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Board says Connecticut missing out on up to $260 million

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HARTFORD —  Connecticut could save an estimated $174 million to $260 million a year if it adopts a “strong culture” of competitive bidding, the chairman of the State Contracting Standards Board told state lawmakers Thursday.

Lawrence Fox said the state is “waving off competitive bidding close to 70 percent of the time” and ultimately missing out on an opportunity to “save the state a significant amount of dollars and probably improve quality as well.” Those are savings that could prove useful as the General Assembly looks to close a projected two-year, $3.7 billion deficit in the next roughly $43 billion two-year budget.

“We have not established …. in our state … a very strong culture of really doing competitive bidding,” Fox told member of the General Assembly’s Appropriations Committee. “We are not on the cutting edge of this.”

The State Contracting Standards Board recently undertook two studies of competitive bidding practices in Connecticut state government. One released in December determined the state is not taking advantage of cost savings available through present procurement practices. It recommended changing to the “tone at the top” to focus on cost savings. It also determined the process of waiving competitive bidding to procure goods and services “may be too routine or lax” and state employee training in procurement practices “appears to be insufficient.”

The report also warned that the current process of hiring expensive outside contractors appears to be easier than to hire less expensive state employees.

The second report suggested shorter contracts, possibly one to three years in length, could be financially beneficial to the state. Of the 40 top personal service contracts, the board found 38 had average terms of more than 10 years, Two contracts — one for banking services and the other for investment services — had terms of 106 and 94 years respectively.

“There’s a big gap between what we’re doing and what we could be doing to really be responsible with the public’s dollars,” Fox said.

Fox said the board plans to present its recommendations to Democratic Gov. Ned Lamont’s new director of the Office of Policy and Management, Melissa McCaw, who has the power to waive competitive bidding in personal service agreements.

Members of the budget-writing committee appeared very interested in Fox’s testimony. Democratic Rep. Toni Walker of New Haven, the panel’s co-chairwoman, called the lack of competitive bidding a “real issue” that an accountability subcommittee plans to examine. She invited the board to participate, along with OPM and certain agencies.

“To me, that is a real issue,” said Walker, adding how half of the Department of Children and Families budget covers contracted services, many of which she said were not competitively bid. “In these days where our non-fixed costs are disappearing, it shouldn’t be at the expense of removing services.”

Fox also urged lawmakers to find money in the budget for more staffing at the State Contracting Standards Board, which currently includes one paid employee and a volunteer board. The board has recommended the job of chief procurement officer be filled so it can effectively oversee its mission if making sure state agencies comply with procurement rules.

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