in Houston, Texas

Deja vu? Houston ISD procurement audit findings echo problems in grounds-keeping contract

Thursday, Jan 26, 2012, 07:57AM CST
By Mike Cronin
Trimmer

When the Houston school system awarded a grounds-keeping contract to the eighth-lowest bidder last year -- to a company that charged almost twice the low bid -- administrators stood by their decision, saying their contracting processes were fair, transparent and legal.

But a sweeping performance audit by a national education nonprofit group has found numerous problems in the school district's system of buying goods and services.

And that review raised some of the same questions about the Houston schools' procurement practices that Texas Watchdog asked last year about the district’s grounds-keeping contract with the locally based Southwest Wholesale Nursery.


The ways the Houston Independent School District does business “lead to a perception of manipulation of and distrust in the procurement process,” stated the audit by the Washington-based Council of the Great City Schools.

A Texas Watchdog investigation published in December of HISD’s business practices showed evidence of flawed bidding evaluations, improper influence by board members and suggestions of contract steering.


The council, which undertook the review at the request of HISD Superintendent Terry Grier, performed its examination of the Houston school system in October. Grier serves on the council’s executive committee.

HISD officials declined to answer questions this week whether about whether they still stood by their decision to award the grounds-keeping contract to Southwest.

A district spokesman this week declined to discuss the council’s audit or the similarities between its conclusions and Texas Watchdog’s questions about the grounds-keeping contract. Grier and HISD Chief Financial Officer Melinda Garrett did not respond to multiple e-mail requests for comment for this story.

PRICE NOT TERRIBLY IMPORTANT

Among the findings of the council’s review was that price often didn’t count enough in how the Houston school system buys materials and services.

That may sting for some -- the school system that faces a $44 million budget deficit this year, and last year it closed schools, laid off teachers and cut the amount of money given to each school per student.  The district has an annual budget of $1.6 billion.

In many transactions, the price of the goods or services counted for just 50 percent of the overall decision of which companies HISD ultimately chose to award contracts, the council review stated. In some instances, price amounted to just 12.5 percent of the final score district evaluators gave.

In the grounds-keeping contract, HISD hired Southwest and another company – even though Southwest ranked eighth-lowest among the companies that bid to do the work, records show.

The difference between the low bid and Southwest’s bid was about $205,000, an amount that would pay the annual salaries of about 4.5 teachers on the lowest rung of HISD's teacher pay scale.

Documents made public by the school system show that the price estimated by each bidder counted for just five maximum points out of a total 75 when a team of HISD employees ranked each of the bidders. That’s about 7 percent of the total score.

By comparison, each bidder could have received up to 20 points for “the quality of the vendors’ goods and services” or the extent to which the vendor “meets district needs.” Together, those two factors counted for up to half of each bidder’s possible score.

Despite the documents showing Southwest had submitted only the eighth-lowest bid among the nearly 20 bidders, each of the three HISD evaluators made Southwest their No. 2-ranked scorer in the criteria of “long-term cost to HISD.”
  • Eugenio Salazar, an HISD senior manager, gave Southwest and another firm a “2” score. He gave another eventual winning bidder, Houston Grotech Services, a “5” score, and did not score any of the other bidders in that category.
  • Larry Nabors, an HISD grounds manager, gave both Southwest and Houston Grotech “3” scores. He gave six other firms a “1” score, and left the other bidders blank in that category.
  • Brian Busby, another senior manager, gave Grotech a “4” and Southwest a “2.” He gave six other companies a “1” score, and left the other bidders blank in that category.
None of the documents released to Texas Watchdog by the school district give any explanation for how the three men arrived at those scores or any of the other scores they gave the bidders on that contract.

TRANSPARENCY ISSUE

That touches on another problem pointed out by the Council of the Great City Schools audit: Lack of transparency, which Michael Casserly, the council’s executive director, told Texas Watchdog was HISD’s most serious contracting problem.

“The majority of the district‘s purchasing,” the audit stated, “... is awarded based on a number of weighted factors that are not always transparent or consistently applied.”

For example, when HISD formally notifies the public that it’s accepting bids or proposals on a contract, the weighting of the various criteria “is not disclosed in most” cases, other than for construction contracts, the auditors wrote. The school district doesn’t assign the weights until later, and may not assign the weights until the district is actually picking which vendor to hire, the audit said.

“We should have a set method for procurement where we transparently specify the measurement criteria prior to the (request for proposals) being sent out,” said HISD Board President Mike Lunceford, who called the audit’s findings “major problem areas.”

“In that way,” Lunceford said, “everyone knows the rules before they play the game.”

Lunceford also told HISD administrators last year that he wanted them to tell the school board whenever they recommended HISD do business with a firm that was not the lowest bidder, and to offer an explanation of why.

In the grounds-keeping contract, HISD scored Southwest and its competitors on a total of eight criteria. The factors where Southwest and the other winning bidder, Houston Grotech, most greatly outdistanced the competition on the HISD scoring matrix were the vendor’s reputation, the quality of its goods and services and whether the company “meets district needs,” documents show.

“’The extent to which the goods/service(s) meet District's needs,’ refers to the extent that HISD is able to utilize the goods and/or services from the vendors that bid (on) the project,” HISD spokesman Jason Spencer said. “This measures how well the vendor’s offerings meet the needs of the district. It takes into account processes, ease of implementation, technology integration if applicable, etc.”

He pointed out that “meets district needs” is one of the criteria state law says school districts may use when picking vendors.

But national procurement experts told Texas Watchdog they had questions about that category’s use as one of the district’s procurement criteria.

“That’s a little broad, isn’t it?” asked Robert J. Nahabit, a national procurement expert and consultant based in Austin who gives seminars on proper purchasing procedures throughout the country.

When first told of the use of the “meets district needs” phrase in a phone interview, he began laughing. “My first impression? Who’s his brother-in-law?”

Bill Munch, director of purchasing for Mesa Public Schools in Arizona, agreed, in part, with Nahabit.

“It's too nebulous,” said Munch, who inspected the evaluation documents provided to Texas Watchdog by district CFO Garrett for the Southwest contract.  “Best practice says criterion should be much more defined and specific.”

Barry S. Meltz, director of procurement for Florida’s Miami-Dade County Public Schools, the nation’s fourth-largest school district with about 345,000 students, said, “We on occasion will use the term ‘in the best interests of the District’ but normally not for bid evaluation purposes.”

Cindy Hallett, who served as procurement chief for Texas’ Eanes Independent School District from 2000-07, also reviewed HISD’s Southwest Nursery evaluation documents. Hallett currently serves as a Texas city purchasing manager.

“I would award to Houston Grotech Services,” Hallett said. “Their score is far above any of the competitors.”

A formal audit of the district's procurement practices is also being done by Houston-based accounting firm Null-Lairson. That review, being done at a maximum cost of $87,500, should be completed during the upcoming weeks, Lunceford and other district officials said.
 
***
Contact Mike Cronin at mike@texaswatchdog.org or 713-228-2850. Follow him on Twitter at @michaelccronin or @texaswatchdog.
 
Photo by flickr user sacks08, used under a Creative Commons license. 

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Comments
Interesting
Thursday, 01/26/2012 - 06:39PM

There is something to say when this article, nor the Council of Greater City Schools doesnt print or communicate the entire picture. Robert Nahabit's comments about a brother-inlaw sounds like the company that he had to bid on the services didnt get the contract.

I think that the short and sweet article on Aramark misreporting millions HISD Food Service's dollars and leaving a deficit on the taxpayers must not be as newsworthy as this article about a difference of $200k on cutting grass. How many teachers does $2million get you?

Has Austin ISD, Mesa school district in Arizona or FLorida's Miami-Dade ever received any awards for Procurement Excellence in their best practices. It would be good to quantify the critics ability to speak as judgemental experts.

If HISD was shut down Texas Watchdog would have very few educational articles to post......Interesting, very interesting.....

Thats all.....

someone who pays taxes
Friday, 02/10/2012 - 02:37PM

sounds like you work for hisd....the brother in law comment was right on target Losing a bid on a contract when it is clearly stacked and not in the best interest of the budget is not the same as losing because you were under bid. This is a problem. I want my tax dollars going to the lowest bid with good references period. It all adds to the budget.........thats not a judgement it facts.

Interesting
Tuesday, 03/06/2012 - 04:27PM

In response to "Someone who pays taxes"..............if it sounds like I work for the district, it surely sounds like your company was one of the bidders that lost the bid. Furthermore, if you dont work for the district, how do you know about whats in the best interest of the budget and that the companies that won, only won because they were the low bid?? Finally, would the "good references" you are referring to, be in line with experience with K-12 enitity or just having a lawn mower service that cuts 20 yards a week with a truckload of illegal employees that have no documentation?

Please give us, the readers, insight to how your tax dollars would work in that scenario....no pun intended, but as a taxpayer myself, I dont work for the district, the district works for me!!!

Desiree Heyns
Sunday, 04/15/2012 - 09:30AM

I am a science lab instructor with an outdoor classroom and garden at a northeast Title 1 school. Last 2010-2011 year the grounds keepers consistently stole produce from the 6 and 7 year old elementary children. We failed to harvest any watermelons or tomatoes until the fall semester began . This was only possible after I confronted them. In addition, they helped themselves to over $100 in bagged mulch and soil stacked in a corner of the fenced in garden. Even after this, I had to physically watch them as they mowed the site. What low-life steels from babies?

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