Thursday, April 2, 2009

New York City Dept of ED. - Xerox Contract Starts at $36 million - ends up at more than $67 Million - UPDATED 4/6/09


Contract overruns are very common at the New York City Department of Education.

In the most egregious overrun, a contract with Xerox Corporation to lease copy machines to schools ended up costing the taxpayers more than $67 million. It had been estimated at a cost of $1 million.
In a letter written to the board from City Comptroller and Mayoral Candidate, William Thompson, called the a “troubling pattern of mismanagement” at the department.

Thompson's claim has been disputed. Representatives say that city records show that the Xerox contract was estimated originally at $31 million, not $1 million, as Thompson reported. Meaning the overrun $36 million, not $66 million.

See the complete article here.

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UPDATE, 4/6/09

In a written response to the Comptroller, the Chancellor explains:

"...Xerox Corporation:

The figure you give for the contract’s original amount, $1 million, is incorrect. The Xerox contract was actually registered for $31 million. We originally registered the contract for $20 million in 2002, and later extended it twice, once by $10 million and a second time by $1 million. It appears that you cite the amount of this last extension as if it were the entire registration amount. The accurate estimate is still less than the amount actually expended, but as we explain below this fact in itself is neither problematic nor atypical in a requirements contract.


For the record, a review of the original Xerox contract documents shows that the original estimate was reached through a standard process. Procurement for the Xerox and T&G Industries contracts began before the start of mayoral control (the contracts went into effect on August 1, 2002). The Board of Education provided vendors bidding on this RFP (including T&G Industries) with a comprehensive inventory of the Department’s copy machines; the number and types of machines guided the unit pricing proposed by the vendors, ultimately resulting in a contract estimate..."

Seems this is politically motivated, who woulda thunk.

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Reactions:

4 comments:

  1. Hmmmm... this is indeed interesting.

    Before the eXcoriation begins, wise observers will wait to see how this story unfolds over time.

    The education vertical market is very dynamic. On any one day, the number of pages can jump exponentially due to a number of factors... especially mandated curriculum changes and new initiatives... and New Yawk City is a darned big place. Did something change over time that resulted in increased need? Could be.

    This also raises the question of accountability within the Department of Ed. I'm neither a fan nor a hater of X... just a mostly disinterested observer. For me, something about this story doesn't seem right.

    I anticipate there will be more to come... and I anticipate you'll provide your usual balanced follow up coverage.

    Keep up the good work, Mr. Walters.

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  2. Actually, this doesn't "smell" right.

    The complaint/letter was submitted by a candidate for mayor, running on education as one of his planks.

    From 1 mill to 67 mill is bad - and probably "puffery".

    But, the city admits the original agreement was for 30 something and ended up near 67m.

    This is not a X bashing piece - I don't blame anyone for billing according to the agreement - I just find the whole political issue intriguing...

    Thanks for reading, keep coming back.

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  3. Greg…

    Interesting clarification on your part. Thanks for that.

    However, the post is being interpreted as an X bashing piece by more than a few industry insiders and outsiders… and that is based upon direct feedback from industry insiders and outsiders and those of us just hanging around the bar.

    Here’s why…

    First, you make no mention of the other copier vendor on the list… only X. T&G Industries is also a copier vendor whose cost overruns are atrociously high.

    Second, kudos to you for posting the screenshot. However, you also don’t mention any other vendor… at… all. That vendor list includes Hewlett Packard whose overruns are listed at a whopping 2,727.34% for software.

    Third, the categories/labels for the post are “Xerox” and “copier crime.” Why aren’t there labels for “HP” and “software crime?” For that matter, why are there not labels/categories for all of the vendors?

    The X overrun MAY have been $35+ million. HP’s overrun MAY have been $12+ million. In the end, nobody knows.

    TCI loves your blog… but TCI is calling you on this one.

    Have a great weekend. There’s more to life than all of this.

    Best wishes… TCI.

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  4. TCI -

    You are quite right.

    As the Xerox example was the extreme, I used it as the example.

    But - this is not about Xerox or HP or cafeteria equipment - this looks like mismanagement at best, corruption at worst.

    And by corruption I am not referring to ANY of the vendors on that list nor do I look at the purchaser(s) - my attention is squarely on the individual who penned this letter.

    His numbers can't be trusted.

    He is running for political office and is using the DoE as examples as to why he should prevail over his opponent.

    This has little to do with saving tax dollars and more to do with getting elected - and he is part of the flawed machine.

    Sorry if Xerox, suffered some "collateral damage" but in the end, we all do.

    ReplyDelete