An interesting opportunity has presented itself in Oregon’s largest city, Portland, namely the possible revisions of contracting policies that have led to very expensive, no bid contracts apparently costing the tax and ratepayers extra money.

A newspaper report today claims that the city is giving sweetheart deals to certain consultants with out going through the competitive bidding process. They cite examples of these contracts and why they are such a good deal for the consultant, but not the taxpayers footing the bill. Certain city bureaucrats defend the practice claiming that is saves the tax and ratepayers money.

In the words of John Travolta from the 80’s TV show, Welcome Back Kotter, “I’m so confused!”

Generally, free market advocates like me believe strongly that private enterprise can usually deliver the bigger bang for the buck to the taxpayers, so if that is not happening here, then what is missing in this time tested formula for governmental success?

In a word it is “competition”

There are long lists of abuses that the city has adopted as standard operating procedures that really freeze out competition, which costs the tax and ratepayers a lot of extra money. Things like change orders that aren’t reviewed by the city council unless they exceed 25% of the original contract, (the story says most are just under the 25% level) is a good example of this type of abuse. Sometimes contractors will under bid a project initially, but then rely on change orders to make their profit (I saw this when I was in the legislature). Under current city practices, the contractor can charge a non competitive rate for change orders, which could lead to the taxpayers paying more than they should.

This and other issues highlighted in the news story have created a problem so bad, that in at least one instance, new city employees were hired to replace the contractor and it saved the city money!

Clearly, reforms are needed, which is the opportunity at hand.

I would suggest just a few changes in city contracting procedures that might positively impact the situation for the benefit of the tax and ratepayers.

First, make all change orders above 10% of the original contract reviewable by the city council.

Secondly, do not renew contracts without competitive bidding.

Third, allow review of competitive bidding criteria before the bid is published. Often, because of cozy relationships between bureaucrats and contractors a bid’s criteria are manipulated to give an advantage to one firm over another. (I have seen this also)

Fourth, never allow a consultant to recommend a contract proposal and then be allowed to bid and possibly obtain that same contract. It is a true conflict of interest and has led to some spectacular government contracting failures.

There are other practices that should be changed on the part of the city to deal with this problem, but this is enough for now. If these modest suggestions are adopted, then perhaps the perceived abuses will end and the public’s faith in government can be at least partially restored.