recommended procurement reforms
(TRENTON)-Governor James E. McGreevey announced today that he will
take immediate steps to begin renegotiation of the Parsons contract to
obtain substantial concessions and modifications for New Jersey. The
Governor said the state also will begin the process of seeking new
proposals to replace the vendor, should the state decide to cancel the
McGreevey said he also would take steps to implement the procurement
reforms recommended by the management audit team.
actions follow delivery of a management audit, requested by the
Governor on January 24, and conducted by a team of legal experts. The
audit examined the procurement and performance of the contract granted
to Parsons Infrastructure and Technology Group to provide the vehicle
emissions inspection system at state-operated inspection centers.
"I launched this review to better understand how the Parsons contract
went so terribly wrong, what we can do to fix it, and how we will
prevent it from ever happening again," said Governor McGreevey. "The
recommendations set forth in this Report outline the actions the State
must take to restore integrity and value to public contracting."
management audit team's report provides key recommendations on how the
State can prevent another debacle in the future while suggesting the
best ways to fix the current contract.
report concludes that the state would be best served by keeping the
existing contract, but only if renegotiation results in significant
concessions and modifications. The report recommends termination of
the contract if the renegotiation fails to achieve those results. The
report also recommends proceeding with the development of a Request
for Information (RFI) and a Request for Proposal (RFP) to find another
vendor, in the event that the renegotiation fails.
McGreevey, however, said that he will go beyond the report's
recommendations and will order that work begin immediately on the
development of the RFI. McGreevey is asking his Administration to
prepare a Request for Information to solicit interest from other
vendors in running New Jersey's inspection program.
directed my administration to immediately begin preparing to seek new
bidders in the event that our renegotiations do not achieve the
results we will demand for the New Jersey public," Governor McGreevey
said. "We are fully prepared to take such action, if needed."
addition, the report recommends the completion of two studies to
determine the most effective means to conduct inspections - private or
centralized. To prevent a reoccurrence of the Parsons debacle, the
Report also recommends completely reforming the procurement,
management and supervision of public contracts.
seek substantial modifications and concessions from Parsons through
renegotiations," said McGreevey. "Precipitously terminating the
contract would likely further inconvenience motorists and should only
be done as a last resort. I have authorized my counsel's office to
lead these negotiations which should begin immediately. I am also
asking Treasurer McCormac to work with my counsel's office to develop
executive and legislative action to implement procurement reforms."
report represents a blueprint for new procedures and protocols that
will ultimately restore the public's trust in contract procurement,"
said Treasurer McCormac. "Our reforms will encompass every phase of
the contract process-from concept and bidding to contract award and
compliance. In revisiting the wrongs and abuses of the past, the Team
has issued clear recommendations on how to bring fairness and
integrity back to the public contract award process."
Reflecting its work with the Team, DEP today announced a new rule
proposal that provides cost savings to taxpayers and reinforces a
commitment to avoid mistakes made in the past. DEP's new rule proposal
lays the groundwork for a federal petition to modify the inspection
cycle from two to four years for all new models.
proposed rule also incorporates the latest technology for motor
vehicle inspections known as On Board Diagnostics into the State's
testing system. Given the high contribution of motor vehicle emissions
to the State's air pollution problems, New Jersey is required under
the federal Clean Air Act to install the new OBD testing system to
achieve essential clean air benefits. DEP is establishing a more
realistic start date for OBD, ensuring that the State is ready to
transition to the new inspection process with minimal errors and
inconvenience to New Jersey motorists.
of this review team has been crucial to developing a new approach that
will reduce cost to taxpayers and increase convenience for motorists
while still ensuring cleaner air under the program," Commissioner
Governor is also asking Commissioner Fox to lead a comprehensive study
of New Jersey's hybrid vehicle inspection system.
look at whether New Jersey's combination of private and centralized
inspections best serve the State and the motoring public, and if not
what changes are necessary," said Commissioner Fox. "One thing that
was clear to me during this review was the injustice perpetuated on
small business owners who face financial ruin because of the promises
made by the previous administration."
January 24th, the Governor announced that he was launching a 90-day
management review of the State's $500 million auto emissions testing
contract with Parsons so that his administration can prevent any
further waste or mismanagement of taxpayer dollars that resulted from
the procurement and implementation of the contract by the previous
course of the 90 days, the Team met with over 35 individuals, reviewed
extensive documentary materials, received written statements and
responses from interested parties and considered extensive evidence
such as testimony and statements of witnesses from prior
investigations into the Parsons contract.
recommendations in the report released today are as follows:
Renegotiating the Contract, which will allow the State to obtain
modifications and concessions from Parsons. To avoid any further
disruption and inconvenience to the public, the Report strongly
suggests renegotiating the current contract and requiring
significant modifications and concessions from Parsons, i.e.
monetary concessions or reducing the duration of the contract by one
year to August 2004.
Terminating the Contract, if renegotiation fails. The report
recommends potential termination based on the way in which the
procurement was conducted, the absence of competition, the presence
of political patronage in the bidding process, excessive hidden
costs to the State in the contract and the quality and sufficiency
of the inspection system.
Governor McGreevey plans to immediately begin the process of seeking
RFI's from potential vendors, rather than waiting until
Assessing the State's level of compliance
with changing emissions standards, including obtaining an
extension of the deadline for the implementation of the On Board
Diagnostic testing. The Report finds that a contributing factor to
Parsons's mismanagement was the State's failure to keep up with and
address the EPA's changes to emissions standards. Therefore, an
extension from the EPA will allow sufficient time for testing and
will help to avoid further inconvenience to motorists.
Ordering two expert studies. The first would evaluate the
inspections system implemented by Parsons because currently, no
comprehensive assessment exists as to the overall quality of the
The second study would analyze the potential complete overhaul of
New Jersey's inspection program. New Jersey's inspection system is a
hybrid of centralized and private inspection facilities, and the
report recommends that a study be conducted to determine the
possibility of using an entirely centralized system, an entirely
private system, or another version of the current hybrid system.
Adopting and implementing comprehensive reforms for the
procurement, management and supervision of public contracts. The
Report recommends the State redesign, from conception to closeout,
the process for handling major procurements to ensure effective
management and procedures are in place to avoid a repeat of the
serious problems that plagued the Parsons procurement.
Parsons Audit Team was led by State Treasurer John McCormac,
Environmental Protection Commissioner Bradley Campbell, Transportation
Commissioner James Fox and Authorities Chief Paul Josephson. It
included former Supreme Court Justice Alan B. Handler, procurement
attorney Robert C. Epstein, Esq., management specialist G. Bruce
Eveland, environmental attorneys Richard F. Ricci, Esq. and Stephanie
M. Wauters, Esq., and Deputy State Treasurer Robert Smartt.