Hudson County taxpayers footed a heftier than necessary bill for rock salt this winter, not only because Mother Nature was particularly cruel, but because of glitches and bureaucratic red tape that resulted when the county used a new system that should have reduced the county’s tab for rock salt, according to two officials.
Last September, the county agreed to experiment with a newly devised bidding process that took advantage of the Internet. By using www.njlowestbid.com, Hudson County proposed to join officials in Atlantic County and government entities in 26 other states that sought to auction government contracts for goods and services.
The firm, developed by Darren Malony, the former Hudson County purchasing agent and the current chief financial officer for West New York, took advantage of a change in state law that would promote use of the Internet to lower costs for local governments. Instead of governments collecting a batch of bids, opening them and awarding the contract to the lowest bid, the auction would pit bidders against each other during a timed session. Bidders would get to see other bids, and offer lower bids in response. Hudson County, in theory, would benefit from the end product.
The internet company started small by providing bidding for several commodities such as heating oil, gasoline and rock salt, and the company had a record of success. It signed contracts with the U.S. Postal Service, Pennsylvania, and the U.S. Navy. Pennsylvania used FreeMarkets, a similar company, to request bids for coiled aluminum for license plates, anthracite coal and rock salt. The bidding for the rock salt, nearly one million tons of it, resulted in the state saving $2.5 million on a $30 million purchase.
Last summer, Malony’s firm helped Atlantic County save $88,000 in rock salt purchases, and proposed to do the same in Hudson County – except for several small glitches.
Hudson County officials did go on-line and did collect bids. Unfortunately, the county picked one of the worst possible days to do so. Although proposed in September, the auction – delayed by technical glitches – did not take place until December, when the first of a series of storms hit the area, “We could have gotten a much lower price if we had held the auction at any other time rather than in the middle of a snowstorm,” Malony said in an interview last week.
Normally, Hudson County purchases rock salt under state contracts. This means that the state seeks out bids based on a statewide use. The promise of a larger quantity purchased from a company throughout the state generally produces the lowest price. This also saves local governments from the chore and expense of bidding out the contract.
The bidding process, despite the snowstorm, allowed Hudson County to get rock salt at $34 a ton, down from the state contracted price of $35.15. With a winter as terrible was the one this past year, the savings should have mounted up with each storm. Two weeks ago, however, Freeholder Bill O’Dea noticed that the county had continued to purchase from the original contractor at the original state contract price.
Hudson County Purchasing Agent Richard Green said the paperwork and final authorizations never went through the necessary channels to allow the county to implement the purchase. Although not a huge financial disaster, the rock salt situation, O’Dea noted, showed just how caught up in bureaucracy the county has become.
“We were told it was on the freeholders’ agenda twice in January for approval, but it never made it on,” said Malony.
Green, however, said the delay was caused by a series of technical problems and the risk of a lawsuit.
“We liked the idea, and we’re looking forward to expanding this to include fuel and other items,” Green said. “But we had to put off the auction twice because vendors who wanted to bid couldn’t get into the system. After the second time, one of the vendors wrote us a letter, and we were afraid we would face a lawsuit if we awarded the bid.”
Green said his office is pursuing the technology and hopes to expand the program.
“We want to save money, and we think it is a good program when it works properly,” he said. “I just don’t want to get the county sued by rushing into anything that isn’t working right.”