Archive for Wednesday, October 19, 2005

District eyes big savings with creative purchasing plan

October 19, 2005

When Darlyn Hansen set out to buy a new public address system for Tonganoxie's football field he found what he wanted on the Internet. And at the right price.

The school district had budgeted $18,000 for the sound system. Hansen bought it new on eBay, the online auction site, for $15,000, and, he said, it was twice the system the district expected to buy.

Not all school districts are interested in hiring a consultant to shop for school equipment.

In April, Lawrence voters approved a $54 million bond issue aimed at renovating, expanding and replacing buildings throughout the school district.

But school officials aren't ready to follow Tonganoxie's lead in hiring a consultant to go bargain-shopping for school equipment, often on the Internet.

"It sounds interesting," said Tom Bracciano, division director of operations and facilities planning for Lawrence public schools.

But Bracciano, who has been with the Lawrence district for 23 years, said it's not a direction he recommends.

"You're better off putting it out to competitive bids for new equipment and buying it that way -- that's the way we'll do things," Bracciano said.

Bracciano said the Lawrence school district will reuse as much of its own equipment as possible.

"What we're buying we're buying new," Bracciano said.

He expressed concern that districts that buy their own equipment might wind up without product warranties.

"If it's broken, who follows up on it -- and there's maintenance contracts -- just a lot of different issues," Bracciano said.

Bracciano said these costs are figured into bond elections.

"If you structure your bond issue correctly, you have money in there to do that," Bracciano said. "That should have been figured in the square footage cost for the new building."

The purchase was exactly what the Tonganoxie school board was hoping for when it hired Hansen's company, Micro Resources, to buy equipment for the district.

"The sound system that we put in would probably have cost $30,000 through a contractor," Hansen said. "That's significant."

School equipment needs took center stage after district voters approved a $25.3 million bond issue last November for construction of a new middle school, an addition to and renovation of the existing grade school and additions to the existing junior high and high school, which will be converted into a four-year high school.

Last summer, Hansen, whose business sells office equipment, including microfilm equipment to banks, suggested to board members that there were less expensive ways to buy equipment for the schools than using a general contractor.

"My point was to think outside the box," Hansen said of his plan for paring equipment expenditures.

"When you have the specifications, you can buy anywhere. That's where the Internet comes in. You can deal with the manufacturer direct, the jobber, the wholesaler and the retailer."

In the past few months, Hansen said, he's purchased roughly 50 large items -- such as restaurant-sized dishwashers -- and numerous smaller items. The purchases to date total between $35,000 and $40,000, Hansen said.

And according to Hansen, there's been a major savings.

"It's over $100,000," Hansen said. "And I haven't gotten started really, that's just what I've done so far."

Hansen said he's spending from 20 to 30 hours a week on district purchasing, making use of his business experience, business contacts and the Internet.

"I would say that probably the Internet gives us an option that we didn't have," Hansen said, "whether it's us personally, or the school district, to be able to find things worldwide."

The school district budgeted $10,000 to pay Micro Resources a $40-an-hour consulting fee, Hansen said.

At a later date, Hansen said, the school board will review the work and decide whether it will be renewed.

School Superintendent Rich- ard Erickson said the goal of Hansen's "competitive purchasing" is to maximize the quality and quantity of equipment.

Erickson said Friday he's pleased with the results he's seen.

"I'm really impressed with the savings that can be realized through this approach," Erickson said. "And obviously with those savings we can hopefully continue to improve our educational programs with our kids and add programs for the future."

Doing the work

Using specifications and drawings provided by the architects, Hansen visits various manufacturers' Web sites and often contacts the manufacturer directly.

It can pay off to talk to manufacturers, rather than just accept their published prices, Hansen said.

"... if they want the business," he said, "they'll sharpen their pencils."

Hansen's shopping list includes large-ticket items --commercial kitchen equipment, auditorium-sized sound systems and even hundreds of student lockers to line the hallways. It helps, he said, when he's buying in bulk.

"When you are buying a lot of lockers you have a lot of clout with the manufacturer," Hansen said, pencil in hand. "I need to secure today's price for 2007."

The shopping list also includes smaller items, technical things that might not be noticeable when touring the school -- such as safety gas valves and hose reels. All can be had at a price, and in Hansen's view, a lower price.

Although the school district did not set limits on spending, Hansen said he frequently talks to Erickson, and construction manager Kris Roberts about prices of individual items.

When asked Monday what she thought of the buying program, Roberts said, "So far it's clearly saved some money."

Hansen described himself as a bargain shopper -- personally and professionally -- so he's not afraid to ask for a better price.

"I like to wheel and deal," Hansen said, grinning. "To me that's the fun of it."

Hansen works with a 2-inch-thick book containing specifications compiled by the school's architects. It includes a detailed list of all the equipment needed for the new middle school.

The technical information can be difficult to understand, he said, but after reading the specs and comparing the information to the architects' drawings, he began to understand what was needed and where it would be used.

This procedure won't work for all items the district needs, Hansen said.

"That just wouldn't be feasible," Hansen said. "We can't look at everything ... we're just trying to buy smarter."

Purchasing oversight

Jim Truesdell is one of a dozen or so local individuals serving on the school district's building committee. The group acts as something of an informal public watchdog over the school construction project.

Truesdell said when he learned Hansen's company was buying products for the district, he was concerned about a conflict of interest.

But Hansen said he checked with Kansas Association of School Boards about the legality.

"I could not do this personally," Hansen said. "But because I have a company, that makes it legal."

Truesdell also has expressed concern about damages.

"What happens if the equipment is being damaged in between while it's being stored and when it's put in the school," Truesdell said. "It's the school's property and the contractor that's going to install the equipment isn't going to be responsible for the equipment if it's damaged."

In a two-page report about the purchasing program that was recently given to school board members, Erickson, the superintendent, answered this question. He said that when equipment is stored on school property the district's property and casualty insurance will insure the equipment from theft, fire or vandalism.

And, Erickson said, "Prior to new or used equipment being sent to the individual school buildings, Mr. Hansen will inspect the equipment, clean the equipment and make sure the equipment is in good working order."

Erickson also touched on another concern that has been voiced -- that in hiring Hansen as a consultant to look for the best prices, the district is sidestepping the bidding process.

But Erickson and Hansen, said that's not the case. In his report, Erickson stated that the school district "will continue to consider any and all vendors who wish to submit price quotes for equipment and services."

Hansen said he understands the concerns about how the district is buying equipment.

"I think people are concerned because it's another way of doing things," Hansen said.

Hansen said his buying method boils down to one thing: "I'm trying to maximize today's dollar for tomorrow's future."

And Hansen noted, new equipment would come with warranties, as they would if purchased through a general contractor.

Truesdell said he appreciates the school district's effort to save money.

"If this process works and the school is saving 50 percent to 70 percent costs on equipment ... that's going to be a process that's going to be good not only now but in the future, for our school," Truesdell said.

Although Truesdell ex-pressed confidence in school Superintendent Erickson, he said he still feels responsible for making sure the district benefits from Hansen's work.

"I know he (Erickson) is a good business manager, so I basically trust his judgment on that," Truesdell said. "I also have a duty to oversee what's going on, because that's what this committee is all about. We do need to be able to prove to the public that we're actually saving money and getting the same quality of equipment as we would get through a bidder."

Meanwhile, Hansen predicts that this type of shopping will be a growing trend. "It's something that's different," Hansen said. "You're going to see more and of things like this occurring, just because of the Internet access to so much information."

Andy Anderson, an architect with the DLR Group, the architectural firm working on Tonganoxie's school upgrades, described Tonganoxie's shopping approach as "a great idea."

"It's not unusual for school districts to purchase larger pieces of furnishings and equipment independent of the general contractor," Anderson said. "In doing so they can avoid a general contractor's markup."

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