Saturday, April 16, 2011

University of Wisconsin releases Bid to outsource its document services requirements

Here’s a link to the bid document the University’s Purchasing Department released:

I’ve pulled the “blue” table from the bid document. Right after, that I added a second table, the one in “black”.

information disclosed in the RFP:

FY 09-10

FY 08-09

FY 07-08

FY 06-07

FY 05-06

Sales ($)












Info added by Joel:

avg revenue-per-copy






avg monthly volume






In the bid document, the University’s Purchasing Department describes the primary reason for “bidding out” the University’s document services requires. Here’s that description:

“The University of Wisconsin-La Crosse is seeking to enter into a local service agreement for printing services. The in-house Document Services unit will be closing on May 27, 2011 after the retirement of two long-term full-time employees. Given the age of the equipment and the high costs of equipment replacement, the University is looking at alternative ways of providing printing services to the UW-La Crosse community.”

Literal translation: the University has two long-term employees working at its internal copy/print center who are receiving high wages and hefty, expensive benefits. Additional translation: Apparently, the University’s Purchasing Department has not done the homework necessary to determine the actual current cost of operating the internal copy/print center, and, instead, is going to outsource the University’s document services requirements, regardless of the cost the University (and Wisconsin’s taxpayers) will incur because of the decision to outsource rather than continue to do the work internally.

I’m clueless as to why the Purchasing Department included “Sales” (Revenue) information in the Bid document. If that’s the total that the internal copy/print center charged to “customers”, then, inasmuch as most of the customers are departments within the University and inasmuch as the revenues are based on “unit prices” internally established (in other words, a self-generated price list, which was probably created without regard to a true understanding of, nor calculations of, “real cost”, then how are the “Sales” numbers relevant to this bid or to the University’s decision to outsource or not outsource? If the University wanted to increase the “Sales” (revenue) number, then all that would need to be done is “raise the unit prices.” Hell, I could do that in less than an hour. But, that’s not really relevant, is it? “Cost” is the “relevant” factor for a government agency.

To go, on, the Bid document contains a schedule that bidders are required to complete to show their “unit prices” for various copy/print/finishing services. The schedule is stupid. It does not enable a completely “objective” determination of “who the low bidder is.”

In spite of that fact, here’s what the Bid document says about the “Award” method:


“Awards will be made to the lowest responsive, responsible bidder. Responsibility is determined at the time bids are evaluated, using criteria which may include: previous performance; equipment available and operable in the bidder's plant to satisfactorily handle the type and volume of work being bid; production, technical, and supervisory personnel; experience in type of work bid; location of the plant; delivery of proofs; extra time required for delivery, and ease of communication with printer.”

To that I say, “gobbledygook”….. WTF does that mean?

Lastly, here’s the e-mail that I just sent off to the person in the University’s Purchasing Department identified as the contact for this Bid procurement:

From: joel salus

Date: April 16, 2011 10:14:22 AM EDT


Subject: RFB #UWL-710

I reviewed the above referenced bid document.

You've published the volume the internal document-services department has done the past few years (I suspect that's the volume of "prints/copies"), and you've published the "annual sales". I have no clue why you published the "annual sales" numbers. All those are - are "made up" numbers - determined by the "unit prices" your internal document services department is using to price jobs. All that would have to be done to increase "sales" would be to increase prices. But that's not even important, since the University is a public entity; all that's really important is, "what was the University's "cost of operation." So, my larger question is, has your department actually done the homework that's necessary to determine the "total cost" of the internal document-services copy/print center?

As to the matter of the bid document ..... On the schedule of services (where bidders are to insert their unit prices for those various services), there isn't a column for "estimated quantities" of those services. That being the case, how in the world is the University going to be able to objectively evaluate who the "low bidder" is?

I've studied bids of this type for many years, and in bids of this type (copying, printing and related services) there are generally (almost always) five "columns" included in the "services" bid schedule:

a) a column that contains a clear description of "the service" (one line for each service)

b) a column that clearly defines the "unit of measure" that bidders are supposed to base their unit price bid on,

c) a column that contains the "estimated quantity" of each service,

d) a column that bidders are to use to insert their "unit price" for each service

e) a column that bidders use to show the "total estimated cost" of each service (this column is the "by-product" of column c) x column d).

After bidders have inserted their unit prices and have calculated and inserted the "line item" totals, they then "add up" column e), to arrive at a "grand total" for their bid.

If you follow the above described procedure, then the Purchasing Department can make a "purely objective" decision as to "who the low bidder is." And, if you don't follow this procedure, then the Purchasing Department's determination of "who the low bidder is" will be subjective. That (evaluating the low bidder on a subjective, rather than an objective basis) is the wrong way to determine the "low bid" vendor for a procurement of this nature (for commodity services.)

I have one further comment to make. Whoever made the decision to discontinue the University-self-operated copy/print center and, instead, outsource the requirements to an off-site printing/copying vendor, should have his/her head examined. That decision was stupid. It says in the bid document that the reason why the University has chosen this method is because of two high-paid, long-term employees. To bidders, that means, "overpaid" and "high benefits". If you want to cut the cost of a University-self-operated copy/print center, then all the University has to do is to either reduce the pay and benefits to those who are already working at the center, or to terminate the current employees and hire two new employees at lower pay and lower benefits than are currently being paid to the two current employees. That isn't rocket-science. In addition, the "high cost" of new equipment - that's actually funny. Based on the "volume" the University-self-operated copy/print center has been doing, the University should easily be able to cost-justify the "lease" or "rental" of new copy/print equipment for the University's "document services" copy/print center. Any "reprographer" who's totally honest with you would tell you what I'm telling you. if the University does decide to "outsource" its copy/print requirements, I'd be willing make a substantial bet that the University's "total cost" for outsourcing will be as much as 2x greater than the University's current cost for the copy/print center. How do I know that? Well, for over 10 years, my company operated, as a sub-contractor for a prime-contractor, the Hillsborough County Government Central Copy Center. Prior to that, the County self-operated its own copy/print center. The County NEVER did the homework to determine exactly what its costs were. The County's people were too lazy to attempt the math. And, a consultant convinced the County that they should outsource the copy/print center ... let a "private contractor" handle it. So, that's what the County did. For years, the County's Purchasing Department and Communications Department have been "touting" that their decision to outsource is saving hundreds of thousands of dollars. That is simply not true. I should now. I was one of the owners of the reprographics company that got the contract. We made a small fortune .... because of the ignorance of the County.

I understand that your Governor would like to reduce the State's expenses and that he would prefer to privatize certain functions normally handled internally. As a taxpayer, I, too, would like to see the expense of government reduced. But, as to the University's document requirements, it is an absolutely dumb decision, cost-perspective-wise, to 'privatize and outsource' the University's document services requirements. I hope the people in your department are not lazy. Do the math! Determine exactly what it is it currently costing, determine what it will cost if you right-size your costs and acquire equipment and continue to do everything internally, and then compare that with the cost of outsourcing (the "total bids that vendors submit to you.) If your department is not willing to do the "homework" that should be done prior to committing the University's document services requirements to an outsource vendor, then shame on your department. One of the reasons why the cost of government is out of control is because people in government Purchasing Departments aren't willing to do the homework they should be doing. I encourage you to make your department an example for how things should be, and can be, done in a responsible, professional, "cost-concerned" manner!

Sincerely yours,

Joel Salus, C.P.A.

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