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FDOT Procurement Process Could Cost State Millions

Posted on August 7, 2011

FDOT Procurement Process Could Cost State Millions

After the recent legislative session and Governor Scott’s subsequent vetoes, it is clear that the Great Recession continues to have real economic consequences in Florida. It would appear that reducing expenses while striving for the efficient delivery of services will be the mission statement for not only government, but the private sector for sometime to come.

With this in mind, Tallahassee Reports has been researching how government delivers services and if this process results in the lowest costs for the citizens of Florida.

As we have written in the past, government procurement policies determine the winner and losers in the world of government contracts. However, often times, decisions are made for reasons other than costs. When this happens, the door to subjectivity is open and questions about final decisions become more relevant.

Tallahassee Reports reviewed 22 design/build selection results by the Florida Department of Transportation and found that three contracts were not awarded to the lowest bidder. A closer look reveals that the three winning awards in the these cases were 21% ($500,000), 9.0% ($12,000,000) and .6% ($500,000) higher than the second place bidders, respectively. This means more costs for the citizens of Florida, but why?

Tallahassee Reports was told by a DOT employee that the lowest bid is not always the best bid because of factors like quality and project timing. But who determines the impact and relevance of these factors? It appears that a rating system implemented by DOT employees integrates project criteria with costs to determine an “adjusted score”. The proposal with the best “adjusted score” wins the job regardless of price. In three instances, the citizens of Tallahassee paid approximately $13 million more than if the second place bidder had been selected because of an “adjusted score.”

With respect to a project titled “DMS Replacement and ITS Install”, the “adjusted score” process caused the state of Florida to pay $12 million more than if the low bidder would have been selected. Also, the project titled “Hayden Burns Building Basement” cost $500,000 or 20% more than the second place bidder because of an “adjusted score”.

Sources have told Tallahassee Reports that the “adjusted score” methodology introduces subjectivity to the bid process and is not needed because sufficient incentives are already in place to ensure quality work. For example, government contractors are motivated to deliver results so they can continue to bid on FDOT work and, in most cases, contractors are required to have a performance bonds which protects the state of Florida. With these incentives in place, why use an “adjusted score”?

The challenge for policy makers is to decide if they want a system in place that adds subjectivity to the procurement process and results in higher costs without much additional benefit. During these economic times, is it acceptable for FDOT employees to evaluate and rate qualified, professional contractors that have won the right to bid, have a track record of success, and have performance bonds in place?

In addition, the fact that the “adjusted score” selected the lower bidder 19 out of 22 times seems to indicate that the time spent “adjusting the score” might be time better spent elsewhere.

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