Horsford questions state contracting rules
Too often agencies are just extending and expanding existing contracts rather than putting them out for bid seeking a better deal, Senate Majority Leader Steven Horsford, D-Las Vegas, complained Monday.
He focused in particular on contracts used by the Welfare Division, Employment Security and Taxation saying in tough economic times, the state must get the best deal it can on every contract.
More than 100 contracts for everything from consultants and social services to janitorial services are processed every month through the state Board of Examiners.
Taxation Director Dino Dicianno said their contract with J.P. Morgan was extended because the company is doing a very good job and it costs a lot to get up and running with a new company. He said the company is able to put payments and taxpayer information up same day or the next, enabling his staff to easily access their accounts.
“It doesn’t make much sense to me to reinvent the wheel,” Dicianno said.
But Horsford asked why he wouldn’t even consider looking around to see if some one else could do a better job.
“It’s amazing that we did not put it out to bid,” he said.
On the unemployment compensation contract for debit cards, he questioned the renegotiation that resulted in a 50-cent increase in the transaction charge for benefit recipients. Administrator Cindy Jones said the new contract raised the number of free transactions each month from two to four. The charge of $1.75 only applies when a recipient makes more transactions than that.
Horsford also questioned the interest Wells Fargo receives on the money it holds for the state.
“We’re not getting that benefit now, you are,” he told ACS-Xerox spokesman David Turner.
Turner and Jones told him that money is capped at just a quarter percent and is used to cover the administrative costs of the program from issuing the cards to technology, banking services and even the charge when a recipient uses a different bank.
Horsford asked for more detail on where that interest money goes and how much it amounts to each month.
And he blasted Wells Fargo representatives for ignoring the committee’s request to attend the meeting and answer some of those questions.
He raised similar questions on welfare’s electronic benefit transfer cards, which are managed under a similar contract.
Purchasing Administrator Greg Smith told the Senate Finance Committee his office manages a system designed to ensure the state gets the best deal on a contract, including creating committees of experts to develop recommendations and review bids.
But he said there is a significant cost – especially in staff time – to go through a request for proposal process on major contracts.
Exemptions from those procedures, he said, are relatively rare and contracts go through a competitive bid process unless there is a strong reason for them to be exempted.
Smith said Purchasing has been working with vendors for more than a year to renegotiate numerous state contracts and reduce costs. During the 26th special session of the Legislature, he was directed to do that and try save 15 percent.
“I don’t think we got 15 percent out of every contract,” Smith said. “I think we got some out of most contracts.”