Purchasing Disasters (Learning from Your Mistakes)

1. Purchasing Disasters(Learning from Your Mistakes) Warren Geltch MBA, CPPO, C. P. M., CPCM Assistant County Administrator RETIRED

2. Outline • The Men in Black • The Conference Table Fiasco • The President’s Car Calamity • Don’t Go Down with the Ship! (aka The Great Bailout) • The Drapery Abomination • The Office Supplies Faux Pas • The Sewer-sucking Screw-up • The Time Clock Cataclysm • The Fuel Apocalypse

3. 1976-1979 3

4. 1979-1981 4

5. The Men in Black

6. Davis - Bacon Act • Federal Law stipulating:when any Federal Funds are used by local governments in a construction contract, the local government MUST verify that the awarded contractors are paying their employees Federal minimum wages and prevailing wage rates of similar projects in the area.

7. Dénouement • Letter from Feds to County Administrator threatening to cut off all Federal funding • Meeting: County Administrator, Public Works Director, and me • Apology Letter • Purchasing handled all future construction contracts • No further issues (that I know of)

8. Lessons Learned The Men in Black: • Some contracts contain clauses that are ALIEN even to the best purchasing professionals! • Always count on the Federal Government to muck up a perfectly good construction contract! • Always let your boss know of an impending disaster – no surprises! • Learn everything you can about your profession.

9. 1981-1985 9

10. The Conference Table Fiasco

11. The Conference Table Fiasco Hillsborough Community College

12. Three Choices: • Send the table back and pay a 20% re-stocking charge, • Cut the table in half, or • Bring in a crane

13. Cost $350 (in 1982)

14. Lessons Learned The Conference Table Fiasco: • Never convert a nurses’ dormitory with a small elevator, a winding stairway and balconies into an administrative building! • Bosses have a knack of appearing out of nowhere when you least expect it! • Always have a Plan B...and a Plan C... • Trust, but verify!

15. The President’s Car Calamity Hillsborough Community College - 1983 Car wanted and specified: Low bid: Chrysler 300 Oldsmobile 98 Low Bid TWICE

16. Lessons Learned • The President’s Car Calamity • Sometimes...bidding is just a suggestion! • Attorneys are usually a pain... but sometimes they can save your job! • “They can fire you, but they can’t shoot you!”… Live to fight another day.

17. 1985-1992 17

18. Don’t Go Down with the Ship!(aka The Great Bailout) Palm Beach County - 1985 • Parks and Rec. Mgr.: “We need a ship for an artificial reef.” • Port of Miami Auction: Swedish Ship “Eidsvag”, 150’ Freighter • Budget: $30K • County bidding requirement: $25K

19. Don’t Go Down with the Ship! • Board Meeting • Request for approval up to $25K • Commissioner “Opie”: “At the Parks Advisory meeting, I said I wouldn’t spend a nickel more than $20K” • Board approved staff request 5 to 1 • Board Chair asked Commissioner Opie to go with staff

20. Don’t Go Down with the Ship!

21. Don’t Go Down with the Ship! • Registration, Itinerary, and Placard with Bidder #225 • Opening Bid for Eidsvag $10,000 $21,000

22. Don’t Go Down with the Ship! • Auctioneer: “I have a bid for $21K.” • “$21K going once...going twice...” • Placard raised...$22K. • “$22K...sold!...to #225.” • Hand-wrote the P. O.

23. Don’t Go Down with the Ship! • Back to Helicopter

24. Don’t Go Down with the Ship! • Commission Meeting • Commissioner “Opie” Comments • Formal “Sinking” Event: 90 Days

25. Don’t Go Down with the Ship!(aka The Great Bailout!) • Eidsvag Towed from Miami to W. Palm Bch. _______

26. Don’t Go Down with the Ship! Eidsvag Sinking Total Cost: $48,000

27. Lessons Learned • Fishes need a good home too! • Celebration plans by government? Forget about it! • It’s probably not a good idea to drink on the job! • The good things Purchasing Officials do are usually unknown to the average citizen.

28. The County Home Drapery Abomination Palm Beach County - 1986

29. The County Home Drapery Abomination • “Spring Time” Design • “Mr. Geltch...”

30. The County Home Drapery Abomination • County Home Tour • “Spring Break” Drapes • Solution: Pay for New Drapes from Purchasing’s Budget: $2,500 ($5,304 today)

31. Lessons Learned • The County Home Drapery Abomination • Spring Time = Spring Break! • Itsy bitsy tiny little details can turn into great big huge embarrassing blunders! • Cost $2,500 (in 1986)...It’s always good to have a little fluff in your budget to make up for staff screw-ups! • Trust...but verify!

32. The Office Supplies Faux Pas Palm Beach County - 1987

33. The Office Supplies Faux Pas • Buyer sent memo to departments asking for estimated quantities for various lines of office supplies • Buyer: “Mr. Geltch...”

34. Lessons Learned • The Office Supplies Faux Pas • Anytime the word “rubber” is used (such as “rubber room”, “rubber biscuit”, “rubber factory”, and “rubber baby buggy bumper”), pay attention! • It’s probably a good idea...when practical...to review staff correspondence! Trust, but verify! • Be careful of overloading good staff. • Learn to laugh at yourself...a sense of humor goes a long way!

35. Orange County BCC 1992-2010

36. The Sewer Sucking Screw-up Orange County - 1994

37. Procurement Process: Sewer Cleaning Truck • Specifications Received from Department • Bids Opened • Award Recommendation Posted • Protest from Second Low Bidder • (Heated) Protest Hearing • Specification Issue: all vendors’ specs included • Performance Issue: can low bidder perform? • Award to Low Bidder

38. Fallout After Award • Delivery of truck: twice as long as promised • Call from Utilities Director: “Mr. Geltch...” • FDOT: Park the Truck…for 6 months! • The 6:00 o’clock news • Meeting with the County Administrator • The fourth axle

39. %$#@&%#$ Sewer Cleaning Truck: Final Product

40. And That’s Not All! Public Works Conference @ Orange Co. Convention Ctr.

41. Lessons Learned The Sewer-sucking Catastrophe • Buying sewer-sucking equipment really does suck! • Always count on the media...and scorned vendors...to twist the knife! • Never combine specifications from different vendors and expect to get “the best” result...use the “or equal” clause!

42. The Time Clock Cataclysm Orange County - 2001 Time Stamp Wrist Watches Wall Clock Blackberry Phones

43. Time Clock • Time clock matched to wall clock • Bids received after the time and date specified not accepted • Received a number of late bids

44. Board Discussion • “The time stamp was coordinated with the wall clock....or was it?” • “How do you know the wall clock is accurate?” • “Do you use an ‘Atomic Clock’?”

45. What’s an Atomic Clock? From Wikipedia: Atomic clock: a clock device that uses an electronic transition frequency...as a frequency standard for its timekeeping element. Atomic clocks are the most accurate time and frequency standards known, and are used as primary standards for international time distribution services...and in global navigation satellite systems such as GPS.

46. Revised Procedures • IT connected time stamp in Purchasing Department to atomic clock...cost $800. • New Bid Condition: “The time stamp in the Purchasing Department shall be the SOLE determinant of late or on-time bid submittals.”

47. Lessons Learned • The Time Clock Cataclysm • Time is always your enemy! • Dealing with time issues can take you to the Twilight Zone! • Government always makes BIG new rules (at additional cost) to address SMALL situations! • There’s simply no way to keep up with technology!

48. The Fuel Apocalypse Orange County - 20005 • IFB for Fuel issued Jan. 2005 • IFB Terms and Conditions • 5-year term contract • County can terminate upon 30-day notice • Estimated quantities (no min. or max.) • 87 Octane • 89 Octane • Diesel • Right to purchase from other vendors • Individual shipments: as needed via P.O.

49. Performance • 249 P.O.s issued • $3.5M of diesel fuel purchased • Contractor: “We quit” termination letter 4/14/06 • County: “You can’t do that” response 4/24/06 • Contractor: “Yes we can” law suit 5/24/06 • County: “We’ll see about that” counter-suit 6/19/06 • Contractor continued honoring P.O.s • County Attorney

50. Legal Precedent “When there is no requirement that the government purchase, or limit it’s demand to any ascertainable quantity, the contract is not enforceable because there is no consideration and mutuality.” Willard, Sutherland & Co. v. United States (U.S. Supreme Court 1923)