$1.6 million no-bid computer deal for Chicago Public Schools raises issue of proper procurement amid COVID crisis

CPS computer deal Adobe Stock

Procurement standards and processes obviously needed a layer of flexibility during the emergency coronavirus lockdowns last spring. But how flexible is too flexible, and where do governments need to draw the line to maintain open, honest and transparent buying processes when dealing with taxpayers’ money or emergency funding?

A procurement story with Chicago Public Schools seeking computers for remote learning highlights the point.

The third-largest school district in the United States — the Chicago Public Schools (CPS) — approved the use of $30 million to buy computers and various technological supplies for its students and teachers to do school from home. The city scrambled to get adequate resources as quickly as possible, with about three months of school left in the year.

Normally, the Chicago Board of Education has to approve procurement decisions in the CPS system for any contract above $50,000. However, the Board approved a $75 million emergency expenditure provision allowing CPS staff to make decisions without consulting the Board. Staff went ahead and spent money to procure various goods as quickly as possible. Demand for computers soared, and CPS needed more than what was in stock with its typical suppliers, CDW and Apple.

Mark Aistrope, the CEO of Chicago-based event technology provider Meeting Tomorrow, had extra devices on hand because typical business events he supplied were shut down by the coronavirus. With his inventory full of products, he reached out to Chicago Mayor Lori Lightfoot and her staff to provide help. In just three weeks, Aistrope struck a partnership with CPS leaders for a $1.6 million no-bid deal where the district bought used and older laptops from Aistrope’s business, according to Chalkbeat, a nonprofit news organization that reports on education issues.

Here’s where things get a bit sticky: The mayor directly recommended Aistrope to the district. Aistrope and Lightfoot knew each other from her campaign — when Aistrope donated $30,000 to elect Lightfoot.

Families and teachers got the supplies before the school year ended.

But an analysis done by Chalkbeat and the Illinois watchdog group Better Government Association (BGA) found that the district placed device orders well after other large districts in the state, leaving CPS to settle for older devices and giving some families slower or malfunctioning equipment.

The lack of a competitive process raised eyebrows too.

“I’d argue that the sourcing requirement wasn’t a matter of life and death,” said public procurement expert Peter Smith, the founder of Spend Matters UK/Europe and author of the recently released book Bad Buying.” “The contracting wasn’t something that had to be done today … and it took some many weeks anyway. I think there’s a question as to why there couldn’t be more competition and openness around the process. And OK, if regular suppliers with contracts already in place couldn’t meet all the needs, then fine, you need to look elsewhere.

“But, you could have had some sort of rapid call for proposals, maybe with the help of some sourcing technology. You could have possibly run e-auctions or even an optimization process if you’re really clever. So, I don’t totally buy the urgency excuse. That sort of raises a bad smell for people.”

Technology offers remedies

CPS has a contract with the highly regarded procurement software provider Bonfire, a specialist in public spend.

Spend Matters did not hear back from CPS on whether they used Bonfire in relation to this project — where it could have been a perfect resource due to the firm's expertise in public spend. Spend Matters has performed an extensive analysis of Bonfire's solution via SolutionMap, where it scores as a Customer Leader in our rankings for Sourcing vendors. Furthermore, Bonfire's customers have ranked it consistently high across the board, according to our references, with 95% saying they would recommend the solution.

Bonfire said its solution has functionality for emergency buying situations, and it offered these details:

  • Clients can set up a roster of vendors that can support emergency situations.
  • Bonfire can suggest vendors (based on commodity codes), helping clients to quickly build invite lists. It has built-in best practices that recommend how long a project/auction/sourcing event should be open for. However, clients have the ability to override the timeline (particularly useful in an emergency situation). During COVID-19, there were cases where clients had a project open for one day, which is very rare in the public sector, and they were successful in procuring the emergency goods.
  • Emergency documents can be created and uploaded in Bonfire and stored in a centralized place to outline procedures during a crisis or to be referenced for an audit.

What CPS bought

And then there’s the quality issue. For a 2017 model iPad, Aistrope charged around the same price or even more than what CPS paid Apple for brand-new devices, the BGA reported. Experts pointed out that older devices and a random assortment of models can make it hard to keep up with software updates, requiring more fees later.

Additionally, some students and parents reported that the older models made it hard to conduct online school, like if the computer’s camera was too old to use for Zoom. And some laptops didn’t even have a camera, a problem that Meeting Tomorrow later fixed, Chalkbeat reported.

Although the quality of the computers was questionable, Smith has some sympathy for CPS. There are typical processes for quality control. You make negotiations and sign contracts. You don’t pay suppliers until the quality equipment is in your hands. You test the supply. In this instance, the district did what they could within the circumstances allotted when it came to quality control, Smith said.

CPS faces pressures to procure computers and tablets as fast as possible

In normal times, the CPS procurement process is not unusual compared to other public bodies. Generally, any contract over roughly $50,000 must be approved by the Chicago Board of Education.

Spend Matters reached out to CPS to ask about its typical procurement process and for any information on specific technologies used, but we received no response.

Last year, an executive order from Illinois Gov. J.B. Pritzker closed schools in the state starting March 17, according to the Chicago Tribune. Lightfoot followed this order but initially extended it longer than the rest of the state, keeping schools closed through April 20. And then schools shut down for the year. So, the race was on to procure computers cheaply and as fast as possible.

Aistrope reached out to the mayor on March 30 in the late evening. Within 24 hours, he was in contact with the top executives at CPS. Within three weeks, the deal was done.

Computers from Meeting Tomorrow went to at least 30 CPS schools, the BGA reported. Aistrope delivered computers before school let out for the summer break in late June, reports indicate.

Phillip DiBartolo, Chicago’s chief information officer, told the BGA that suppliers rushed to get all devices procured to the district. The majority of the 50,000 total computers CPS bought in the $30 million effort arrived in six to eight weeks, appearing during the second half of April and first half of May.

But, DiBartolo also said that some orders came “straggling in after that” — meaning that some students received their district-issued devices only weeks before the school year ended. Although there was an emergency rush to procure supplies, it didn’t end up helping all the students it needed to.

Public spend in emergencies act as a caution against bad buying

In a similar procurement effort focused on medical supplies and PPE that the BGA reported on in Chicago, Lightfoot again recommended a contact she knew. It seems that in emergency procurement situations, “friends of friends” of Chicago city officials are the ones that get the deals.

The mayor likely wasn’t acting maliciously in either case. In the technology purchase, she simply wanted to get computers to students as soon as possible. However, it’s important to consider how quickly this recommendation made its way through CPS procurement. Within 24 hours of the mayor’s email, Aistrope was negotiating with CPS leaders to make the deal happen.

And it was done at the hands of someone who contributed money to elect the mayor. Relationships are key in procurement. It’s no secret that we live and work in a society that values connections. However, when it comes to taxpayer money and procurement, issues like this one can raise concerns about corruption, Smith said.

Chicago is increasingly facing issues with debt, rising tax rates and accusations of corruption. While this one computer deal might not be the end of the world, it doesn’t bolster any confidence with taxpayers — especially after CPS’s recent history with executives.

Former CPS Chief Executive Barbara Byrd-Bennett was sentenced in 2017 to four and a half years in prison after pleading guilty to helping steer $23 million in no-bid contracts to education firms for $2.3 million in kickbacks and bribes while she led CPS, according to the Chicago Tribune. In court proceedings, it came out that Byrd-Bennett conspired with SUPES Entities — a company she used to be a consultant for — and Synesi Associates consultancies to direct contracts in return for special payments to her directly.

So now, any little hiccup in practice by CPS is faced with even more scrutiny, regardless of emergency status or not.

“We’ve got to be very vigilant about public procurement,” Smith said. “It’s not just brown paper envelopes filled with cash. It can be favors. It can be campaign contributions — all of those things.

“I personally think in this [computer] case, it’s unlikely that $30,000 would corrupt the mayor of Chicago. I think you might need a bit more than that, to be honest. … However, I think politicians, and senior politicians or public servants have to be very, very careful. There are conflicts of interest, and they should always be declared. I would say it’s unwise at best for the mayor to be seen putting in a good word for any supplier other than through the proper processes.”

So, what’s a mayor to do?

To avoid raising any red flags, Smith advises all procurement practitioners — in the public or private sector — to keep competition in mind.

“We run competitive processes in public procurement for several reasons,” Smith said. “It’s a great barrier against corruption. Competition tells you who’s the best firm to do the work — rather than just working with your friends. It’s what you can do rather than who you know. That’s the basis for good public procurement.

“But the second reason is to arrive at a fair price. There are other ways of arriving at a fair price, but competition is a pretty damn good way to ensure a fair price.”

Smith also advised the use of technology to keep public procurement open and transparent by bringing more competition to the table and prevent any questionable buying. CPS could have used source-to-pay technology (S2P) to their advantage.

S2P technology can take out the headaches for CPS in the future — and prevent buying older, used and expensive devices that end up being a waste of money.

The Public Spend Forum (PSF), a sister site to Spend Matters, is a global public-sector procurement community and market intelligence platform dedicated to improving public buying everywhere. It has found that federal and local governments have lagged behind the private sector in the adoption of commercial technologies that streamline procurement.

Many public sector departments develop their own technologies and solutions but have spent hundreds of millions of dollars to do so. Instead, the PSF recommends the public sector understand and begin to prioritize commercial procurement technologies.

“As the procurement function of many public organizations is becoming more strategic, procurement technology allows for a process redesign that makes the procurement process open with improved accountability, transparency and reporting capabilities; thereby speeding up the procurement cycle and providing greater access to more opportunities for suppliers,” PSF said in a report with NIGP, the Institute for Public Procurement. “The use of technologies is not a substitute for the development of comprehensive and robust strategies. Technology only facilitates the development and delivery of a good strategy.”

PSF has a procurement technology market intelligence report providing insight into the $10 trillion industry of goods/services for governmental use. It provides a list of technology vendors that might encourage stronger competition — which helps prevent corruption and bad buying practices.

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