches. And the waiver system is still in place today. Regrettably, a necessary system because, bottom line "You can't bid absolutely everything."