NIGP, Periscope by Colin Cram

Posted on April 11, 2015 by

2


Organisations such as NIGP frequently struggle to exist on membership subscriptions alone. They therefore have to find other sources of income. My interpretation of the issues identified by Jon Hansen is that the need for income may have led the NIGP into what appear to be some shady and unwise deals. In particular, if selling its product and services code puts a company in a position effectively to restrict competition for consultancy business, that would be a serious error of judgement. In addition, outsourcing NIGP’s consultancy arm appears to put Periscope in an extremely powerful position. I wonder if NIGP understood fully the value of what it was selling. Transparency and competition underpin professional procurement. That seems to have been lacking.

conflict of interest2

It looks to me as if the current chief executive, Grimm, may be attempting to justify the award of contracts – particularly the consulting award to Periscope, by stressing the use of a “competitive RFI” process, thereby putting things right for the future. However, is he hamstrung by decisions of his predecessors? That one of his presidential predecessors – who was actively involved with the NIGP – moved to Periscope straight from her role as the top procurement executive for the State of Arizona, will hardly have made things easier. So, what is to be done?

Grimm needs urgently either:

  1. To demonstrate that
    1. decisions were properly taken,
    2. value for money obtained from the contracts and concessions with Periscope,
    3. that current agreements do not put non-Periscope companies at a disadvantage and
    4. that there is no impropriety or
  1. In the event that any element of the above cannot be demonstrated, take swift action to remedy matters.

In situations like this, perceptions matter and reputations can be unfairly damaged. Transparency is vital and urgent and could be achieved through the following actions.

  • The NIGP needs to publish its contracts with Periscope – in full, including how much Periscope paid – and associated correspondence.
  • There should be an independent assessment of the market value of both contracts. The thought that occurs to me is did Periscope pay less than the market price?
  • An external independent investigator should be brought in to examine emails and any other documentation between Grimm’s predecessor (or anyone who was formerly involved with the NIGP and is now working with Periscope) and the vendor, to be certain that they were not involved in negotiations with Periscope either at the same time or subsequent to their having discussions with Periscope about a future role in the company without their having declared a conflict of interest. In the meantime, Grimm should ensure that all correspondence and that of other NIGP Board members, electronic or otherwise, should be retained for scrutiny by the investigator.
  • In choosing an investigator, an independent organisation such as the Association of Certified Fraud Examiners should be consulted and I would recommend that Grimm puts in a call to them as soon as he becomes aware of this ‘blog’. Any delay could risk perceptions that not all evidence may have been retained.
  • Any strange transfers of money should be checked and all Board members at around the time the contracts were let and subsequently up to the present day should open up their bank accounts for scrutiny by the independent investigator.
  • Checks should be made for any other links, direct or indirect (e.g. through families of friends), between Board members who were around at the time the contracts were being let and Periscope, or any other gratuities.
  • Grimm should take immediate steps to ensure that past emails and correspondence are not destroyed or mislaid, deliberately or otherwise.
  • I am not aware of what other contracts and concessions NIGP may have let, but they should also be considered for scrutiny.
  • If there does appear the possibility of illegal action, the police (federal police?) should be notified.
  • It could be difficult to get US states and institutions to move to another coding system. It would be interesting to see what the contract with Periscope says on the topic and whether it tries to impose restrictions.

contract-stock-agreement-xsm-crop

I hope that I am not being unfair, but I am reminded of the Darleen Druyun case. She negotiated with Boeing on behalf of the US Air Force after she had been offered a job by Boeing. http://www.nytimes.com/2004/10/08/business/worldbusiness/08iht-boeing.html?pagewanted=all&_r=0 People do move from public sector positions to senior positions with suppliers, but such moves must be done in a way that demonstrates that there has been no conflict of interest.

All procurement associations and institutes must award contracts and concessions in a competitive, transparent and non- discriminatory way if their credibility is not to be dented. Their professionalism must be of the highest standard and be seen to be of the highest standard. Under some circumstances this could work against their income generation. However, standards and transparency must not be sacrificed for a quick buck or because they cannot pay their way.

Lack of transparency and competition will lead to suspicions of impropriety, whether justified or not, and could damage people’s reputations, fairly or otherwise. The issue with the NIGP is not going to go away and suspicions about the role of individuals such as Jean Clark seem already to have been voiced. The reputation of public procurement also seems to be at stake. NIGP needs to preserve its credibility and reputation and protect that of current and former staff.  The actions I have proposed should enable it to do so – and quickly.  Assuming Periscope has acted properly, it would be in its interests to cooperate fully with any investigation and agree to the contracts and related documentation being published.

Jon Hansen deserves much credit for spotting and highlighting this issue.

 

Just started following the NIGP #CodeGate story? Use the following link to access the Post Archive; https://procureinsights.wordpress.com/nigp-codegate/

30