Are State Contracts Fixed?

November 30, 1993

No, in answer to the headlined question, there's no out-and-out awarding of state contracts to friends and allies of the administration in Annapolis. But evidence is mounting that a subtle form of favoritism has crept into Maryland's procurement system in which bid specifications are routinely tailored to steer business to selected companies.

There's considerable sentiment among legislators on a special task force that this sort of "steering" happened in the awarding of the controversial $65 million lottery computer contract, the follow-on $49 million keno contract, the $30 million statewide fiber optics proposal and the $10 million telephone PBX replacement contract. But it's not just the mega-contracts where personal preferences are impinging on the procurement system. Eastman Kodak alleges, with some justification, that it was frozen out of $1 million worth of copier business because procurement officials leaned over backward to favor Xerox Corp.

In three of these cases, state officials have been forced to backtrack rapidly by canceling "sole-source" contracts and opting for competitive bids. That's an admission something's wrong. There's no coordination of Maryland's massive contracting apparatus, no overseer and too little training of officials designated as procurement specialists. These officials have fallen into the trap of turning to "sole-source" contracts to avoid the time and detail involved in seeking competitive bids. That's not always good for the taxpayer.

In Kodak's case, state officials claimed only Xerox offered the types of high-speed copying machines they wanted. That was enough to justify the sole-source award, though Kodak officials claimed their machines should have been given a chance to compete both for price and quality. When the sole-source contracts were drawn up, they were based on specifications provided by Xerox.

State legislators have now heard countless tales of contract steering and questionable behavior by state agency officials. It is time for them to get to work on reform legislation. Maryland's contracting system has developed serious flaws that need to be corrected. This should be accomplished in the upcoming General Assembly session. The public has a right to expect fair and impartial contract awards in the State House.

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