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Wednesday, 06 August 2014 13:32

Outbid or passed over? Haywood businessman questions school contract for cleaning supplies

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fr bruceA well-known businessman in Haywood County is questioning why school officials would steer a contract for cleaning supplies to a major national chain that’s more expensive instead of his own company.

Buying local and buying cheap don’t always line up. But this time, they do, and that’s what flummoxes Bruce Johnson.

“I am a local company with local employees, and the bid was cheaper. What more is there to talk about?” said Johnson, the owner of Champion Supply. 

Johnson has been selling dishwasher detergent and rinse agent to all 16 Haywood school cafeterias for more than a decade. But this year, the head cafeteria manager for the school system, Allison Francis, recommended switching to a national supplier, EcoLab.

In a somewhat rare move, the Haywood County School Board unanimously tabled the vote on the contract last month. The board typically rubber stamps bids and contracts recommended by school administration.

But this time, board members delayed the vote, saying they needed more time to understand the bidding process and rationale. It will be back on their agenda in the coming week.

To Johnson, the contract is worth fighting for. For starters, his kids go to Haywood Schools, so it’s his home turf.

“We know kids at almost every school across the county,” Johnson said.

But on principle, Johnson is an ardent believer that small businesses are the backbone of a strong local economy and job base. He’s been the president of the Haywood County Chamber of Commerce, serves on the Economic Development Commission and is a champion of the business community. 

What’s more, he’s on the board of the Haywood County School Foundation and has donated and raised thousands of dollars to the school system and co-founded two of the foundation’s signature annual campaigns.

His list of civic engagement includes the Folkmoot board, Smart Start and the leadership team of First United Methodist in Waynesville.

Local small businesses play a vital role in the civic side of a community — another reason to support his company over a national chain.

But at the end of the day, losing the contract would have a real impact on his employees.

“If I get emotional about this, it’s because real people are going to lose their jobs,” Johnson said. 

Champion supply is based both in Asheville and Waynesville. Of the company’s 12 employees, seven live in Haywood, including Johnson.

And four of his employees are directly connected to his school cafeteria contracts.

 

The bigger picture

There’s more at play than the $25,000 in dish soap and rinse aid Haywood’s Schools historically bought from Johnson each year.

A suite of two dozen cleaning products used in every nook and cranny of school cafeterias — oven cleaner, freezer cleaner, fryer degreaser, stainless steel polish, pot and pan scrub, hand sanitizer, even laundry detergent for the aprons and dishtowels washed on site — have been wrapped into one large, single contract this year.

Cafeteria workers, not school janitors, clean cafeteria equipment. They keep their own stock of specialty kitchen cleaning chemicals rather than sharing the school’s custodial supply — even down to the floor and glass cleaners. 

Johnson jumped at the chance to bid on Haywood’s full arsenal of cafeteria cleaning products. He’s provided all those same products for years to Buncombe and Henderson County school cafeterias.

And here’s where the stakes got even higher. The new contract for all of Haywood’s cafeteria cleaners wasn’t the only thing on the line in this year’s bidding.

Haywood, Buncombe and Henderson pooled their buying power and jointly bid out the cafeteria cleaning products — one contract would be awarded to service all three schools systems. 

A purchasing co-op among Haywood, Buncombe and Henderson school cafeterias has been in place for years, but until now was only used for food orders. More volume equaled more buying power, which equaled lower per-unit costs.

This school year, they decided to bid out cafeteria cleaning products this way as well.

Despite being cheaper, Buncombe and Henderson’s cafeteria managers joined the recommendation from Haywood to go with EcoLab. Every year, Johnson does $100,000 in business with Buncombe schools and $40,000 with Henderson, but he’ll lose all that if he is unable to convince the school systems to reverse their decisions.

 

Adding it up

Champion and EcoLab were the only two companies that submitted bids for the joint contract put out by Buncombe, Henderson and Haywood for cafeteria cleaning products. An analysis of the price lists for EcoLab and Champion’s products show that Johnson’s bid is half the cost.

At least if you base it on the actual volume of cleaning products used.

But Francis said she didn’t attempt to quantify the actual volumes used by the cafeterias when determining which would be cheaper.

Instead, she looked at a sample of the 10 most-used products and took an average of the pricing lists. 

Johnson said that method is flawed. Some of the products are used in extremely small amounts, while others are used in large volumes. While EcoLab may have been cheaper on some products, Champion is cheaper on those that were used in larger quantities.

For example, EcoLab was cheaper on glass cleaner.

But Buncombe only spent $208 on glass cleaner last year.

“They don’t have a lot of glass to clean,” Johnson said.

Meanwhile, Champion is cheaper on rinse agent, used at a much greater quantity. Buncombe spent $34,000 on rinse agent.

Using a blanket average from a suite of cleaner prices doesn’t square with what’s actually used in the kitchens. Johnson said Francis should take the extra time and effort to accurately calculate which bid was higher.

Francis countered that would just be too complicated and “hard to figure out.” 

But Johnson disagreed, even providing spreadsheets that did the math for her.

Francis said she was simply using a different method.

“I understand his math. That is not how we determined it. We didn’t look at actual use,” Francis said. “The way we chose to look at it, we didn’t weigh things out.”

Johnson countered her method is simply wrong.

 

A trial run

Francis defends her claim that EcoLab would be cheaper by pointing to a trial run last year, allowing Champion and EcoLab to go head-to-head in a real-world scenario.

She divided schools into two groups, with eight schools in each group. One would use dish detergent and rinse aid from Champion, and the other would use EcoLab.

Francis did the trial in hopes of reconciling an outlier in product pricing between the two. When it comes to rinse aid, EcoLab is astronomically higher — many times higher than Champion, in fact.

“I thought, ‘how could they be so far apart?’” Francis said. “They were so far off on the rinse product, something didn’t jive for me. How could one company be so far off on this one product?”

The trial was aimed at determining real-world costs from both.

“Honestly with any other product I wouldn’t have done it, but with chemicals it is so hard to compare,” Francis said. “If you look at Dawn versus grocery store brand and chose that because it is cheaper, it may not last as long.”

After half a year, Francis compared what the two trial groups spent, and the schools using Champion’s products had spent $2,000 more. So for the second half of the year, she switched all the schools over to EcoLab.

Francis said the trial year with EcoLab came out “several thousand cheaper” than past years under Champion. Francis said the total cost of cafeteria cleaning supplies for last school year was $20,000, compared to $25,000 in previous years. 

But there’s a major flaw in the trial, Johnson said.

The cafeterias still had leftover inventory from Champion that was used up over the course of the year. Since there was existing stock on the shelf, the school system didn’t have to order as much from EcoLab, so the cost for the year seems lower.

Francis said she accounted for both existing inventory and leftover inventory, but Johnson questioned her calculations.

“There is absolutely no credibility in her trial. She can’t quantify what was used and what wasn’t,” Johnson said.

He said Francis doesn’t really know how much inventory was at each school.

The $25,000 spent on cafeteria cleaning supplies is small compared to the total Haywood cafeteria budget of $5 million. But the cafeteria operations have been struggling to stay in the black in recent years. Money collected on lunches has been falling short of expenses.

“I have had to look under every rock to find every cent that is out there,” Francis said.

“Once a month we sit at this table and go over every line item and try to figure out where can we save money,” Haywood Schools Superintendent Anne Garret said.

To Johnson, that’s all the more reason to go with his company as the lowest bidder.

“This is tax dollars when everyone is screaming and yelling for money,” Johnson said.

As for the discrepancy in the pricing for rinse aid, Johnson said EcoLab is using the oldest trick in the book for gaming bids.

“Bid strategy is they make all their money on one product. They break even on everything except one product and make all their money on that one product. They look great on everything else,” Johnson said.

Francis instead saw the lower price of Johnson’s rinse as a red flag, theorizing the quality wasn’t as good, when in fact, EcoLab is highballing the rinse aid in order to lowball its other products, Johnson said.

 

Other factors

Francis said even if she had accurately calculated the true cost of the bids — factoring in the actual quantity of the actual products rather than the blanket pricing method skewed by a handful of outlier products used only in small amounts — there were other more important factors that weighed into the contract decision, like customer service and product quality.

Johnson said he doesn’t understand that either.

“We have always been told we have excellent service. We always respond that day or within 24 hours,” Johnson said. He said he makes regular visits to all the school cafeterias.

“The kitchen people are so great. I love seeing them and they love seeing you,” Johnson said.

Johnson questioned how often Francis got out to each of the school cafeterias and how much she knew about the cleaning side.

Francis also claimed that EcoLab’s products were better, citing anecdotal comments from kitchen staff.

Johnson challenged where she came up with that.

“No one has ever complained about our chemicals,” Johnson said. He speaks to the school cafeteria manager when making deliveries and always inquires about any concerns.

“I say ‘are you happy with everything, is everything working fine?’ and they are always happy. That’s customer service 101,” Johnson said.

Of course, there have always been personal preferences.

“I’ve been in kitchens where one person says ‘I don’t like your stainless steel cleaner’ and another woman is like ‘I love your stainless cleaner,’” Johnson said.

Francis said EcoLab also inspects machines at all the sites once a month and sends an email report saying whether the dishwasher spray arms appear to be working correctly, in case the women who run the machines all day didn’t notice, Francis said. Johnson said he does the same whenever they restocked cafeterias, and faxed a report.

Francis cited other pet peeves about Johnson’s bid. She said Johnson didn’t use the provided form, for example.

But Johnson created a nearly duplicate version of the bid form in a spreadsheet, with the same columns, rows and fields.

The form Francis provided was a scanned copy of a spreadsheet. Rather than send bidders the Excel spreadsheet itself, she printed it out, scanned it, and sent them a PDF of it — a format that couldn’t have data directly inputted to it, prompting Johnson to recreate the form.

 

What’s next?

It’s rare for the school board to intervene and second-guess the purchase contract recommended by school administrators. The situation becomes even more complicated since the bid was done jointly through the purchasing co-op with Buncombe and Henderson schools.

“We have never come across an issue like this,” Francis said.

If the Haywood school board bucked EcoLab in favor of Champion, it could throw a wrench in the contract for the other two school systems as well.

Haywood School Assistant Superintendent Bill Nolte said Haywood has never deviated from the co-op after crafting a joint bid. 

“It is usually pretty routine because you are almost always going with the lowest one,” Nolte said.

The school system is obligated to go with the lowest bidder, in fact, and can’t make exceptions to support local businesses, Superintendent Anne Garrett said.

“That would be illegal,” Garrett said.

The only time the school system would deviate from the lowest bidder is when there’s a quantifiable difference in service or products.

Johnson said it’s a shame that despite lower prices and local service, he can’t overcome the window-dressing that a giant, international corporation puts on its contract.

“Where these other bigger companies get us is they have the slick marketing and a huge team at some national headquarters that puts together bid packages,” Johnson said. “Meanwhile, it is Bruce Johnson in the back office with a Diet Coke putting his together.”

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