Local Jobs And Total Cost And Bankrolling By The Government, Oh My!

Rich Lord of the Pittsburgh Post-Gazette is becoming one of the country's better reporters for sniffing out government procurement controversies. In an article in today's edition, he sheds some light on some details behind a million dollar procurement of lights by the Allegheny County Airport Authority. In this procurement, the Airport Authority spent nearly 30% more than it could have by selecting another supplier.

So is there something shady going on here?

Not necessarily. The winning supplier had some advantages that apparently warranted the premium.

What were those advantages? They included the following:

• They supported local business and jobs: the distributor of the lights is located in Allegheny County and the manufacturer is also local, based in a Pennsylvania town just outside of the county.
• The Airport Authority estimates that it will achieve an "estimated $160,000-per-year savings on its electricity bill" by using the winning bidder's lights, which put "out more light per watt than products made by bigger competitors."
• The Airport Authority had previously won a grant from the State of Pennsylvania which covered half of the cost of replacing its outdoor lights with LEDs. This grant factored into the supplier selection as the article that that if "the authority hadn't bought products that created in-state jobs...it would have lost the $800,000 state grant."

In my view, this was a fair deal as long as:

• The total cost calculations and estimates were done correctly;
• The total cost represents the best long-term deal to the taxpayers of Allegheny County; and
• The supplier selection criteria were published in advance of bid submission.

Of course, competitors to the winning supplier are barking about the award, saying things like the winning manufacturer must be "trading off something," claiming that the winning manufacturer's lights "may burn out more quickly," and requesting engineering evaluations.

Time will tell how bright this decision was.

And, when it does, here's hoping that the Airport Authority documents what it did right or wrong and applies any lessons learned to future purchases so that it can avoid being the subject of a Rich Lord column.

To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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