Wednesday, November 7, 2012

George Leventhal's Questions to MCPS on $2,042,000 Appropriation

Video of the November 6, 2012, Montgomery County Council Public Hearing on the $2,042,000 Appropriation for MCPS to buy 2,000 Promethean brand Interactive White Boards and wireless Internet access through a 5 year lease. 
MCPS wants to buy only the Promethean brand of board and to utilize the Promethean World, LLC partners Cicso and Dell for the procurement.  No contracts or supporting documentation have been made public by MCPS. 

At the end of the public hearing (minute 22 of video), Montgomery County Councilmember George Leventhal made the following statement:
1.  Was this contract competitively bid? 
2.  Is the supplier reliable in the long term?  
3.  Are we making a major financial commitment to a company that is financially shaky? 
4.  Are local companies having the opportunity to bid on this contract? 
5.  The way that this rebate situation is structured, is it less favorable to the taxpayers and more favorable to the school system? 
6.  Are we appropriating, in effect, money to the school's budget above and beyond the reasonably generous budget they already got? 
The County Executive himself in his letter to the Council, in his transmittal letter identifies this concern about the financial viability of the supplier.  Larry Bowers memo does not address that concern.  And, I know we are all working very hard.  I'm not casting blame on anyone, but neither does Essie McGuire's material for this public hearing address that concern. So, these concerns that have been raised by my constituents are questions that I would like to have answered to. I don't seek to get them in this meeting, but I would hope that we would have the chance to review them when this comes to the full Council. 

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  1. In response to Councilmember Elrich's concerns about the price of Promethean World stock (00:26:00 in the video) -- he mistakenly says that "PRW is trading between 16.25 and 17 pounds" [British Pounds Sterling]. In fact, PRW is trading at about 16.25 pence (about 25 cents US) -- which is 1/100 of 16.25 pounds. Mr. Elrich corrected his misstatement after the meeting (on Facebook), but his correction does not appear in the video.

  2. The total market capitalization of PRW is currently £34 million -- or about $54 million US. In comparison, PRW's major competitor, SMART Technologies (NASDAQ:SMT), has a market capitalization three times as high, and their most recent financial report -- just released today -- shows that they are still profitable, whereas PRW showed a huge loss in their most recent income statement.

  3. The residents and taxpayers of the County would like Council to direct staff to answer Councilmember Leventhal's questions. The staff report did not answer them. In addition, we ask that Council direct staff to provide independent research to answer these questions. The staff report continues to quote MCPS rather than provide the taxpayers with independent answers. We also want to remind the Council that, in answer to Question 6, the answer is, yes. In addition to the $2.1Billion you appropriate to MCPS, you will be giving them another $2Million. E-rate rebates go into the County's general fund. They are not to be used exclusively for MCPS. The money could go, for example, to our stressed libraries.

  4. Regarding Question 5, MCPS, under the fiduciary eye of Council, purchases Promethean boards at full retail cost, even though it is possible to purchase them at a much lower cost. In this way MCPS 'jiggers' the system, so they receive more funds as e-rate rebate monies. Of course, this assumes all the e-rate monies go back to MCPS, which Council is not required to do. So, the answer to Question 5 is, yes, the 'rebate system' (set up by MCPS) is less favorable to taxpayers and more favorable to the school system.

  5. @Paula (question 5 comment). The e-rate system does not work the way you describe. First, Promethean boards are not eligible for e-rate funding. The fund only supports purchases of telecommunications services and some networking. Second, even if the purchase were eligible, the fund's rules require competitive bidding as a way to try to minimize the costs. Many schools lose out on funding due to the administrator's hyper technical interpretation of the competitive bidding rules.

    So, while the purchase may or may not be wise, and the use of the e-rate rebate may or may not be wise, the e-rate fund is not driving up the cost.

    1. It is the way the E-Rate program is being used that drives up the MCPS budget. MCPS is paying full price for covered services. Then they hang on to the rebate money. Instead, they could buy the covered services at a discount and the county would never need to fund them to pay for the full price of the covered services.

      E-Rate has nothing to do with the purchase of Promethean Boards. The anonymous comment above is correct. What MCPS does with the E-Rate program and how the Council spends the E-rate money is one issue.

      MCPS wanting to hog the E-Rate Rebates and THEN spend that money on a NO BID procurement with an overseas company is a whole other issue!

      The MCPS budget is being over funded because MCPS is not buying at a discount. They are buying at full price when they do NOT have to under the E-Rate program. The Council OVER FUNDS MCPS and MCPS is hanging on to the change.

  6. @Anonymous, thanks for your comment. I understand that the original purchase is not through the e-rate rebate. However, MCPS purchases the 'technology' at retail (no comment), and that inflates the amount that the rebate is. They then frame the rebate as if it can only be used by MCPS. Libraries are part of this program, too. Why not spend the money on our stressed libraries, as an example.

    This is your elected council's decision. If they approve this, they are adding >$2million to the MCPS $2.1Billion budget, instead of using the >$2million on other desperately-needed county programs. Councilmembers who will vote on this are: Valerie Ervin, Marc Elrich, George Leventhal, Nancy Floreen, Nancy Navarro, Hans Riemer, Craig Rice, Phil Andrews, Roger Berliner (council president).

  7. Councilmember Leventhal has asked important questions. Mr. Leventhal, would you please ask these same questions regarding FieldTurfTarkett?


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