ANNAPOLIS — Nearly $50 million in state spending requests were temporarily delayed after members of the Board of Public Works raised questions about the bids.
In all, the board voted to delay action on six requests, including construction projects, lab services and equipment to make it easier for first responders around the state to communicate with each other.
Gov. Larry Hogan sent a message that that it would not be business as usual when he chaired his first Board of Public Works meeting three weeks ago. In his second, he teamed up with Comptroller Peter Franchot and sometimes with Treasurer Nancy Kopp in rounds of tough questions on a number of spending requests, some of which were ultimately delayed.
“We are concerned,” Hogan told one procurement officer from the Department of Health and Mental Hygiene after a round of questions on a nearly $261,000 contract for laboratory services with Quest Diagnostics.
Franchot, before asking to delay the request, said he was “fed up with the business as usual.”
At issue was whether the Department of Health and Mental Hygiene had done enough to ensure a competitive bid on the contract. Quest Diagnostics submitted a bid that was 21 percent lower than the current contract but was underbid by another company from Virginia. That company ultimately withdrew after balking over what health department officials called “standard contract language.”
“So we’re paying too much,” Hogan said to Paul Althoff, a procurement officer for the state health department, referencing the current and the proposed contract.
When Althoff was slow to respond, Hogan answered for him saying: “Yes.”
Althoff told Hogan and the board that his office contacted a number of other firms in an attempt to seek bids but none were interested.
Kopp agreed with Althoff and ultimately voted against delaying the proposed contract until the board’s next meeting in March. She later joined Hogan and Franchot in questioning contracts from two other agencies and later in voting to delay those requests.
In addition to the laboratory services contract, the board also delayed votes on $29 million in what Hogan and Franchot said they believed were additional costs to four construction projects on campuses of the University System of Maryland and a $20 million contract expansion for the state Department of Information Technology.
James Haley, a procurement officer for the University System of Maryland, was attending his first board meeting and presenting 13 items for approval.
“Don’t be nervous on your first day but I’m going to beat ya up a little bit,” Hogan told Haley. “We’re going to try and get some answers out of you.”
Hogan and the board then proceeded to raises questions about five construction projects that Hogan said appeared to cost $35 million more than originally estimated.
“I couldn’t help notice a glaring pattern we have in many of the items today and that is that many of them far exceed the original bid by massive amounts of money,” Hogan said, adding that he was concerned that some of the explanations were related to poor estimates of costs.
“We’re trying to be fiscally responsible,” Hogan said. “I hear people at the university system, some of them talking about raising tuition rates, and we’re here talking about spending $35 million more than you thought you were going to spend and it just seems out of whack to me.”
University officials told Hogan and the board that some of the costs were related to market pressures and the difficulty in finding contractors to complete the work. Other costs were not overruns but the merging of multiple contracts in an attempt to streamline projects.
“I understand it’s not taxpayer money but I’m not real sympathetic to that either because you’re a public institution and we need to make sure that you’re tight with a dollar as well as high in quality,” Franchot said.
Greg Urban, deputy secretary of the Department of Information Technology, was subject to similar questions when he asked the board to approve a $20 million modification to a project to improve communications between first responders around the state. Urban tried to explain that the request was not technically an increase in costs, an argument that wasn’t well received by some board members.
“It’s almost like never-never land for us,” Kopp told Urban.
Following the meeting, Franchot said it was clear that Hogan was sending a strong message about procurement, a message he himself had been calling for over his last two terms in office.
“Having been on the wrong side of a number of 2-to-1 votes it’s personally satisfying to be on the right side of them,” Franchot said.
The governor concluded the meeting by standing up and leaving no room to wonder what message he was trying to send.
“New sheriff in town,” Hogan said.