Two years after the Washington administration set out to gain control of the city`s antiquated Department of Purchasing, even its former director admits it remains mired in a cumbersome management system that leaves it open to waste and petty corruption.
Many city contracts remain unsigned because of the department`s delays, officials acknowledge. Furthermore, purchasing employees still keep records manually, even matching orders to deliveries by hand, making it virtually impossible to stay on top of the $400 million in business the department handles each year.
On Aug. 23 the Washington administration, struggling to revamp one of the city`s most important agencies, forced the resignation of city purchasing agent William Spicer, the former army officer brought in by the mayor in 1983 to turn the troubled department around.
This move reflected the administration`s growing frustration with its inability to control a department whose haphazard management style has, by most accounts, continued under at least three mayors.
But more than that, the problems with the department provide another example of how the day-to-day workings of City Hall are affected by the bitter behind-the-scenes battle between Mayor Harold Washington`s appointees and a bureaucracy left over from previous administrations.
In an interview just after his resignation, Spicer said his efforts to modernize the department were hampered by an entrenched bureaucracy that was slow to accept his leadership.
For one thing, he said, some employees in charge of making small purchases refused to follow orders to spread the purchases among various vendors rather than to the few that for years have dominated city business. By Spicer`s account, his ability to deal with these problems was hampered by court rulings, intended to discourage patronage, that make it difficult to fire city workers.
”It was a hell of a problem,” Spicer said. ”If you don`t have a cooperative staff, the problems are insurmountable.”
At least four top executives in the department, including Ronald Mondack, the official in charge of administering contracts, were viewed as opponents of Spicer, purchasing sources said. In one instance the tension between Spicer and Mondack grew so intense that Spicer asked him to quit, the sources said. Mondack, who would not comment on the department, recently resigned.
A department source said lower-level bureaucrats have so much autonomy that, when one left his job, his successor discovered the employee had been paying $600 for a $200 item.
Department sources with administration ties claim some purchasing employees would purposely lose records and sabotage office operations. The administration also believes that some employees reported regularly to Chicago City Council majority bloc members opposed to the mayor, the sources said.
Administration officials say that revamping the department is one of their main priorities.
”I think there have been some longstanding institutional problems in the Department of Purchasing,” said Brenda Gaines, the mayor`s new deputy chief of staff.
Nonetheless, some administration sources say the mayor`s office has not moved quickly enough to accomplish this goal.
”There`s a growing awareness that we have to start moving stuff,” said one administration source. ”In the first half of the term you can get away with blaming things on your predecessors. But now we have to do something about it.”
To be sure, as evidenced by a recent shuffling of department heads, the administration is also struggling to improve the management of other city agencies.
But the Department of Purchasing is a top priority because it handles most city acquisitions, from the O`Hare International Airport ”people mover,” the biggest purchase in the city`s history, to pencils.
”The problem with purchasing is it can bring the whole system to a halt,” said an administration source. ”Purchasing feeds everything else.”
Since political contributions frequently come from city vendors, the department is a key part of an administration`s patronage system. The agency has the authority to make smaller city purchases without seeking public bids and it plays a part in writing bid specifications.
Under the Washington administration, the department has added another task that some political observers view as an important part of the mayor`s own patronage program: administering the multimillion-dollar program to steer public business to firms owned by minorities and women.
The agency decides which city vendors qualify for the mayor`s program to aid minorities and women. And it has the right to exempt a contractor from minority subcontracting guidelines.
Essentially, the department, located in cluttered offices on the fourth floor of City Hall, handles all city purchases. Typically, a city agency will contact the department when it needs supplies or equipment, and the agency either puts the order out to bid or finds a vendor.
Technically, the agency is known as the Department of Purchases, Contracts and Supplies. It has 223 employees, including buyers, people who write bid specifications and those who run warehouses in which city supplies are stored. Not counting city payrolls, the department handles nearly every dollar spent by the city.
In September, 1983, a little-noted study by the administration`s transition team detailed some of the agency`s problems.
The study reported that lax management techniques ”have resulted in the potential for mismanagement, waste or misappropriation.”
For example, the study concluded that it was impossible to make a list of all city purchases from one company, or to find out whether a particular vendor had a good track record. In addition to a lack of computerization, office files were in such disarray that purchasing experts brought in by the transition team could go through only two contracts an hour, the report said. The transition team also found that the city was not getting the best prices because the department did business with only a handful of vendors and that purchasing employees did not have to justify decisions to skirt public bidding laws.
More recently, a study by consultant James Lowry found that, halfway through Washington`s term, little had changed.
The Lowry report, completed in March, said the department`s inefficient management costs the city millions of dollars each year.
For example, it pointed out that in 1984 the city suddenly ran out of gasoline and had to rush to buy it at almost retail prices. And it said the city does not put enough contracts out for competitive bid.
Lowry also contended that the department has never developed a system to audit government contracts, often pays contractors without making sure the goods have been delivered and approves change orders without proper justification.
The report cited one case in which a maintenance service contract originally let for $1.2 million grew to $1.6 million through change orders approved by the department.
Additionally, the department`s system of handling small, nonbid purchases has been abused, Lowry said. His report pointed to a $200,000 consulting contract handed out without public bids.
The Lowry report concluded that the system was ”outdated and, to a certain degree, out of control.”
A more recent study, conducted free of charge by two purchasing executives of the Quaker Oats Co., also concluded that the department has serious problems, said one of the executives, William Whiteford.
The report says the department is understaffed and burdened with a top-heavy management structure. For example, the report said routine purchases of office equipment and supplies can take up to seven layers of approval.
Whiteford praised the administration for taking steps to overhaul the system but cautioned that ”after decades of this thing being a mess, it is going to take a massive effort to unravel it.”
Spicer said it may take 10 years to get the department in shape but that he had made major changes.
Describing the city`s purchasing operation when he was appointed, Spicer said, ”I hear the word `antiquated` all the time. So let me find another word. The system was ancient.”
For one thing, he said, the department will soon be computerized.
He also said some of his opponents in the department have resigned in the last two months, ”with encouragement to leave.”
Spicer said the city now gets better prices from vendors because it seeks more competitive bids and is tougher in negotiations.
Describing the early days of his administration, he said, ”When I first got here, if a contractor would say his services were worth $1,000, he got $1,000. Now my people question it.”
Whatever the case, the administration decided Spicer was moving too slowly in his efforts to take control of the agency.
”This system just moves along on its own momentum,” said a person close to the department.
