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.