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No-bid contract at Governor’s residence raises red flags

Last week, news broke that the State of Michigan will replace the driveway at the Governor’s residence. By itself, that shouldn’t be unusual. The State of Michigan owns the house, so one might think that the State also funds its upkeep.

Except that several previous administrations have used private foundations to pay for repairs to the Governor’s residence in Lansing as well as the summer residence on Mackinac Island. This time, the state’s Department of Technology, Management, and Budget will foot the bill, which includes a driveway and two EV chargers. For its part, the State has pushed back on the notion that it does not spend any money on repairs and upkeep for the house. According to the DTMB, the agency has spent money on building maintenance and repair, fencing, and security upgrades. The total value of the Governor’s residence driveway project approaches $1M.

Paying for the driveway and the EV chargers isn’t what has people tied up in knots. Instead, the problem is that the driveway contract was given out in a no-bid situation. Now, the state argues that it selected a contractor from a list of previously vetted vendors. Of course, the no-bid nature of this particular contract has certain people up in arms and claiming that someone should go to jail.

Choosing a preferred vendor (vetted or not) is really not a good way to pass out contracts. While people can cry all they want about the no-bid nature of this particular contract, the fact of the matter is that no-bid contracts are more common (and much more expensive) than one would think.

Governor’s residence pales in comparison to WCC’s no-bid IT contract

Washtenaw Community College issued a $26M no-bid contract in 2019 that resulted in the loss of 31 jobs. Despite the Board policy that explicitly prohibits no-bid contracts over a threshold amount, the WCC Board of Trustees readily signed off on this one. WCC spent more than $2.6M in taxpayer funds to buy out the IT staff, 85% of whom refused to sign on with the contractor. Since entering into the no-bid contract, WCC has spent even more on IT services than it did when it had a very high performing in-house IT staff.

No-bid contracts don’t just provide an extraordinary benefit to the recipient. They also guarantee that the buyer pays whatever price the seller asks. The terms of the IT contract explicitly exempted the care and feeding of the College website. That clause required the College to throw away millions of dollars in development on a new website that was ready to go at the time the College fired the IT staff. So, in addition to paying $26M for a limited set of services, the contract also required the College to pay out $2.6M in buyout costs, and flush millions more down the toilet on a website the new IT contractor refused to support.

If no one is going to get upset by WCC giving away an IT contract that has objectively cost the Washtenaw County taxpayers more than $30M in actual costs and wasted funds, why should a million-dollar driveway be a problem?

Photo Credit: SoulRider.222, via Flickr