CBS21 Investigates | Are taxpayers paying extra for costly school construction projects?
One hundred million dollars. That’s the amount of money taxpayers are losing on a statewide purchasing program, according to opponents. Now, one legislator is moving to put a stop to the money-losing practice.
“We are talking big money to the tune of $100 million over a five-year period,” said Janial Mack with the Coalition of Procurement Reform.
One hundred million dollars of tax money wasted on school roofing projects. That eye popping number, according to a study by the Coalition of Procurement Reform, is the result of a practice called cooperative purchasing.
“There is no competitive bidding and checks and balances in the process,” Mack said.
Cooperative purchasing has been around in Pennsylvania for years. Here's a simplified view of how it works in the case of school roofing projects:
- Instead of going out to public bid, where anyone can price the job and provide an estimate, instead public entities like school districts can choose to use a cooperative.
- That cooperative has already done the leg work, setting a standard price and usually having contractors in place.
“Cooperative purchasing can be great for small items, for bulk items like pencils, paper and printers. But is it really something that we should be doing for construction?” said Representative Jake Topper, (R) 78th District.
“All of those items are bid. The districts are able to use it because we have done the legwork of bidding the program,” said John Brenchley, Chief Innovation Officer, Central Susquehanna Intermediate Unit.
Brenchley runs the cooperative purchasing program, Keystone Purchasing Network. Over 18 years, KPN has worked for 300 school districts statewide, completing 1,800 roofing projects. Out of those jobs, Brenchley says there have been no lawsuits against the co-op and no problem that has gone unfixed.
“We promise you that we are going to give to you a quality contractor and quality roof for a fair price,” he said.
“In order for taxpayers to get the best bang for their buck, every project, every renovation project in construction project including roofing should be competitively bid. And it should be competitively bid with material pricing as well as the labor pricing,” Mack said.
But pricing is the biggest worry for Mack and the Coalition of Procurement Reform. She says there are many examples of projects done through a cooperative that cost hundreds of thousands of dollars more than an open bid.
During testimony at the State Capitol recently, three examples were given trying to prove the difference in pricing:
- According to Coalition of Procurement Reform, the West York Area School District would have spent $520,000 more on a roofing project.
- If Big Spring School District would have used cooperative purchasing, they could have paid $1 million more, with bids from cooperative purchasing at $2.4 million and the competitive bidding coming in at $1.4 million.
- Finally, the Shippensburg Area School District would have paid $12 per square foot for a recent roofing project if they used cooperative project. That same project ended up costing them $5 per square foot under a competitive bid.
“It’s the easy button for them but it is the proverbial fox watching the hen house,” Mack said.
One of the benefits of cooperative purchasing is ease. Instead of waiting and paying for an architect to draw up plans, advertising the bid and then combing through all of the bids, a school district can just pick up the phone and get a price from the cooperative. But Representative Topper from Bedford County worries that districts may be choosing the easy way out.
“We are sacrificing competitive bidding in the name of efficiency or the name of making it simpler. But that could also get us in trouble,” he said.
To combat the issue, Representative Topper is authoring a bill to remove all school construction materials from the cooperative purchasing program.
From roofing to floors, he wants to see every school district funded construction project go through the competitive bidding process.
“We need to make sure that we are protecting taxpayers because these are the kinds of hidden costs that they are going to bear the brunt of,” said Rep. Topper.
Eliminating hidden costs and providing options, that’s two of the biggest benefits of cooperative purchasing according to John Brenchley. In none of KPN’s 1,800 roofing projects, has a change order ever been submitted by the contractor. Many times, he says, change orders drive up the original price meaning the bid is much lower than the actual cost.
“If you take a look at the results. If the districts find it to be the best option for them, they can use that cooperative purchasing. If they don’t feel that, then they can fo with their own bid,” he said.
By eliminating cooperative purchasing, Brenchley worries, we are taking away a valuable tool for districts who should have the ability to enter the program or go the traditional bidding route.
“We understand school districts have a choice. They can either do a competitive bid on their own or they can use our product. What we try to provide is the best quality product at the best price for the school districts,” Brenchley said.
Right now, Representative Topper’s bill will die at the end of the session. He plans to reintroduce the measure next year.