Saturday, May 09, 2009

Why Did Daniels' Administration Sign Sweetheart Contract With Pitney Bowes?

WISH-TV's Karen Hensel takes a hard look at a $37 million, multi-year contract the state entered into with Pitney Bowes in 2007 to handle printing and postage needs of state agencies. The Department of Administration claims the contract saves the state $4.9 million, but it can provide absolutely no documentation to back up that claim. In fact, because the contract sets a minimum payment to the company whether the services are utilized or not, the state has been forced to pay Pitney Bowes over $700,000 for services it never performed. Hensel reports:

In August 2007, the state signed a contract with printing and mailing giant Pitney Bowes. It’s a contract worth $37 million per year. Rob Wynkoop, Deputy Commissioner of Procurement for the Department of Administration, said the state has saved money.

“Since the inception of the contract in August of 2007, we’ve saved 4.9 million dollars,” said Wynkoop.

However, the state can’t readily back up that dollar figure with documentation . . .

The state also can't explain why, if the printing service done by private company Pitney Bowes is so good for taxpayers, the BMV hasn't steered their way. Also, why does the Hoosier Lottery put its money elsewhere? Why do state lawmakers vote against using it? . . .

“Clearly this is a contract that, in this particular interest, is favoring
the contractor. It’s really kind of a sweetheart deal,” said Vaughn.

How sweet? The state has had to pay more than $723,000 since the start of the contract to Pitney Bowes for work never assigned. That's because the contract requires Pitney Bowes to be paid $37 million even if they don't do $37 million worth of work.

When state agencies don't use Pitney Bowes it means less work and triggers the reconciliation fees.

After nearly two years, state officials say they are finally working to reduce those extra fees paid for work not assigned.

I-Team 8’s Karen Hensel asked, “Would part of it fix it if you brought in some of these other state agencies who say ‘No, we're going to go off and do our own thing?’” Wynkoop answered, “We are absolutely doing that. And that's how you fix the reconciliation.”

Hensel points out in her report that the state paid over $34,000 to build out office space for Pitney Bowes to use in a state government building and picks up all of their operating expenses (computers, phones, etc.). The Department refused to grant Hensel and a WISH-TV film crew access into the office space occupied by Pitney Bowes. A Department of Administration spokesperson acknowledged that no other contractor receives this sort of favored treatment. The state paid a consulting fee of $120,000 for the work of Jay Pirtle to prepare a report for the Department of Administration upon which it relied in putting together the contract with Pitney Bowes.


I know said...

And why would this be a surprise? There are far bigger sweetheart deals that no one will report on that have very badly gone wrong!

It is all about who you know and not what you know.

Governor Daniels told the Butler Grads his generation is self indulgent and boy is he right!!!!

Sad thing is his appointees are the fine people making the sweetheart deals.

The television stations won't touch a forty year deal gone very bad because of the pressure applied to the media by the contractors that got the deal. Ask WRTV Channel 6.

Paul K. Ogden said...

Gary, do you know how long this contract is for? The trouble is they give these vendors long term contracts which is essentially handing them a government endorsed monopoly. The purpose of privatization is to bring competition into the delivery of government services. That doesn't happen when you give a vendora long term contract where the vendor is insulated from contract.

I'll cringe if I find out they signed a 10 year contract for photocopying.

I know said...

Read the Indy Star today and see the Lauth article and then ask the Gaming Commission why the same people were give a forty year "sweetheart deal" contract after they missed financial deadlines to post a multi million dollar bond.

It appears Lauth had $250,000,000.00 in unsecured loans and still failed to pass the litmus test and the deadline and they were still given the contract after missing a financial obligation by five months that any other contractor would have to meet.

Now the contract has selectively defaulted three times and is rated at the bottom of the pile.

If Pitney Bowes is getting paid for work they do not do then the folks that got contracts handed to them after they wrote them for the State and missed the deadlines really got s sweetheart deal!

Give a kudo to the Governor for calling out the self indulgence! Now let us all ask him to have the Inspector General, the Attorney General do something about the problems. That is what they are put there for.

We all know it will take a new Federal US Attorney to weed out all of the messes just like the Pitney Bowes for being paid for work they do not do. In most circles that is called ghost employment or fraud. In Indiana it is called "sweetheart" deals.

Diana Vice said...

This sounds familiar. The Educational Service Centers claim that they saved taxpayers millions on overpriced roof jobs via a no-bid contract scheme that favors an out-of-state roofing company when the opposite is true. They come up with these extraordinary figures of cost savings to taxpayers to justify their existence, which is why we need auditors to check these claims out. We should never take their word for anything. Taxpayers have been lied to too often.

Paul K. Ogden said...

FYI, since when do public officials believe they have a right to keep reporters off of public property. This happened at the Department of Insurance where they refused to let reporters videotape the expensive furniture a supervisor over there bought.

Anonymous said...

Privatization is great - so long as I'm the one who gets the contract. Otherwise, it's nothing more than a weak excuse for folks in office to fill private coffers with money taken from OUR paychecks.
The answer to government spending isn't to become more efficient via privatization. That's the lie that people like Governor Daniels use to enbable their crimes. The answer is smaller government. Reduce the role and size of government until it's nothing more than a legislative body with courts and minimal staff to maintain critical operations.

I know said...

If the Administration Appointees don't allow the media to report then the contractors that get the contracts use their "Political" clout and persuasion to have media bosses ignore the story or the bosses sometimes tell their reporter employees if they do not quit digging and telling the story the reporter will lose their jobs at the request of the Good Old Boys.

It is all about self-indulgence, greed and power just as the Governor told the people at a public pulpit yesterday.

The United States has a document that has an item that allows Freedom of the Press. In Indiana it appears Freedom of the Press and reporting is only for the elite, wealthy and insiders.

I hope some reporter proves me wrong and keeps digging.

Downtown Indy said...

Paul, preventing citizens from photographing/videotaping anything (even from the vantage point of a public street!) is becoming commonplace. The Constitution doesn't say you are presumed not to be a terrorist until proven guilty.

Just one recent example of that:

so it's not surprising that a camera INSIDE would be seen as a threat.

Downtown Indy said...

Oh but the closing paragraph is so memorable:

"Suddenly, the city's vaunted sports strategy was face-to-face with a new reality. The Colts represent the National Football League, one of corporate America's most powerful combines. Proximity to this corporate power is why we've wanted an NFL presence here. But this is also a power that dwarfs our resources and, when necessary, is prepared to bluntly remind us how lucky (and small) we really are."

I know said...

If the Governor truly is interested in running for President and he has stated people need to have solutions and quit moaning then maybe he needs to take an evaluation of the good people his friends of wealth, power, self indulgence and selfishness have trampled on, ruined and scared and maybe reach out to some of them for solutions.

People that have battle scars for doing the right things and getting shown the "facts" of life of the rich and powerful probably have some great solutions to offer and implement to clean up the mess.

It is the true definition of experience when you either do not get what you wanted or had someone remove you for reasons of self gratification that creates experience and wisdom. Those people screwed once would surely not let it happen twice.

Maybe a run for national power ought to be laid with a foundation of REAL people other than the friends and family plan that have put Indiana in the poor ethical position it is in. The greedy and wealthy in Indiana have had their chance. Look at where the mess is now.

Governor go back to the people. You did it once. It works.

Paul K. Ogden said...


That whole terrorist nonsense is just that...nonsense. I'm pretty sure the the terrorists are not waiting to get videotape of DOI or a copy center to launch an attack.

But, hey, it makes for a handy excuse when you can claim threat of terrorism.

Anonymous said...

Check the Wish-TV website for the Pitney story. It's no longer available. Hmmmm... I wonder why? Maybe it was filled with misleading statements and shoddy reporting. Instead of banging on the Guv and his team, maybe you should bang on the press a little more. Don't believe everything you see.