The Baltimore County school system has paid a Georgia software company hand-selected by Superintendent Joe A. Hairston at least $4 million over the past decade without seeking competitive offers from other companies.
In doing so, procurement experts say, the school system did not follow commonly accepted purchasing practices that would have required the system to fully explore whether similar products were on the market.
Concern about the lack of transparency in the school system's business practices has been growing among county lawmakers for the past year, since they began questioning the ethics of another deal that Hairston struck with a colleague. Now legislators are calling for more openness in school spending.
The school system first awarded the contract, for a student data tracking system, in November 2000 to EduTrax, four months after Hairston left the superintendent's job in the Clayton County public school system in Georgia to come to Baltimore County. EduTrax is owned by Steve Holmes, who worked as Clayton County's technology officer under Hairston and started the company that year.
The school board has continued to approve the arrangement, revising the contract in 2002 and 2006 to allow for the purchase of two other products from the company, whose software gives school systems a way to manage and analyze student test data. As recently as June, the board agreed to make another $1.19 million payment to the company for maintenance of software, according to public records.
Hairston said the contract has always been handled properly. The products EduTrax offered in 2000 were new to the market and unavailable from other companies, he said. Today, Hairston said, "there are companies that would claim" to sell the same databases that EduTrax developed for the county but none that would deliver the same customized product.
But Jonathon Harber, the CEO of Schoolnet, a software company founded in 1998 whose products are used by a third of large urban districts, said he would like to have done business with the county schools. "Had Baltimore County put out a request for proposal, we would certainly have responded and I think we would have responded favorably," he said.
Del. Stephen Lafferty, a Baltimore County Democrat, said he was "surprised [EduTrax] was a no-bid process. … I can't imagine that there wouldn't have been some bids" if the county had sought them. Lafferty has introduced legislation, co-sponsored by half of the county delegation, that would require the school system to post payments to contractors on a website.
"I think the experience that many of us have had over the past two years have raised concerns about the transparency, the openness and the responsiveness" of the school system, Lafferty said.
On the state level, a contract handled this way would raise questions, said William Kahn, an expert in state procurement and a retired assistant attorney general. "Normally, the agency would take some steps to test the market," he said.
Typically, most government agencies, including school systems, have three choices in how they can make large purchases, according to Kahn.
If a school system is spending more than $25,000 — be it to build a new school or buy food for the cafeteria — state law requires it to competitively bid the purchase and have the school board approve it.
But when state agencies want to analyze the quality of a product and not just its price, they commonly use a "request for proposal," said Kahn, who was in charge of a unit that specialized in procurement for the state from 1983 to 2003. In such cases, the system publishes details about what it wants and waits for vendors to submit competing bids.
For the EduTrax contract, however, Baltimore County officials used a third option that allowed them to forgo the competitive process by claiming that the software to track student data was unique and no competing products were available.
The county rules say that a so-called "sole source" purchase can be made when the school system staff has satisfied the purchasing office that only one company can provide the product and "that it would be advantageous or [that it would be] impractical to seek or utilize another source," said Rick Gay, head of the office school system's office of purchasing.
Hairston said his support of the EduTrax deal was partly a result of his desire to avoid the one-size-fits-all software used by many other school districts. By purchasing customized software, he said, the district can avoid potentially costly fixes later.
When asked if the school system had checked whether any other companies made software similar to EduTrax, Hairston said it wasn't necessary. He said he had a deep knowledge of what was available because of his technology background and he knew nothing similar was on the market.
"First of all, there is no school system over 100,000 students that had anything operating and if they did it was off the shelf. And if there had been, I can guarantee you I would have known about it," said Hairston, who added that the county has made it a priority to buy software that is customized.
County rules also require a justification for purchases that consider only one vendor, such as with the EduTrax contract. Gay, who was not in the job at the time, said records show the school system called three school systems in Georgia that were using the product and all said they were satisfied with it.
Kahn said a state agency would be required to put in writing the evidence collected to prove no other company offers the product, a procedure he called "good procurement practice."
And Harber at Schoolnet said large school systems sometimes take a year to bid and vet technology purchases. "It is rare for a school system that size to sole source technology. Very unusual," he said.
Hairston and Baltimore County school board President Earnest Hines said that sole-sourcing purchases are not rare for the school district. Hines added that the school system always "vets" products before they are brought before the board.
Del. Dan Morhaim, a Baltimore County Democrat who heads a House subcommittee that considers government purchasing issues, said that "procurements need to be scrutinized at every level."
"The fundamental responsibility is going to lie with the school board and the superintendent. If the board approves the contract, they have to ask the question. If they didn't [ask], they should have."
Hairston has championed products developed by employees before. Last year, he came under scrutiny for signing a legal agreement with a high-ranking Baltimore County employee that gave her ownership of the copyright to a computerized grading tool, called the Articulated Instruction Module, that was created in part by county staff.
Hairston said when he arrived in Baltimore County in 2000 he found a school system lacking technology, and so he turned to Holmes, a former colleague he trusted who was still working in Georgia schools while simultaneously starting EduTrax.
Hairston said that he did not believe it is unusual to have a relationship with the president of a company that does business with the school system.
"You can say that about anybody we have around here that we do business with," said Hairston. "I don't know what I can do about that."
Hines, who was not on the board when the original contract was approved, agreed with Hairston. "It is not uncommon to solicit assistance from former associates if they have access to something that works," he said in an e-mail.
Holmes said he started his company in 2000 and had 22 customers before the Baltimore County school board approved his $306,500 contract on Nov. 21, 2000, to purchase an EduTrax product called TestTrax. Today, Holmes said, the company has 12 employees and annual revenue of about $5 million. The company says it has a "multitude of customers," primarily in the South, including Alabama, Georgia and Mississippi.
Over the following six years, Baltimore County expanded the original contract to include two more EduTrax products.
In 2002, public records show, the board approved the purchase of DataTrax, software that compiles data on everything from what a student's test scores were in his 12 years in school to who his teachers were and whether he was in special education or gifted classes.
Then in 2006, the school district bought a third product called AssessTrax. Under that contract, the Georgia company provides copies of the tests teachers give to students at the end of each quarter and ships them to each school in Baltimore County. Teachers give the tests, then scan the results into a central database that allows teachers and administrators to see how well students all over the county are doing in a particular subject at different points during the school year.
In both cases, school officials did not go through a competitive process. Hairston said the amendments were never competitively bid because the purchases were connected to the original contract or were "relational."
"Why would we want to stop the operation and start from scratch with anything?" he said. "We have a consistent operation and a highly functional operation."
Other local school systems have handled similar software purchases differently.
Benjamin Feldman, the former head of assessments for Baltimore City who oversaw the purchase of a data warehouse, said the city schools put together a 100-page, detailed request for proposal for its $4 million purchase this year.
Anne Arundel County purchased a data warehouse from IBM in 2004 for about $395,000, according to Bob Mosier, a spokesman for the county. Instead of putting out a bid or request for proposal, the county decided to use a contract that its neighbor, Charles County, had put out for a competitive process — a common practice among local and state governments.
While procurement decisions are not glamorous, Morhaim said, it is important that government gets value for every tax dollar that is spent. "We are spending people's money, and they ought to know how it is spent," he said.
liz.bowie@baltsun.com