DPS: What’s wrong with this picture?

Category: Chronicle Archives Published on Tuesday, 15 August 2006 20:00 Written by Michigan Chronicle

Let me say at the outset that I wouldn’t have any problem with DPS trying to save money by going with these other companies if the bidding process had been fair and above board. I am beginning to have serious questions about whether this was the case. There is no question that the DPS budget is tight, and they have an obligation to save money – and taxpayer dollars – as best they can. I also do not have any problem with any decision to give consideration to Detroit-based businesses for the contract. Supporting Detroit business is a good thing – whenever it makes sense to do so.

This deal makes no sense for a lot of reasons.

First of all, this is a $58 million contract. VisionIT, incorporated in 1997 and one of the four companies awarded the contract, will receive approximately $45 million of that total amount. What’s so strange about this is that VisionIT, according to the 2006 Dun and Bradstreet Business Information Report, only did slightly more than  $9 million in business last year. Furthermore, the D&B report lists the company’s financial condition only as “fair.”

How in the world does a company listed in only “fair” financial condition, and that did only $9 million in business last year, land a $45 million, five-year contract with DPS? It’s no wonder that Compuware recently announced its intention to file a formal protest of the School Board’s July 27 decision. Compuware’s five-year contract expired April 30, and their $14.4 million (per year) contract renewal bid was nearly $3 million higher than the $11.7 million (per year) bid awarded to VisionIT, Management Systems Consultants, Universal Sales, and GVC Networks. Although the Compuware bid was higher (the total bid, which included a renewal of the five-year contract plus additional required services and a cost-of-living increase adjustment, was nearly $18 million), Compuware Chairman Peter Karmanos was quoted in the Detroit Free Press as being “shocked that the board awarded this contract to a patchwork group of less capable vendors.” In the same article, Karmanos said that his company saved the district $4 million and gave them $3.5 million in unbilled services and equipment.

Denise Knobblock Starr, Compuware’s executive vice president of administration, echoed her boss’ sentiments during a conversation last week, plus she had a few additional concerns. First of all, Starr said that when Compuware first got the contract five years ago, there was a performance bond requirement, the purpose of which is essentially to ensure that all the work will be done properly by the company.

“Now, all of the sudden, there’s no bond requirement. That’s odd,” she said.

It is particularly odd since the money being awarded comes through the state and the federal government. The federal government requires a performance bond for such disbursement of funds, Starr said, so she cannot figure out how the DPS managed to duck that requirement this time around.

Starr’s second concern was that Karmanos was not even given the courtesy of a meeting prior to the decision being made. Instead, DPS decided to award the contract only days prior to a scheduled meeting with Karmanos that had been on the calendar much earlier. Furthermore, on the date of the July 27 DPS meeting when the topic was discussed and the contract was ultimately awarded, there were no representatives present from any of the four companies that were awarded the contract. There were, however, representatives present from some of the companies that didn’t make the cut. Why? Probably because it had been a done deal before the meeting ever took place and the only ones who didn’t know it was a done deal were the ones dealt out of the process.

“The decision was not supposed to be made until August,” said Starr. “That’s what our account executives were told.”

But then, all of the sudden, a special rush-rush meeting is called by the board for July 27 to award the contract and — surprise! — nobody bothered to tell Compuware about the meeting until the last minute. Furthermore, I am told that public comment on the issue was not scheduled until after the vote was taken. What’s the use  of letting the people speak once the decision has already been made? What kind of sense does that make? Then again, considering the less-than-impressive track record of the companies set up to take Compuware’s place, I cannot say I am shocked that DPS wanted to do their dirt in the dark. They knew it was shady, and shade doesn’t like the light.

Karmanos and Starr are not the only ones fuming at how the entire process was handled.

“It’s an inappropriate bid process,” said Cynthia Paskey, president of Strategic Staffing Solutions (S3), which was one of 17 companies from around the country that also bid on the contract.

In a recent DPS press release announcing the selection of the four companies chosen for the contract, it highlights the fact that all companies are minority-owned, which normally I wouldn’t have a problem with all by itself. But what bothers me about this particular fiasco is that it appears race loyalty is being placed above common sense. How does that benefit the citizens of Detroit?

“I logically can’t find a reason for this to happen,” said Paskey.

Logically, maybe not, but you don’t have to live in Detroit long to know that logic doesn’t often apply, especially where matters of race are concerned. Here you have two Detroit-based companies with a long history of service to the community and sterling track records that may have been shoved to the side because neither one of the company presidents is Black. In the case of S3, this company comes with 16 years of experience (compared to nine years for VisionIT), that employs 1,500 people (compared to 112 for VisionIT), and that pulled in $103 million in revenue for 2005 compared to VisionIT’s $9 million. As for Compuware? This is a worldwide corporation that listed 2005  revenues of more than $1.2 billion and that employs nearly 8,000 people in 84 countries across 60 countries. 

So tell me, what’s wrong with this picture?