From 2005 through 2010, public entities in Louisiana spent more than $595 million – more than $99 million per year – for computers, computer equipment and peripherals from Dell Computers of Round Rock, Texas, often paying considerably more than the online price for which the same equipment could be purchased.
The expenditure of more than half a billion dollars is never inconsequential, but in times of budget crunches necessitating deep cuts in health care and higher education, such waste takes on even greater significance.
The purchases were made by the state, parishes and municipalities through participation in a consortium called Western States Contracting Alliance (WSCA). WSCA was formed in 1993 by the state purchasing directors of 15 states.
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.
A designated lead state negotiator issues the solicitation and awards contracts based on each state’s statutory requirements and processes. WSCA receives one-twentieth of one 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.
While the idea of a consortium to serve as a clearinghouse for major purchases such as computers might be a good idea, it works only if the members are able to negotiate the best discounted price available.
Such does not seem to be the case with the state of Louisiana.
In October of 2010, the state purchased 640 Dell Model E6410 laptop computers directly from Dell for the State Library system at a unit price of $1640.86, or $1,050,150.40 total.
The same model was found online, available directly from Dell, for $669, a total of $428,160 for 640 laptops. That would have been a savings to the state of $621,990 or 59.2 percent.
In February, LouisianaVoice learned that a state agency requested quotes for two Dell E6420 laptop computers and received quotes from Dell of $1,448.71 each even though the same model was available from Dell online at a cost of $670.
That prompted an email to LouisianaVoice from a Baton Rouge information technology (IT) salesperson and former tech company owner that was highly critical of the manner in which the state locks out competitive bidding on computers, computer equipment and peripherals.
The content of his email is as follows:
As a local technology provider for over 20 years, I have watched this practice go on for over a decade. 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. 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. 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. 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. 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.
LouisianaVoice 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 and 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.
Louisiana Voice 
How pathetic is this. Why can’t the state call Dell’s 800 number and get the everyday price?
Where are our State Auditor and Attorney General when it comes to this level of malfeseance? Surely this level of apparent waste and violation of state bid laws deserves investigation. I hate to admit it, but the TEA Party just might be right insofar as waste is concerned.
This is under the oversight of the ethics and transparencey governor. Obviously, this transparencey does not apply to the governor or his administration. His watchword is simply: Do as I say not as I do!!! Wake up Louisiana citizens before it is too late. Legislators must put the brakes on an “out of control governor.”
I have sold computer equipment and I now buy equipment from Dell and other authorized state providers. More accurately, I used to buy equipment until Bully Jindal started giving Billions of state revenue to his corporate buddys.
I have three points:
1 – I don’t have the facts to comment on your basic point that Dell state contract prices could be lower. From one specially negotiated set of prices, I concluded that Dell is certainly making a “fair” profit with their normal state contract prices.
2 – When you are comparing prices on computers, you must be absolutely anal about having the same configuration. Within the same model you must have exactly the same processor, RAM, hard drive, service plan, etc. Otherwise it is like comparing apples (fruit) and Apples (computers).
3 – I absolutely believe that the price comparisons you have provided are apples to Apples type comparisons. As a specific example, most state computers are purchased with a five year service plan, ensuring that we will get five years of computing from that equipment. Most Dell “retail” computers can not be purchased with a five year service plan, and certainly not for $670.
Tom, I very much respect you as a journalist that tries very hard to provide accurate information. It really sets my teeth on edge that you are beliving this grotesquely distorted information apparently provided by sources you trust.
While it is likely that the state is overspending on its computers, the examples given do not provide enough information to prove that they have and by exactly how much. You cannot compare the the price the state was quoted and the online price without knowing what the specs for each order were.
I doubt any IT manager in the state is simply going to order the base model. He or she would order larger hard drives & more memory than the base model has. They would also purchase an extended warranty from Dell. They could also buy accessories like extra batteries, computer bags or docking stations to allow the laptop’s user to a regular keyboard, mouse and monitor while in the office. (These accessories would likely be unnecessary and a waste of money for most users).
Now, all of those items are the only why I can picture a price that high off the base price. My point boils down to the fact that the state likely overspent on these laptops but not by the percentages that are quoted in the article. We simply cannot know by how much without more facts.
This is true. You cannot know what the specs were from just a model number.
DELL also offers discounts to state employees which the state advertises for them. After having 3 computer meltdowns at work and extended down time for repairs, I’ll pass on that “deal”.
Once management gets a quote that fits on the hardware budget for a project they stop asking for quotes. I have seen vendors cut their quotes when you send it back and tell them it’s too high. It’s up to the buyer to get the best deal and most won’t push for it.
The percentages may be miscontrued a bit, but the message is the same. This state wastes a lot of money on everything. I have seen management buy unnessary items just because they can. The citizens of this state need to organize a real watchdog group that can get the real facts of where the state’s revenues are going.
Tom, I also respect you very much but I don’t know that bidding computers is such a good idea, I work in purchasing and bid things out all the time, I would be afraid to bid computers for many reasons, the biggest of which is what some comments already stated, the configuration must be the same and I can tell you from experience that most of the people wanting the equipment have no idea what they want and you have to make them be specific when it comes to purchasing. I have bought many many laptops and never seen Dell charge that much for a laptop. I have seen lots of money wasted during my 30 years and have made many suggestions on how to save (and never taken seriously) but I don’t believe bidding on computers is the way to do it.
The information on the price paid for the 640 laptops was provided from Division of Administratin documents obtained through a public records request.
Tom,
The question several of us have asked is whether the information you got included an exact configuration. Without that you can’t get a meaningful price comparison.
In response to several general comments on wasteful spending, remember that every state expenditure has to be requested by an employee, including a written justification, approved by a manager, approved by Fiscal, and approved by agency management. In the last several years there have been such huge Jindal-created budget shortages, including about a third of the staff being laid off in several state agencies, that even necessary spending is questioned and often delayed or denied. In my department, IT expenditures must also be approved by the local IT manager and the head of IT for the entire department. That doesn’t mean the state couldn’t do better on IT purchases, but it does mean that the state is not regularly throwing money away on wasteful spending.
Tom, I run a small state agency, and have had the same frustration with having to purchase things on state contract. My first experience was about 30 years ago when I asked for a calculator that would do a correlation coefficient. (This was in the dark ages before we had computers.). Those in charge at the time offered to buy me a $300 model off of state contract, while I could get what I needed just about anywhere in town for $70. That just seemed wrong, and I refused. The principle is still the same. Another HUGE expense to look at is Internet service. We were going through the Office of Telecommunications Management because we were told we had to. We were having to pay somewhere around $14,000 a year. We cancelled the Internet service with them about 3-4 years ago, and went with a local provider for about $150/month. Multiply that across state government! I decided the risk was small because it would make anybody trying to challenge us on it look really bad since we saved so much money.
You have shed a ray of susnihne into the forum. Thanks!
The Dell contract does not stand alone. There is a similar contract for Hon office furniture. Most agencies are not allowed to purchase locally from discount stores anymore; they are required to purchase items from grossly overpriced office supply catalogs. In many cases, the quality of the merchandise is also quite lacking. The administration states there is a special State rate, but there are no savings when the retail price has been jacked up 200% or more. I know this because I, too, operated a State office for several years.
One final word on the computers—the computers purchased for us are not supplied with the hardware required to run newer programs. How sad the State wastes money on software and computers that are not compatible.
Having 30 years as an IT engineer, and having been involved with many hardware/software purchases by the state as a consultant, IT administrator and IT trainer for LA on contract, most departments break the law, a law that is the most moronic piece of legislation ever passed, and this no-bid agreement with Dell is illegal as all get out! Louisiana state offices are purchasing stuff left and right that is unneeded, never used, overpriced, etc. HUGE waste in the IT sector of LA state gov. I can tell you first hand, the IT waste in LA is enormous, out of control, no way to be accountable, and is a total joke. Thanks for writing this article. It’s about time folks knew how messed up LA state’s IT dealings really are.
Bravo! Sounds like we worked [in the same state or..] for the same agency/organization. Unbelievably high IT expenditures in Louisiana and little to show for it.
And in my not-so-humble opinion…. IT leadership in LA is the worst (inside and outside state government) about throwing around terms and concepts like “transparency” and “total cost of [IT] ownership.”
It is not pensions for state employee’s putting a drain on the budget; it is corrupt and/or incompetent management of state funds.
The value of assets represented by IT, as well as employee skills and knowledge, and organizational culture, leadership, and knowledge management, can’t be measured separately or independently but is derived from their ability to help an organization (or government) implement its strategy. (Kaplan, Strategy Maps: Converting intangible assets into tangible outcomes.)
What IS the “strategy” and what IS the mission of Louisiana’s State Government?
DEQ just acquired all new DELL laptops to replace two year old DULL laptops, and all new blackberry curves to replace perfectly fine and working blackberry phones!
Money is flowing in certain places and lots of it. Senator Guillory needs to ask for more cash to finish this retirement surgery!!!!!!!!!
Serenity Now!
In response to B: This is flat out false. DEQ does not use Dell for their laptops due to price, they didn’t acquire all new machines of any brand, and they definitely aren’t replacing two year old equipment (my friend is an employee there and his department Lenovo is from 2006).
And the new Blackberry hardware? Verizon offered a much cheaper rate so they switched from AT&T. Verizon agreed to give all the devices FREE as part of the deal since they had to have new hardware for the different network, so this saved the state quite a bit of money.
There is plenty to be upset about with government spending, but before posting inflammatory language about how irresponsible someone is, be responsible yourself and find out if what you are writing is even factual.
oops, forgot to mention Short’s Travel (out of state operation) and useless!!!!!!
OMG, Serenity Now!