Butkovitz Exposes Questionable $3 Million Sole-source Contract

Audit Date: July 12, 2010
Audit Categories
  • Investigation
Controller: Alan Butkovitz

Executive Summary

For Immediate Release:
July 12, 2010

Contact: Harvey Rice

Butkovitz Exposes Questionable $3 Million Sole-source Contract
Investigation focused on award process & projected savings
for BigBelly Trash Compactors

Click here to view report

PHILADELPHIA – City Controller Alan Butkovitz today released the BigBelly Solar Compactors report that found questionable business practices with the City purchasing 768 high-tech trash cans, costing almost $3 million.

All compactors, costing $3,700 each, were purchased through a sole source contract in which the Streets Department contacted only one BigBelly distributor, BigBelly Solar, and awarded the company an initial $2.1 million contract. Since the initial purchase of 500 compactors, the City purchased an additional 268 compactors for an added cost of $991,600.

“The single-source contract raises serious questions due to the $3,700 cost per unit, in comparison to the $100 wire baskets that were replaced,” said Butkovitz, at today’s press conference. “The City also awarded the contract to BigBelly Solar in spite of their not having a required business privilege license.”

During the Controller’s review, it was found that BigBelly Solar provided false information to the City by stating it was the only source able to sell the product to the City. According to Butkovitz, the City relied solely on the claims of BigBelly Solar without any other verification.

One of these claims included a report by BigBelly Solar and referenced by the City stating that a 70 percent weekly reduction and corresponding savings in cost would be realized.

During a two month period, the Controller’s staff monitored BigBelly compactors and found there was an average of 10 compactor collections per week. This is more than double the amount stated by BigBelly Solar, which were five collections.

“The City failed to consider numerous areas where savings may not materialize,” said Butkovitz. “It failed to consider the cost to replace a damaged unit as well as the number of trained personnel and time it takes to maintain these highly complex units.”

In addition, when inspecting the BigBelly storage facility, the Controller’s staff observed a lack of procedures for reporting maintenance or warranty of these units, as well as how many were inoperable and how long the inoperable units would be out of commission.

“There is a complete lack of accountability for these expensive trash cans,” said Butkovitz. “There weren’t even property tags on the units that would identify and track damaged or deployed units.”

Along with the 768 BigBelly compactors that have been purchased with no accountability, the Controller found that the City has plans to purchase another 397 units for an overall planned total of 1,165 units along with 510 recyclers, amounting to approximately $5 million

Before any additional BigBelly units are purchased and/or deployed, the Controller recommends the following:

• Prepare a cost analysis considering all variables – BigBelly’s vs. wire baskets.
• Develop pre-puchase planning, training and operational procedures prior to entering into a contract.
• The Streets Department should immediately train all employees responsible for emptying the units and develop a comprehensive maintenance protocol.
• The City needs to review its contract with BigBelly Solar and attempt to negotiate a contract price reduction for those items that have not been provided.

“Until these steps are put in place, I strongly recommend that the City stop purchasing any additional BigBelly units,” said Butkovitz.

“The City must ensure taxpayers’ dollars are being used efficiently and effectively and that any operational change, especially of this magnitude, should be thoroughly examined with a full cost benefit analysis.”