The state of Florida is one of the largest buyers of goods and services in the Southeast, but its contract management has been stuck in a political quagmire and filled with inconsistency.
In the past two years the state of Florida has lost approximately $48 million due to poorly negotiated and under performance in contracts. Florida Chief Financial Officer, Jeff Atwater, has agreed to a loss of $48 million to the state. That is the amount of taxpayer money he has authorized to spend to settle dozens of bad contracts and grants he believes could have been avoided. In those instances, the state concluded it was not going to get what it paid for, or the companies (vendors) were in breach of contract in some form, but rather than take the vendors to court the state agreed to settle the contracts at a loss.
As reported by the Tampa Bay Times, in 2011, an independent firm hired to review the state’s online purchasing program, MyFloridaMarketPlace, found half of the eligible state contracts were covered by the program and the process under which that system operated was hampered by poor project governance and lack of standard procurement processes. For example, hundreds of contracts contained terms that allowed for automatic renewal with little to no standards. Vendors were awarded contracts at the lowest bid, but the costs have been allowed to balloon with budget amendments to those contracts. In addition, dozens of contracts have been on the books with the same vendor for over 20 years.
Former Senate budget chairman, J.D. Alexander, blames state agencies. Those agencies have their own procurement system, bid process and overhead, and have no interest in seeing the system changed or streamlined. He has said, “Every time a company loses a contract, they have someone to come back to the legislature to write them back in. It works, so who wouldn’t keep trying.”
Atwater estimated the total contract spending for Florida’s 2011 – 2012 budget cycle at $50.5 million, a full 72 percent of the overall budget. Those contracts cover vendors such as computer firms, health care companies, office product suppliers, providers of parking spaces, and prisons, to name a few. The infusion of state money into private and nonprofit industries has led to an increase of lobbyists who help vendors manage the mountain of rules and build relationships with state agency executives and officers to enhance the opportunities of securing contracts for their clients.
Craig Nichols of the Department of Management Services, Jeff Atwater, and Governor Rick Scott are trying to implement changes that will improve the system. Craig Nichols has published a guidebook for contract negotiations, to include a set of uniform standards. Jeff Atwater has asked the Florida legislature for pre-audit authority to review contracts before they are signed to make sure the services and associated costs are equitable. Governor Rick Scott has urged agency heads to attempt to renegotiate their top contracts to produce savings, and he recommended spending $353,000 in his 2013 – 2014 budget to hire four full-time people to train contract managers across the state.
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