By Lyle Moran
Lowell Sun
LOWELL, Mass. — The city violated state bidding laws when it procured a new wireless fire-alarm system and forced some property owners to purchase connecting radio boxes from the company that installed the system, the state Inspector General’s Office found.
The city should have procured the system under the state’s public-construction bid laws, according to then-Inspector General Gregory Sullivan. Instead it chose in 2009 to use the request for proposals (RFP) process under Chapter 30B of state law, and even violated provisions of that section, Sullivan said.
Terms and conditions of the first phase of the city’s procurement for the alarm system “were not favorable to the city or its businesses and citizens,” Sullivan concluded.
The way the city handled the procurement also forced another awarding authority subject to 30B -- the Lowell Housing Authority -- to violate the state’s bidding law when purchasing new fire-alarm boxes, according to Sullivan. Sullivan’s findings are detailed in an Oct. 20, 2011, letter addressed to Michael Vaughn, the city’s chief procurement officer. The letter was obtained by The Sun. It was never provided to the City Council by City Manager Bernie Lynch’s administration.
When first reached Thursday afternoon, Lynch said the IG’s letter may have crossed his desk, but he did not remember it specifically.
After reviewing the letter, the manager said the process of procuring the fire-alarm system forced the city to balance what was best for the Fire Department, property owners and the city as a whole and that led to some of the challenges. He agrees with Sullivan’s determination that the procurement should have occurred under the public-construction bid laws.
“It gets complex with trying to balance a whole bunch of different interests,” Lynch said. “We should have considered the impact it would have on another public entity.”
Lynch also said procurement is not a City Council issue, but it would not have hurt to have informed the council about the letter.
The LHA initially complained to the Inspector General’s Office, which Vaughn said prompted the IG’s probe. The authority questioned the requirement that property owners of residential buildings of 13 or more units purchase a radio box from one company, according to Vaughn. If followed, the LHA said it felt it would violate state bidding laws requiring it to seek quotes from more than one vendor, Vaughn said.
Sullivan concluded that most of the LHA’s purchases of the boxes under Lowell’s contract were violations of Chapter 30B, which outlines the process under which many goods and services must be procured depending on price thresholds.
LHA Executive Director Gary Wallace did not respond to requests for comment on Wednesday or Thursday.
Vaughn said his mistake was not including the LHA in the procurement, which would have prevented the LHA from having to violate the bid laws when purchasing the alarm boxes.
The city switched to the wireless system to move away from a telegraph-wire alarm system that had become costly to maintain and was less reliable.
The March 2009 RFP sought a company to install the wireless radio alarm system. Phase one called for installation of 68 alarm boxes on city-owned properties and for the installation of equipment in the dispatch center to receive signals from the alarms.
The city received six bids, from $77,849 to $394,500. In May 2009, a technical review committee of Fire Department officials chose to give the contract to East Coast Security Services of Salem, N.H., the low bidder.
Vaughn said the company proposed providing the same type of product as some other bidders for less, and they were awarded the contract based on a pre-determined scoring rubric that was not based on price alone.
But Sullivan found that the specifications called for in the RFP did not provide a way for the different systems proposed by the vendors to be meaningfully compared. One example cited was the city’s failure to call for the itemization of installation and maintenance services, as well as for equipment provided.
“The disparity in proposal price of more than $300,000 suggests the City’s solicitation documents did not contain specificity as to what it wanted to purchase,” Sullivan wrote. “The vagueness of the specification contributed to the myriad deficiencies this Office has found with City’s procurement.”
The city violated the law by failing to require separate price and technical proposals.
Asked why the city chose to go with an RFP rather than going out to bid under the public-construction laws, Vaughn said the city did not know what the best alarm system would be and wanted to see different proposals. A bid process would have had all companies meet the same specific specifications and the low, responsive bidder would be awarded the contract, Vaughn said.
State law regulating public-construction work says that every contract for construction/repair of any building estimated to cost between $25,000 and $100,000 should be awarded to the “lowest responsible and eligible bidder” on the basis of competitive bids.
Vaughn acknowledged that the IG’s Office believed a bidding process should have been undertaken because the new alarm boxes had to be connected and wired to buildings, which is considered public construction.
The IG highlighted how the first phase of the contract called for the installation of the new city-owned boxes, but there was also a second phase that would require all the non-municipal fire boxes to be connected to the new system within two years.
The Fire Department told owners of residential buildings with 13 or more units they needed to purchase fire-alarm boxes from East Coast at a price of $2,475 for each box. Sullivan called the city’s arrangement with East Coast a “no-bid” agreement.
Based on the IG’s review and information from the city, Sullivan found that the price East Coast was charging for the boxes for non-municipal buildings was far more than $1,100 East Coast paid to obtain the boxes.
“This was not advantageous for the businesses and the citizens of Lowell,” Sullivan wrote.
Mark Dufour of East Coast did not respond to a request for comment on Thursday.
The LHA registered two complaints with the IG about East Coast deal: The LHA noted it had received quotes for less than half the amount East Coast was charging and that the city was requiring the LHA to install one new box per building even though one box could serve two buildings.
Deputy Fire Chief Phil Lemire, the head of the city’s Fire-Prevention Bureau, said he is not sure who would have told the LHA it had to have one radio master box per building with 12 or more units, but that is not the city’s policy. Lemire said plenty of property owners in the city have one East Coast box serving several properties.
Sullivan concluded that Phase 2 was not covered by the RFP, and that the city violated the law because it should have procured the boxes for non-municipal users through Chapter 30B bidding.
The city’s requirement that those connecting to the new alarm system purchase the boxes from East Coast “completely obliterated price competition” that would have occurred under 30B, Sullivan wrote.
Vaughn said Fire Chief Edward Pitta made the decision to require property owners to purchase the new radio boxes from East Coast.
The chief has said he was enforcing what he believed was the requirement that property owners of residential buildings with 13 or more units directly connect to the dispatch center. In light of a recent state Supreme Judicial Court ruling throwing out a similar policy in Springfield, the city has eliminated the requirement that those property owners purchase boxes from East Coast and directly connect to dispatch.
Sullivan recommended that in the future the city consider collaborating on procurements with other public entities in the city subject to 30B. He also said the city should determine the applicable public-bidding law before issuing a solicitation and should consult with the Office of the Attorney General on the public-construction bid laws for certain procurements.
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