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State's purchasing system shows complex challenges of reform
By Dan Carden | Daily Herald Staff
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Published: 5/18/2009 12:11 AM

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SPRINGFIELD - You can't buy a Coca-Cola in the state Capitol. Or a Sprite on campus at the University of Illinois. Or a Diet Coke at any of the dozens of state office buildings scattered across Illinois.

On one hand, it's just one more thing to blame on ousted former Illinois Gov. Rod Blagojevich. But the story of how Pepsi won a controversial state contract to control all of the vending machines and fountain drinks in state buildings reveals the complexity of the state purchasing process, known as procurement, and why reforming the process may prove very difficult.

The Blagojevich administration, hoping to maximize the revenue Illinois could earn in vending commissions by having a single statewide beverage provider, started the soda pop beverage procurement process in spring 2004. The state finally issued a request for proposals in December 2006.

Contracts whereby the state is buying something it will use typically get processed by Central Management Services, which does most of the procurement for the state. But because the soda pop contract was intended to make money for the state, the governor's office routed the contract through the Department of Revenue.

Following an eight-month evaluation process that included a vendor conference, e-mailed questions, separate technical and pricing proposals, grading of bids by an 11-member committee and reference calls to other states, Revenue eventually ruled Coca-Cola ineligible and awarded Pepsi the final contract in August 2008.

"There's some reason the governor's office wanted to have this in your hands and not in the normal course of business," state Rep. Jack Franks, a Marengo Democrat, told Revenue officials during a House investigative hearing recently. "It looks to me like the fix was in."

But Jodie Winnett, an associate director at Revenue who ran the vending procurement, insisted nothing malicious was afoot.

"Our scoring tool was very detailed, and we had a scoring methodology, and Coke's proposal simply fell short," Winnett said.

While an investigation by Illinois Auditor General William Holland did not find undue interference from the governor's office, the auditor discovered that Revenue made plenty of errors in the procurement process.

Holland found that both companies' proposals were scored wildly differently by different evaluators with no explanation for why each proposal was scored the way it was. There was no record of what was said at committee meetings and some scores were changed after the fact.

Now, five years after the original idea for a statewide beverage contract, Franks is calling for the contract to be scrapped and rebid to ensure the selection process is done right.

So, state procurement clearly is not simple. But neither is fixing it.

According to the report of the Illinois Reform Commission, "remedying the structural impediments to fair, open and competitive procurement in Illinois requires significant reform." The commission's goal is to end pay-to-play politics where big donors get big contracts.

But fixing how Illinois makes purchases by following the commission's recommendations could create an entirely new, and some say costly, layer of state government bureaucracy that might not even produce the expected reform.

The commission proposes creating a centralized department of procurement, headed by an executive procurement officer who would be appointed by the governor and confirmed by the General Assembly. But unlike other political appointees, the EPO would be intentionally insulated from political pressure and could only be fired for cause following a public hearing.

Several suburban lawmakers said they had concerns with creating a procurement "czar" with near unfettered oversight of state contracts and whether another, expensive layer of super bureaucracy was needed.

State Rep. Fred Crespo, a Hoffman Estates Democrat, told the Daily Herald he wanted to know more about how the independence of such a position could be assured.

Batavia Republican state Rep. Tim Schmitz questioned the costs at a time when the state's budget is $12 billion in the red. "Adding another layer is not saving money," he said.

Additionally, lawmakers point out that under the commission's proposal state agencies headed by political appointees would still play a role in the process by deciding what their agency needs and setting the rules to determine which bid is best, just like the role Revenue played in the beverage contract.

That means, the lawmakers say, some of the very people causing the problems that led to calls for reform will likely still play a major role in procurement even after it's been "reformed."