Clip 12: DISD official pushed breakneck bidding / Exclusive: Tech chief sped along deal for firm whose yacht he used
We uncovered and revealed how the school official used his inside influence to favor his benefactor.
By PETE SLOVER
Suspended Dallas schools technology chief Ruben Bohuchot pushed for and helped secure a speedy $2 million deal this year for the technology firm that gave him the frequent free use of a yacht, records show.
Interviews and records obtained by The Dallas Morning News show that barely five weeks elapsed between Mr. Bohuchot's e-mail first pitching his boss on the computer lease deal with Micro System Enterprises and final approval by the Dallas school board.
The award was approved over objections from district purchasing officials, who complained that the breakneck bidding process - whipped along by Mr. Bohuchot - gave the company an unfair edge.
Micro System, of Houston, was so confident of getting the business that it delivered most of the equipment to DISD well before trustees voted to approve the deal April 28. Some was brought in even before the district asked for bids.
On advice from district lawyers, Dallas Independent School District trustees rescinded the vote Aug. 25 without any discussion, and the equipment was removed in September.
A Micro System spokesman defended the integrity of the deal, which he said left the company with nearly $1 million in used equipment the district agreed to lease but never paid for.
"We don't feel like there was any favoritism or that we were looking for any favoritism at all," spokesman Scott Blankenship said.
Mr. Bohuchot's lawyer said that his client did not exert any improper influence and that his client agreed with Micro System's account of the transaction.
Mr. Blankenship said the district originally began to buy the equipment - and took partial delivery for a test drive - under a previous contract, which Micro System had won through competitive bidding in 2000. It was only after the district opted for a lease - not allowed by that previous contract - that the bidding process was started, he said.
During the bidding, documents show, Mr. Bohuchot worked to keep close track of Micro System's competitors and pushed to chop from a week to two days the time other vendors had to prepare bids.
His actions prompted competing vendors and DISD purchasing officials to complain.
"George, this deal is typically more of the same: MSE and whoever else Ruben has been working with is all in the know and has a quote prepared, etc.," DISD procurement director Gregory Milton wrote in a March 24 e-mail to his boss, Associate Superintendent George Sparks.
Mr. Milton, who declined to comment for this story, complained that Mr. Bohuchot was "prejudicing the playing field and not adhering to the spirit of the law for 'open and fair' competition."
Mr. Sparks referred questions to his lawyer, who did not return calls.
When the district opted to lease the hardware instead of buying it under a previous contract, Mr. Blankenship said, Micro System assumed that it would sell the equipment to whatever company the district found to handle the lease.
"We didn't care who they chose, because they were just going to finance it," he said. "The hardware was going to come from us."
He said Micro System was surprised when DISD purchasing staffers instead requested bids on both leasing services and hardware.
"We were definitely under the impression that they just needed financing," Mr. Blankenship said. "There was a breakdown in communications."
An early edge
Records and interviews show that the early negotiations with Mr. Bohuchot gave Micro System an edge over competitors.
When the time came for the complex bid to be drafted, Micro System already had price quotes from wholesale suppliers.
And, because of the way manufacturers do business, those advance prices were better than those available to other resellers that subsequently requested prices.
Records show that the winning bid, submitted by HP Financial Services and Micro System, was about 3 percent lower than the nearest rival.
However, a number of potential competitors complained that the hurry-up bidding process insisted on by Mr. Bohuchot forced them out.
Of nine eligible vendors contacted by the district, three submitted bids. And, of those three bids, two - including the winner - were from companies proposing to lease gear purchased from Micro System.
Mr. Bohuchot and Mr. Sparks were both suspended with pay after The News reported in July that Micro System had for years given Mr. Bohuchot the regular, free use of two boats.
Most recently, he traveled on a $789,000, 59-foot sport-fishing boat that he helped pick out and name.
Mr. Bohuchot has not commented publicly since then. The district has never said why it suspended Mr. Sparks.
After news of the boat came out, the DISD legal department reviewed the server lease agreement approved in April and recommended in late August that the deal be scrapped.
Lawyers cited "the best interest of the district ... based on severe time constraints which did not allow for optimal evaluation award."
The board agreed, and Micro System has since retrieved its equipment.
The computer gear was intended to improve the district's finance and payroll systems and to beef up the ability to recover from a computer disaster. The district is preparing to rebid the deal, a spokesman said.
The FBI, also prompted by the boat revelations, is investigating possible corruption in the awarding of a technology contract - negotiated by Mr. Bohuchot - worth up to $125million in federal technology funding to a consortium of companies led by Micro System.
Federal authorities also froze payments from the federal E-rate program to vendors under that deal, a ban that was lifted recently, a district spokesman said.
Though the April 28 contract did not involve E-rate money, it could be legally significant in the FBI investigation: Two key elements of a federal corruption case are a thing of value - a gift - given to a public official and a return favor by the public official.
The FBI has been documenting Mr. Bohuchot's use of boats owned by Micro System.
To see whether Mr. Bohuchot did Micro System any favors in return, agents have gathered volumes of records from DISD, including the April contract and related documents. The News obtained the documents under state open-records laws.
The field narrows
Mr. Bohuchot specified that the equipment in the April deal should come from two manufacturers, HP and Xiotech Corp.
That effectively shortened the list of potential bidders to vendors authorized to sell both those brands. That included Micro System.
Mr. Blankenship, of Micro System, said the deal had been under discussion since late last fall. Xiotech executives confirmed that Micro System first notified them of the potential deal - an "opportunity," in business techspeak - on Jan. 20, 2005.
By being the first vendor to notify Xiotech of the potential business, Micro System was given special discount pricing for that deal, not available to vendors who might later join the DISD bidding, a company executive said.
According to records released by the district, the first internal DISD communication about the lease was on March 20, when Mr. Bohuchot e-mailed a Micro System proposal to his boss, the since-resigned deputy superintendent for business, Karen Wilson. He described the district's need for the new equipment.
While he characterized the acquisition as a purchase, he said he would work with senior DISD technology buyer Rose Kohut to get the ball rolling on lease financing.
On March 22, Mr. Bohuchot e-mailed a spreadsheet with a detailed price quote from Micro System - roughly 20 pages of fine print - to Ms. Kohut and other DISD officials, again stating that Ms. Kohut would move ahead with the purchasing process.
Ms. Kohut declined to comment.
Within a day, records show, Ms. Kohut contacted potential suppliers by e-mail, asking how long it would take for them to prepare a bid for what the district wanted - both hardware and software. They responded that it would take a minimum of five to 10 days.
The next day, she complained to her boss, Mr. Milton, that Mr. Bohuchot was insisting on reviewing which firms were solicited for bids, a request she deflected. That prompted the e-mail from Mr. Milton to Mr. Sparks, in which he accused Mr. Bohuchot of keeping the purchasing department in the dark and giving Micro System a leg up on other companies.
"As per usual, my concern is that Ruben's shop doesn't make us aware of these solicitations," which, Mr. Milton wrote, limited competition from other vendors. "They don't really get a fair shot because the vendor who has the inside track gets ample time to plan, assist with design, and prepare for the business."
"Please work with Ruben to get him to let us in on the deals they're working in the preliminary stages," he pleaded with Mr. Sparks.
Fast turnaround
Meanwhile, Ms. Kohut prepared bid specifications by cutting and pasting the district's shopping list - minus prices - from the Micro System sales proposal.
On April 5, Micro System president Frankie Wong involved himself more directly in wording the bid request, according to documents.
In phone and e-mail exchanges with Ms. Kohut, he worked out and approved a statement - later inserted into the district's solicitation - offering the chance for other vendors to team up on a bid with Micro System.
According to documents, Ms. Kohut told Mr. Sparks she was not comfortable with the special clause inserted in the bid solicitation.
The language was not removed.
The next day, Mr. Sparks and Mr. Bohuchot visited Ms. Kohut. According to her notes, the two men "declined" the seven-day period she proposed for bids to be prepared and returned. Instead, she wrote, they insisted that the process be completed in less than 48 hours so a deal could be approved at that month's board meeting.
Later that afternoon, on April 6, the bid proposal was sent to potential vendors. Some of those bidders dropped out, they said, because they were not licensed by Xiotech or HP to sell their products. Others quit, complaining that they were unable to get timely price quotes from HP, Xiotech or both.
Xiotech officials said that they did not deny pricing to anybody who was qualified to sell their gear - and that Micro System was the only company that both qualified and asked for prices.
The HP representative on the deal did not return calls, but in e-mail to the district, he similarly explained that the only requests for pricing he got were from companies not authorized to sell his hardware.
He did not mention that he would be submitting his own bid, in partnership with Micro System.
On April 11, three bids were opened.
One losing Dallas firm offered to lease equipment purchased from Micro Systems.
Another bid was submitted by a company proposing to provide the hardware themselves. The sales representative for that company confirmed in an interview that he was never able to get prices on the Xiotech gear: He persuaded Micro System to surrender its price list, suggesting he might provide leasing services, then plugged those numbers into a solo bid.
The winning bid came from HP Financial Services and Micro System, with HP offering to lease the district the items purchased from Micro System for $2.09 million. It beat the nearest competitor by $53,000.
