I had nearly forgotten the beltway bandits of my past!

Having just picked up a thread about AED being banged by USAID for a change,  I  dug out the original texts of my early fall-out with these bandits ….  I’m amazed that I wasn’t eventually assassinated by anyone at the time:-). Read the latest about AED hanky-panky… 


 ““Initial findings by USAID’s OIG reveal evidence of serious corporate misconduct, mismanagement, and a lack of internal controls [at AED], and raise serious concerns of corporate integrity,” USAID said.

So these wee interactions of mine with AED in 2003 are pale in their significance ! Read on:


Dear Bill

Having had a scotch last night, some time to think and calm down, and a frank and positive discussion with ***** today, I am now in the right frame of mind to pursue this flow of conscience.

We must ensure that the GDA can deliver 70 schools at least – the contract requires 100 schools to be delivered and this may allow USAID to put some considerable pressure on EDC and AED to indicate their cost-share under GDA – obviously GDA is somewhat different to ordinary beltway bandit deals.  

The argument about US$ devaluation  from 10.65 to 7.00 may still play a role in the arguments envisaged between EDC/AED and USAID, but I do think that I have a valid case in arguing for only one contractor under GDA to bring up the budget from 698k to a more realistic 900k+ to meet this US$ devaluation.  

Obviously in determining the total number of schools supported by GDA,  the route proposed by ********** and myself with respect to  “school solution invoices”  rather than complicated procurement processes for dribs and drabs in phases is the way to go.  This means that the total value will fluctuate with exchange fluctuation but not the essential composition of technologies delivered to a school.  In essence, given the fact that we’re working with pre-owned tier1 computers, the technology will only get better as time progresses – today we ship tier1 PIs and some PIIs, next year it will likely be tier1 PIIs and PIIIs and so on… all for the same total school solution price tag. 

To counter any argument with regards the costing we are providing for pre-owned machines please appreciate that while such pre-owned tier1 machines could cost between U$ 75 and 119 per unit FOB in USA, depending on shipping, at least 10 – 20 % will be dead on arrival.    

Sourced locally (ie SA) such similar machines will cost us N$ 1900 – 2400 per unit, with 5-10% dead on arrival.  

Factor in the normal probabilities of fall-over in NEW computers – this is presently calculated at 10% in first year of warranty! – then the cost of providing warranties on pre-owned refurbished machines situated in remote parts of Namibia is obviously significantly higher.  We presently calculate that some 35% of all refurbs delivered to schools will be replaced during a three year depreciation cycle.   Accordingly we have scaled these costs into our equation for a school solution.  

Interestingly, though, if you compare our pricing to that of any local retail resource provider, you’ll discover that our prices ARE still lower than anyone else!  I have a very recent tender evaluation available for your consideration. 

Nufsaid –  the school solution calculator can be validated by comparison with contemporary retail procurement prices – for hardware, software, installation, internet services, maintenance contracts, etc.   If such details are necessary to convince, please let me know.   The workplan put forward by ******** after consultation with myself was submitted yonks ago – what has AED done about this?  I understand the deadline for submission has passed. 

Over to you!

Cheers

Joris

Joris,
  If I were in your position I’d have the same reaction to the overhead rates and so on…

  About the two Washington entities.  My preference some time ago was to have AED work with you on iNET and have EDC work with you on GDA (in fact, Steve ****** suggested that).  I think the argument here was that AED had a COP  on the ground so it made more sense for that AED employee to be involved with both.  Since EDC is the prime grantee on dot-EDU we will have to be in at some admin level.  The mission may take out *****’s time if pushed.

  Or if the mission wants to take out AED completely (on GDA) that is fine with me.  But they may argue that they want **********’s  replacement to stay in at some level, so they may want to keep AED.

  Thanks for listing the main points below.  Will make sure that you get a longer time for the first 35 schools (yr # 5).

  Will let you know as soon as I know more.  

Bill

At 06:48 PM 7/23/2003 +0200, you wrote:

Bill

TX very much for the call today, transparency and clarifications – finally a budget to examine earnestly!   It leaves me speechless – if I had been better informed of the extent of G&A cropping over and above direct costs (many of these are also hard to believe!) claimed by  EDC and AED, I would have built in compensatory margins of the same stature.  Too bad, I have learned my lesson well!   Further to our discussion today – my salient points:

1.  Note that earlier budget discussions with AED very particularly addressed a per school solution – simply calculated at ca.  US$10,000 per school for 100 schools = US$ 1 million.   This was calculated at an exchange rate (then – 1.5 years ago!) of US$ 1 = N$ 10.65.  Today the exchange rate is US$ 1 = N$ 7.00, which means at least 30% devaluation on the original budget.

2.  From the first pressing request by Steve ****** for a draft budget proposal which I submitted 1.5 years ago, there was NO FURTHER dialogue with AED concerning the detailed descriptors/line-items of the GDA budget.   The direct cost items as shown me today have absolutely NO BEARING on the proforma school solution calculator submitted by ******** to AED (you’ve now got a working spreadsheet as arbitrated by **********, and also given to ******** of USAID).

3.  I argue strongly against the fact that there are TWO not ONE beltway bandits milking this GDA budget, where the contents of the MOU and GDA preparatory guidelines (remember I STILL DO NOT HAVE ANY WORKING CONTRACT DOCUMENTS)  which makes reference to the use of a DC-based, USAID-approved contractor, if SchoolNet did not qualify for direct funding from USAID,  based on a pre-contract audit.  No such audit ever took place.   So why two beltway bandits for this particular GDA?

4.  My proposal is simple – remove one bandit and the GDA will see more schools served than currently possible at US$ 698k.   I intend to pursue this matter with the board of SchoolNet and  MInistry of Basic Education as a matter of extreme gravity.   A milking of US$ 302k for DC home costs is a bit much, I would say.

4.  Under your present budget of US$ 698k, it is only possible to serve 43 schools;  if the exchange rate improves (grant-wise), then more schools can be served at between US$ 10k  and US$ 16k per school

5.  Please note that the spreadsheet suggests that SchoolNet supplies 35 schools between 1 october 2002 (!!) and 30 September 2003.  It is now nearly August.   I think this needs correcting.

Cheers for the mo’

Joris

Joris,
  Good to talk this morning.  Thanks for this justification of the cost changes.  I just had two calls with Stephen *******  at USAID/Washington, and a call with Ken ******* at AED (contracting office).  Stephen is going to contact the mission and say that we need to reduce the number of schools — or we need more funding to get the number back up to 100 schools (or we need to take out some beltway bandits).

  In any case, I hope this can be resolved soon.  When we get a modification letter, AED will sign the subcontract and you should be able to invoice them.  I’ll keep you posted.

Best-
Bill



Indeed they were the best of  days – Дорогой длинною (!)  –  reminiscent capers of guileless youth and romantic idealism

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