Lowest bid not always the best

Saturday, Dec. 16, 2006 | 7:02 a.m.

Controversy, it seems, is at times synonymous with Clark County contracts.

Whether it's 1997's Airportgate, when commissioners slipped friends and cronies onto a preferred list of contract winners for airport concessions, or a multimillion-dollar hospital contract awarded to a firm that didn't submit the lowest bid, when big bucks are at stake, allegations of favoritism often follow.

In light of several recent issues - Aviation Director Randy Walker resigning to take a lucrative position with an engineering firm that has received millions of dollars in no-bid airport contracts (the county now is trying to persuade Walker to stay) or two recent University Medical Center contracts missing key language to protect the hospital - one question inevitably surfaces: Why not simply bid out such work and erase the opportunity for suspicions to arise?

The answer, county officials say, is that state law does not require the county to seek bids for "professional services," a category that includes highly skilled services, such as work performed by doctors or architects. Such jobs require certain skills, not just low costs, county officials stress.

Summing up the logic behind the exception, County Manager Virginia Valentine said: "I don't necessarily want the cheapest heart surgeon I can find."

Some of the contracts that have spawned controversy are in that vein - among them, UMC's recent $1.8 million contract with Hospitalist Medicine Physicians for in-house emergency room doctors.

The hospital requested proposals for the contract, but according to some of those who responded, the hospital did not choose the lowest-cost provider.

The hospital's medical staff refused to endorse UMC Chief Executive Lacy Thomas' selection of HMP.

Then, the Clark County district attorney's office discovered that the contract as proposed by the hospital lacked a termination clause that would allow the hospital to cancel the contract if HMP breached any of its terms - a mistake similar to that in another contract that the county's internal auditor had exposed only two months earlier.

The hospital has passed up the lowest bids in the past, with administrators arguing that in the long run, the higher-cost contracts would save the hospital money.

That theory, however, has come under scrutiny because the hospital revealed recently that it lost more than $18.78 million in the fiscal year that ended in June - more than $6 million beyond what it had anticipated. Thomas attributed the losses to an increase in indigent patients.

The Aviation Department is another case where contracts are often awarded to design and architecture firms without a bidding process. Because of the expertise required, Walker said, a formal bidding process might box in public officials and prevent them from choosing the best firm for the job.

"The flexibility to pick the right tool for the right circumstances is always a good thing," he said.

That flexibility, though, also opens the door for suspicions of favoritism and cronyism.

Walker, for example, announced in November that he would resign in January to take a job with design and architecture firm Carter & Burgess.

Under Walker's supervision, the airport has awarded Carter & Burgess $12.6 million in contracts since 2000, more than any other design firm.

County commissioners, who must sign off on any significant airport or UMC contracts, also approved a $406,000 contract with Carter & Burgess after Walker had announced his intent to work there.

While county and airport officials agree that nothing improper occurred during the process, the fact that Walker planned to take a job with the firm to which he awarded the most work at least raises eyebrows.

It wouldn't have, however, if the county had put that design work out for bid. In that case, the process - not Walker - would have decided who received the contracts.

Although state law does not require a competitive process for some services, that doesn't mean the county couldn't use that approach if it wanted to, County Purchasing Manager Yolanda Jones said.

That is exactly what some would like to see.

The current process "doesn't make any sense," said Glenn Martin, a retired Exxon auditor and chairman of the Nevada Center for Public Ethics' financial accountability committee.

"The Nevada Revised Statutes provide that you don't bid professionals, you negotiate with them," he said.

That's bad for two reasons, he said. First, it doesn't guarantee that taxpayers are getting the best price. Second, it tempts politicians to exercise cronyism.

"All your competitiveness has gone to hell," Martin said. "There can be favoritism and all kinds of things."

His group is looking into ways to establish some kind of bidding process, he said.

One idea, Martin said, would be for the county or its departments to create a list of qualified firms for certain jobs, score them on past projects they have performed for the county and then use those scores to weigh the bids that the companies submit, Martin said.

But with most politicians being content with the status quo, that's not likely to happen anytime soon. Martin said his group's recommendations to the Legislature probably will not be ready until the 2009 session.

The county, however, plans to change how commissioners handle the hospital's agenda.

UMC requests, including contract approvals, will be heard in a separate meeting instead of being part of the larger countywide agenda.

That change, commissioners believe, will help provide more oversight and discussion of issues at UMC.