Archive for April, 2013

Myth: Vendor Overcharges To Government (Part 3)

Posted on April 10, 2013. Filed under: Journalism | Tags: , , , , , , , , , , , , , |

7th in the series The Manipulators

Life’s Prime Directive:  Every living thing shall attempt to manipulate events, circumstances, behaviors, and social structures to favor its own narrow interests in the struggle to exist.  The only judgment that LIFE places on living entities is the failure to keep existing.  (Okay, it has been said before more bluntlyIt’s all about survival of the strongest.)

Your words for the day: 

  • unbelievable = possessing the property of being too incredulous to be believed
  • red herring = a literary device designed to throw the reader off the trail of plot progression; a diversion or decoy
  • math = the science of using mathematics to figure things out; numeric logic

Clarification of my objective:  These articles, from my slant, paint a negative picture of a specific local government and a specific writer and his media venue.  I hold no personal animosity toward those entities.  However, I do have an animosity toward skewed logic and claims that have the objective to actively bend my personal views (and those of the general public) to enhance the standings of others as they hide their own inadequacies or seek to garner awards and salary increases to further their own life-goals.  You know, using the Prime Directive at my expense.

I am aware that there may be other information “out there” that could render my observations on this Media story as way off the mark.  My focus on THIS journalistic venture of Jack-Hass is limited solely to the information that has been provided within the article and the apparent reason it has been presented in such a caustic vein toward private business.  My presentation is to show that Media seeks to MAKE public opinion, not to simply apprise the public of current events, and, that journalistic endeavors are often based on the ignorance of both the public and the paid story-tellers.

O-kay!  I feel so much more morally superior, now.  Let’s get on with my Media bashing.

Jack-Hass is just a writer.  He has been trained to “drop names” and high-sounding titles into his articles to enhance the importance of his words.  My!  Oh, my, has he dropped a bunch into this story to lend it a semblance of credibility:  City Auditor, City Controller, Mayor, and several other non-associated Government Entities.  They are invoked as though they are the benchmarks of irreproachable accuracy, and yet, political malfeasance is another staple of Media hot-button focus.

While not necessarily “malfeasance,” incompetence certainly seems to apply.  If lapses in bureaucratic protocol were occasional, that is certainly understandable.  We are all human, and, we often lose our focus.  That is why business has so many built-in backup steps (per my previous posting, specifically purchase orders and invoicing).  But, I am totally blown away by the magnitude of this bureaucratic gaff, and the joint journalistic-bureaucratic glossing that seeks to paint the vendor as the bad guy.

Can you believe…

  • 300,000 instances of poorly documented transfers of private product and TAXPAYER MONEY — under a single contract?
  • That a City Auditor would wait 4 years before auditing a major supplier ($75,000 or so per week) against the city’s accounting protocols?
  • That such interest in the accounting protocols only took place after the Auditor heard that other Government Entities were fairly successful in getting retroactive rebates from the same supplier?
  • That an auditor could not determine whether the alleged overcharges were on the order $1.7 million or $6.5 million, and simply summarized, without corroborating documents, that “the city is owed a lot of money?
  • That a city accounting department would pay out $19.2 million without EVER checking to see if the invoicing was as it thought it should be?

Can you believe that a (reputed) journalist would ignore such bureaucratic mis-steps and opt, instead, to cow-tow to the biased, self-serving slant of the reluctant City Auditor?  (Well, that would be the path of least work…   resistance…   I mean “the path of least resistance”.  Why do investigative work?  Just take what the important-sounding City Auditor said and print it up.)

  • Accounting did not do its job for over 4 years.
  • The City Auditor did not do his job for over 4 years.
  • The City of Houston has been short on cash for years; an inept auditor could enhance his standing by dredging up some hard cash when it occurred to him to do his job.  Hell, he might even get the Controller’s job; after all, the Controller bears final responsibility for the city’s financial accounting — or, in this case, NON-accounting.
  • An inept City Auditor who finally thinks he’s onto something needs to get the spotlight on someone else so that his own shortcomings are not in the limelight.

How absurd can this get?  Let’s do some math.  252 weeks of a contract with 300,000 financial transactions during that time totaling $19.2 millionthat’s the raw data.  The extended data is that the average of each transaction is $64.00 ($19,200,000 divided by 300,000), with 1,190 of them per week (300,000 divided by 252 weeks).  This was business as usual for untold numbers of city employees charged with accountability of TAXPAYER MONEY.

The REALLY ABSURD part?  A series of $64 transactions (over 1,000 of them each week for 252 weeks) that — according to the City Auditor — resulted in $6.6 million of overcharges…   or, maybe it’s only $1.7 million.  I guess it just depends on how you calculate it.

And, just how does the US Communities thing fit into all of this?  My code name for US Communities will be “George.”

Next up:  Myth (Part 4) Let George do it


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Myth: Vendor Overcharges To Government (Part 2)

Posted on April 7, 2013. Filed under: Journalism | Tags: , , , , , , , , , , , , |

6th in the series The Manipulators

Your words for the day:

  • auditor = one who analyzes processes and figures, frequently on a short-term recurring cycle
  • extortion = coercion, pressure, blackmail, squeezing, shakedown
  • cheat = deceive, swindle, bilk, take advantage of

The target of my mockery:  The Houston Chronicle (again), December 9, 2012, Section A, Pages 1 and 14, Article title:  Auditors find 4 years’ worth of overcharges, Writer:  Mike Morris (hereinafter referred to as Jack-Hass).

Every business (or government entity) creates a Purchase Order when it agrees to buy product from a vendor.  That order constitutes a contract with an offer (to sell), an acceptance (of the product and the terms of sale) and transfer of the consideration (the monetary payment).  This contract can be verbal, but big business prefers the accountability of that paper trail; it gonna be in writing.

The City Auditor in our story alludes to a contract that “was part of US Communities, a government purchasing cooperative.  The contract ran from March 2006 to the end of 2010.”  That would be 252 weeks by my calculation.  And that is all that Jack the Writer thinks we should know about this third cook in the accounting kitchen.  What is US Communities?  I’ll get to them in Part 3.

I’ve spent a bunch of years preparing specifications lists for needed products and contacting various vendors for availability and best pricing of our needs.  I have prepared purchase orders, detailing the final agreement of purchase (product description, unit price, total price)).  I have cross-checked the product received against the vendor’s shipping bill and my company’s Purchase Order for compliance with specs, and prepared a receiving ticket to document the delivery.  This receiving ticket was then affixed to the purchase order.  ANY DISCREPANCIES, whether of quality or quantity, WERE ADDRESSED WITH THE VENDOR AND CORRECTED BY THE VENDOR, or I ISSUED A CHANGE ORDER TO THE PURCHASE ORDER TO ACCOMMODATE THE DOCUMENTED VARIANCE.

When the vendor’s invoice came in, I went to the purchase order and the attached documentation and compared it to that invoice.  If it matched all of my documentation, I approved that invoice for payment.

If the invoice differed, it was kicked back to the vendor for clarification and compliance.

That invoice was not paid until it complied with my company’s documentation.  It is basically the same thing that everyone does in the department store:  select a suitably priced product, take it to the check-out, then scream bloody murder if the register ka-chings a higher price than that shelf price tag that attracted your attention.  You ain’t payin’ until the cashier re-rings at your understood price, or until you change your expectation and agree to the now-higher price.  You take care of the variance at the point of sale.

So, WHY does a multi-billion dollar a year operation (e.g., guv’ment) with whole departments on the payroll to oversee such things, pay those invoices as they are received and wait 5 years to see if it is overpaying for its weekly/monthly purchases?  Oh!  I really haven’t told you the particular newspaper story, have I?  Strap on that seat belt; this is going to be quite a ride.

Our writer, Jack-Hass, has a ripping good story — another one of those big business-ripping-off-the-taxpayer scoops.  This was going to be a no-brainer for this Hass, and the chosen headlines accentuated that:  Office Depot could owe city millionsAuditors find 4 years’ worth of overcharges, and, Controller says firm didn’t cooperate with audit.  We gullibles, by and large, just see the hot-button headlines and conclude that “our local paper has uncovered another anti-taxpayer plot.”  Rah!  Rah!  Sis-boom-bah!  Obviously, that’s not what I read.

Our city auditor (City of Houston), hearing that other government entities (Dallas County, Texas; Los Angeles, California; State of Florida) were successful in cheating * Office Depot out of millions in alleged overcharges, checked the sign on his office door and discovered that he, himself, David Schroeder, was in fact being hyped as a bona fide AUDITOR.  “Wow!” he must have thought.  “Why don’t I…   AUDIT…  and make it look like my employer, the City of Houston, has been getting overcharged, too?  I’ll bet everybody will sit up and realize that I am a…  I am a… ”  (he read the cue card on his office door again)   “… an AUDITOR!”

You will have to excuse Dangerous Dave’s uncertainty.  Auditors, as a rule, cruise around their kingdoms at least once a year to rap the knuckles of those departmental bean counters.  This would be Dave’s first venture in the AUDITING of this contract, so he was probably both mystified and elated when he discovered that Office Depot’s contract had been on-going and un-reviewed FOR OVER 4 YEARS.  “What was the auditor doing,”  he must have thought.  (I figure this is the FIRST audit since, had it happened before, this story would be 1, 2, 3, or 4 years AGO.)

Now, one would think, being the auditor for the CITY and all, that his job would be to audit CITY DEPARTMENTS for accountability and adherence to city departmental protocols.  You know, “Show me what you did with all that money the city budgeted to you this year just ending!  Paperwork.  Show me the paperwork!”

Anyway, one would think that.  Yet, the clue to bureaucratic goldbricking was in the headline “Auditors find 4 years’ worth of overcharges.”  Get real.  NO ONE in accounting noticed ANYTHING for 4 years??  NO ONE in the auditors office, during that 4 years, thought to go over and ask someone in accounting, “WHAT’S UP DUDE??”  (Or, Dudette.  I don’t want to be labeled a sexist.)

Let’s give Dangerous Dave his due.  He at least STARTED OUT mucking around in the files of the city’s accounting department.  We use the term “files” somewhat loosely, here, ’cause Dave couldn’t find the documented history of just under 300,000 transactions from Office Depot.  He did find a total for the amount paid out by the accounting department over 4 years and 10 months for those transactions — $19,200,000.  YES, an undocumentated payout of TAXPAYER MONEY by city employees to the tune of $19.2 million.  But, Dangerous Dave, the Cinderella Auditor, rose to the occasion in true bureaucrat mode — and in keeping with his original intent for leaving the comfort of his office in the first place — announced that…

…it was all Office Depot’s fault.


*being government entities and all, they did the cheating legally.   Using the extortive weight of GOVERNMENT, they leaned on the private business and said, “Give us a BIG REBATE or we’ll have to play rough with you.”  The Big Pee ignored the extortion by officialdom, and went for vendors ripping off the tax payers.

**A national office supply retailer.


Next upMyth, Part 3Can you spell t-o-t-a-l-l-y  a-b-s-u-r-d?

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