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Procurement Probe Could Change Way State Does Business

Remember Ross Perot's great line of the 1992 presidential campaign? The one about looking under the hood of government and having a go at it with his wrench?

In a very real sense, that's precisely what the legislature's Joint Task Force on Maryland's Procurement Law is doing in Annapolis these days. Each year, Maryland buys more than $4 billion in goods and services -- yes, it's an expensive car they're examining.

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But, rather than engaging in a major overhaul of the state's contracting system or trading it in for some other model, the legislature's collective leadership looks as if it'll install some new parts and perform a long overdue, if minor, tuneup. Out of this rare diagnosis and repair will doubtless come a better-running purchasing vehicle for Maryland.

Senate President Thomas V. Mike Miller Jr., a Prince George's Democrat, got the task force started late this summer. During the Schaefer years, he reasoned, there had been so many controversies over high-profile contracts -- principally lottery contracts, but also one for a home detention system -- that a public perception of wrongdoing had been created.

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To examine and improve the process and to restore public confidence, he asked his committee chairmen and vice chairmen to participate in a panel that would examine state laws, regulations, and the most contentious contracts.

House Speaker R. Clayton Mitchell Jr., a Kent Democrat, later agreed to have his body's chairmen and vice chairmen participate as well. By making the task force a joint one, Mr. Mitchell's decision all but guaranteed that some legislative changes would be passed during the 1994 session.

The task force has met three times since starting last month. Four more meetings are scheduled. With an eye toward reaching some conclusions, panelists (and they represent close to one-sixth of the legislature) will begin conferring after the next meeting, set for Oct. 26. The panel's recommendations will likely come by early December.

One fascinating subplot to all this involves state politics. Eyes may glaze over at mention of complicated and technical procurement regulations. But procurement could very well be the first concrete issue of the '94 state campaigns.

The GOP's attorney general hopeful, Richard Bennett, included procurement reform in his recent candidacy announcement. Democrat Eleanor Carey has made early pronouncements on the subject. And the incumbent, Attorney General J. Joseph Curran Jr., has shown recent interest in the matter, even suggesting legislative reforms.

Privately, legislators on the task force are saying that Mr. Curran's assistant attorneys general haven't been aggressive (or objective) enough in spotting potential problems in procurement contracts. The explanation: They've become co-opted by the agencies to which they're providing legal advice.

Another procurement-related political race could be that of state comptroller. Sen. John A. Cade, an Anne Arundel Republican, admits that he's mulling over a challenge to nine-term Democratic incumbent Louis Goldstein.

Though the task force has four co-chairs, Mr. Cade, a crusty legislative veteran, is clearly in charge. His sense of humor, wide-ranging management experience and intellectual prowess are respected and feared in Annapolis. Though he could politically capitalize on his task force role, he has so far chosen not to.

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Mr. Goldstein, who serves as a member of the state's procurement oversight body, the Board of Public Works, always runs scared, whether he needs to or not. Already he's feeling some of the task force heat.

A man who's probably reviewed and approved 40,000 contracts in his long career, Mr. Goldstein is cracking down at the Board of Public Works, refusing to OK sole source contracts (ones where only one company was contacted for a bid) without receiving satisfactory written justifications from state agency heads.

Thus far, task force workings have been essentially apolitical, with sessions deliberately kept basic and boring. With one clear exception (the Lottery Agency) legislators have been very careful not to level charges or to voice conclusions publicly.

Hanging over all this is the U.S. attorney's investigation, begun last year into Maryland gambling contracts. Federal investigators have been spotted frequently in Annapolis office buildings. Few doubt that they're monitoring Procurement Task Force sessions. And, more important, the rumors continue that U.S. Attorney Lynne Battaglia could get a grand jury to hand down indictments by December. If that happens, they will arrive as the task force is completing its work. (Its last scheduled meeting is Dec. 8).

One of the task force's other intriguing sideshows is how the executive branch, which essentially carries out state procurement, has reacted to the legislature's new-found interest oversight.

Initially, Gov. William Donald Schaefer blasted Mr. Miller for creating the task force without first talking with him. Then, he and his fellow members of the Board of Public Works, Mr. Goldstein and Treasurer Lucille Maurer, vigorously defended the system. Belatedly, bitterly, and in what most saw as lip-service, he pledged cooperation with the task force.

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In a jab this week, he called the task force "the embarrassment committee."

Taking cues from the governor, Mr. Schaefer's high-level people seem anxious to play down procurement problems or ignore them. Task force members were noticeably upset this week when Lottery Agency head William Rochford, apparently on his own, chose not to appear before the panel, sending instead low-level assistants who seemed to know little about the lottery contracts in question.

Mr. Rochford says the U.S. attorney carted off 13 boxes of uncopied agency records, and he was afraid that giving inaccurate answers to task force questions would be worse than saying nothing at all.

But, by not fully and enthusiastically cooperating, the governor and Mr. Rochford leave the unanswered questions ringing in legislators' ears, making procurement seem more like a scandal than any one bad contract could on its own.

Right now, the task force is roughly at first base in a four-base sprint. Still to come: more meetings on specific contracts, sessions at which member consensus is sought, bill drafting, committee hearings, etc. And the governor could still veto whatever the legislature comes up with.

Under likely reforms, state government would:

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* Do more follow-up on approved contracts to find out if they worked out as intended.

* Limit, to a certain percentage of the initial contract, any options potentially resulting in large expenditures. Legislators want to allow executive agencies some flexibility, but are miffed over the anti-competitive consequences of large-dollar modifications. The main lottery contract, valued originally at $64 million, was modified through keno to the tune of $49 million.

* Provide greater staff support for Board of Public Works members. They currently process 1,200 contracts, worth $1 billion, each year. Additional analysis might slow the flow of contracts a bit, but keep agencies more on their toes and weed out more of the questionably handled contracts.

* Require state agencies to furnish the Board of Public Works with extensive written justifications for sole source contracts and, for all contracts, a summary of the steps a contemplated purchase went through before reaching the board.

* Appropriate additional money for training procurement professionals. Special emphasis would be placed on two things: how to best write bid specifications and how to make sure they aren't drawn with a particular vendor in mind.

* Require the legislative auditor to flag procurement problems spotted in agency audits -- for follow-up by legislators and by state prosecutors.

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* Revamp the Lottery Agency. Legislators believe that, particularly in its contracting, the agency has been too 'u acquiescent to a "do it now" governor, too closely tied to the agency's biggest vendor (GTECH Corp.), incapable of doing long-range planning and generally operating too much like a private business. The legislature needs lottery revenue to balance the state budget, but it also sees a basic need to clip the agency's wings. Agency stonewalling at the latest task force meeting certainly didn't improve relations with the General Assembly.

* Restore and revitalize the old Procurement Advisory Board. The board would examine and correct procurement problems regularly, rather than sporadically. The need for permanent procurement oversight seems to be accepted by all legislators. It will come about, either through this panel, which has been advocated by Mr. Mitchell, or through some other mechanism.

One much-discussed change is unlikely to happen: creating a state procurement czar. Maryland's system seems built on checks and balances. The legislature may be reluctant to put so much power and so much money in the hands of one person, no matter how great its interest in greater procurement control and coordination.

During the next three months, the state's entire procurement system will be tinkered with. One way or the other, a vehicle inadvertently ignored for some time will be gently steered back onto the road.

Bruce Bortz is editor, and Jay Lechtman is deputy editor, of The Maryland Procurement Report, a biweekly newsletter focusing on Maryland procurement.


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