Wednesday, February 10, 2010

AEPA Bidding Specifications Limited Competition in Indiana According to SBOA Audit Report

Were the bids rigged? The SBOA will report. You decide.

Indiana law requires that competition be encouraged when government entities solicit bids for public works projects, but a recent State Board of Accounts (SBOA) audit report indicates that didn't happen at the Wilson Education Center (WEC) when it came to certain Association of Educational Purchasing Agency (AEPA) bid categories. Government agencies are also strictly prohibited from unduly limiting competition, but it reportedly didn't deter the AEPA or the WEC from shutting out the competition when it came to certain school roofing and floor covering contracts in the state of Indiana.

In fact, the WEC continued with the illegal bidding practices even after the Rossville School District was cited in a 2004 audit report for violating Indiana's public works statutes by initiating a roof contract via the WEC as was duly noted in an audit report that was released to the public today.

An excerpt from WEC board minutes, which was included in the audit report, made it clear that WEC board members were well aware that they were potentially breaking laws by continuing with the illegal scheme in December of 2004; however, they continued promoting the illegal bidding program despite the warnings.

"...Lengthy discussion ensued that included the status of the Rossville Schools audit, implications for the Wilson Education Center, and is there a possibility of lawsuits. Mr. Risk also distributed letters from corporations across the state that have used TREMCO and would like to have the bid awarded so that they may use them in the future. Following discussion a motion was made by Mr. Schroeder to approve the AEPA Bid Award for year five of the multi state buying consortia to Shaw Industries and Interface Flooring for Commercial Floor Covering, and Weatherproofing Technologies (Tremco) for Roofing Related Services; with a disclaimer stating the Wilson Education Center Governing Board recommends any corporation using this award, and any vendor used under this award go through the necessary steps to meet requirements of public works and prevailing wage law..."

In addition, the WEC could not provide information "that a process was in place which ensured the multi-state service agreement did not eliminate bidders that were qualified to provide products and service of their products within the State of Indiana except for the 'office/classroom supplies' bid category."

In other words, Indiana roofing businesses were screwed when it came to AEPA bids related to roofing products and services since a multi-state roofing contract was awarded to Tremco, an Ohio-based roofing manufacturer, for consecutive years since the AEPA originated it's multi-state program in 2000.

"Bidders for 'Roofing Related Services' and 'Commercial Floor Covering Systems' were required to be manufacturers by the AEPA specifications. Consequently, local or regional general contractors, roofing installers, and carpet installers in the State of Indiana would not be eligible to bid on public works projects based on the above requirement," read an excerpt from the lengthy SBOA report.

Were the AEPA bid specifications designed to eliminate competition? Who wrote the specs?

Bidders for roofing related services and commercial floor covering systems were required to meet AEPA specifications; otherwise, they would be ineligible to submit a bid. But who wrote the AEPA specifications since the educators who run the questionable AEPA organization are highly unqualified to understand the complicated process involved in writing bid specs for specialized industries. And why does the same Ohio-based roofing corporation continue to be the only company able to meet the roof bid specifications?

According to the audit report, Johns Mansville, a major roofing manufacturer, showed that they were eligible to bid on the AEPA multi-state roofing contract; however, their bid was rejected for consideration based on a bid specification requirement that an eligible bidder must serve all member states.

It would appear that this particular bid specification violates Indiana's Public purchasing law.

Indiana law requires that plans and specifications for public works projects "shall avoid specifications which might unduly limit competition..." The statutes also require public agencies to "encourage competition in satisfying the governmental body's needs."

The fact that Johns Mansville had not been approved for a general contractor's license in Arizona during the intitial bidding phase did not excuse the WEC or the AEPA from eliminating them from the competition in Indiana where the company was approved to conduct business. The audit report indicates that Indiana taxpayers could have saved a significant amount of money had Johns Manville been allowed to compete.

The AEPA multi-state roofing bid package also required a whopping minimum $50,000,000 million dollar bond in order to meet the bid specification, a standard that few companies would be eligible to meet; however, no bond was required for Commercial Floor Covering Systems or the various athletic services categories.

Why was the roofing bid singled out for an exorbitant bonding capacity while other bids were not required to have one? Was it a way to eliminate competition in favor of Tremco?

This particular bid requirement also appears to violate Indiana law.

Indiana Public Purchasing Law IC 5-22-16-5(c) states:

"If a bond or certified check is required as the evidence of financial responsibility, the amount of the bond or certified check may not be set at more than ten percent (10%) of the contract price. The bond, certified check, or other evidence of financial responsibility shall be made payble to the governmental body."

Based on the information provided by the SBOA, none of the school roof jobs would have required that a bond be posted in the amount of $50,000,000 million dollars. To do so would violate Indiana law and unfairly prevent many Indiana businesses from competing for AEPA school roof jobs. Why wouldn't anyone be suspicious of the motivation behind requiring such an outrageous bond to be posted?

Is it time for taxpayers to start interviewing anti-trust attorneys to possibly represent them in a class action lawsuit against multiple parties?

Next Up: How much did unfair bidding practices cost Indiana taxpayers? A Price Comparison between Tremco and Johns Manville

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