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Retired purchasing agent: ‘They’ve totally changed the terms of the contract’

Scott Sherman, a retired purchasing agent from Idaho Falls, has been raising questions for weeks about Idaho’s controversial high school WiFi contract with Education Networks of America; last Friday, state schools Superintendent Tom Luna replied to several questions Sherman had emailed him, including one about the fixed-price nature of the contract. In the Aug. 27 email, Luna defended that approach, writing, “The RFP was written intentionally with a fixed bid price component for two reasons: 1) to meet the language set forth in Senate Bill 1200 passed by the Idaho Legislature, and 2) to ensure the vendor assumed the risk involved, not the state.”

Sherman disputed that, saying, “It was totally inappropriate for a fixed-price contract, because they didn’t know how many users there were going to be.” Rather than shifting the risk to the vendor, he said, the approach shifted the risk to the state, by saying it would pay full-fare regardless of participation. That, in turn, gave vendors an incentive to up their price to protect themselves against the uncertainty. “They just about ate the whole budget up to protect themselves,” he said.

When Luna sent his Aug. 27 response to Sherman, the superintendent already knew that ENA had made a unilateral concession in an Aug. 6 letter, agreeing to bill the state only for actual work done at Idaho schools, not for the full contract amount, but he didn’t mention that; the state accepted the offer in an Aug. 22 letter. His spokeswoman, Melissa McGrath, said in an email today that the contract has not changed. “The original contract remains in the place,” she wrote. “These letters clarify the billing process and additional questions that were raised in initial meetings with ENA.”

Sherman, who has long been retired but was a purchasing agent with the atomic energy division of Philips Petroleum when the company was the main contractor at the Idaho National Laboratory, said, “In my mind what they’ve done is totally changed the terms of the contract. It’s gone from a fixed price – which given the kinds of things they were asking the potential suppliers to do was ridiculous – to a cost-plus contract.” He said, “That entirely changes how the others would have responded.” Nine companies bid on the contract; ENA was among three finalists, along with two Idaho companies. “I would think that the other suppliers or bidders would have every right to come back and say, people, what have you got?” he said. “You’ve just given these people a million bucks under totally different circumstances.”


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Betsy Z. Russell covers Idaho news from The Spokesman-Review's bureau in Boise.

Named best state-based political blog in Idaho for 2013 by The Fix

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