Procurement Controversy Swells at SXSWedu

News flash! Scandal! Bombshell drops! Vendor conspiracy revealed! One of the themes emerging from the recent SXSWedu conference—evidenced in two sold out sessions—involved rethinking procurement practices in education. In one particular session entitled “Begging for Disruption: EdTech Procurement”, controversy became the order of the day:

“EdTech procurement is broken. American K-12 schools spend over 20 billion annually on instructional materials for students. This money is often spent without any measure of the impact on students. As a result, schools unintentionally waste public funds, [and] provide students inferior or inappropriate materials…”

An influential group of ‘power’ panelists gathered to take a provocative look at retooling the technology procurement practices of schools and districts. The panelists represented a veritable Who’s Who of educational experts, including Harold Levy (past Chancellor of the New York City Schools), Hal Friedlander (past CIO of the New York City Schools), Celina Morgan-Standard (New York Academy of Sciences), Karl Rectanus, (CEO of LearnTrials), Fiona Hollands, (Center for Cost Effective Education, Columbia University), Leonard Medlock, Senior Product manager at EdSurge, and Nicole NEAL (Co-founder of NoodleMarkets).

The premise of the “Begging for Disruption: EdTech Procurement” panel, according to Levy, was that “Procurement is badly broken. Schools buy stuff badly, and particularly ed tech. The market lacks transparency; districts don’t know each other’s pricing or each other’s problems, unless they are on the front page of the New York Times”. And apparently, this is quite a large problem. “Ed tech [purchasing] today is on the order of 10 billion dollars [per year],” Levy suggested. “That’s extraordinary”.

Chancellor Levy postured: “districts have to get better at doing discerning, and the vendors have to get better at being transparent and having products worth buying.” Fiona Hollands echoed these concerns sternly: “Schools cannot feel they are being guinea pigs for your product, because they don’t work. The vast majority of products don’t work.” Nicole Neal agreed: Although we are “really are in the midst of a digital transformation in learning today, K12 purchasing is painful, and there is clearly a lack of transparency today in education.” She further lamented: “Districts aren’t able to collaborate with each other”.

Not be left out, CIO Hal Friedlander then threw gasoline on the fire, suggesting that “the process of identifying, managing, paying [for], deploying, and evaluating [ed tech purchases] …was eye-gougingly frustrating.” He added: “In my chats with other leaders, most [educational CIOs] across the country have had the same experience.” He regretted: “we did an exceptionally poor job for the amount of money we poured into the technology”. Karl Rectanus then chimed in: “If efficacy mattered, this would all be different. Policies would be different, pricing would be different, practice would be different; but that reality is that it is not”.

Then the panel dropped an incendiary bombshell, revealing the results of a study that proves, they say, that vendors are indeed pillaging schools. Selina Morgan Standard rose from her seating to walk the audience through the results of her study. She prefaced her remarks by suggesting “the data appear devastating”. In the study, (conducted by the Technology for Education Consortium, a group formed with Gates Foundation Funding), they did a careful analysis of iPad prices across the country, in districts of various sizes: big, little, mid-sized, urban, rural, and suburban. “We found pricing discrepancies of 40% between the highest district and the lowest price paid for by a district”. For our reader, that specifically means a high price of $499 per device versus a low price of $367 per device. She warned: “There’s no correlation to the size of the district, the model of iPad purchased, demand or volume of the purchase. We believe we found price gouging”. She scolded, “this is unacceptable”.

CIO Friedlander, now the CEO of the Technology for Education Consortium highlighted some of the data discovery methods used in this study:

  • public data collected from varied districts
  • drill down phone interviews with CIOs
  • standardizing data collection on a single configuration, for apples-to-apples comparisons (iPad air, WiFi-enabled, 16 GB, and so forth)
  • consideration of disparate contracted services or volume pricing (iCare protection, support services, other device capabilities, volume pricing configurations )

The result, according to CIO Friedlander: “We feel like we found a dead body in the back of the house.” He clarified: “We found small districts that got better pricing than large districts. “This really pissed me off”, he bristled. “If they could do that kind of fluctuation, they could have done better in NYC, too”. He reasoned: “Apple had gotten the better of us” despite the size of the NYC schools. Upon further reflection Friedlander noted that the relationship between salesperson and buyers in the district often made for a difference in pricing. “The chutzpa or attitude of the buyer” also mattered. Could the buyers turn down the vendor? “If they stood their ground—that would bring the price down”.

At that point, Chancellor Levy harmonized: “In my judgement, this is an exercise in gouging, not an exercise in helping districts. Inefficient markets make for exploitation.” He added: “Brand is too often a substitute for quality, and big sales forces succeed. Buying the wrong tech means bad tech wins. Investors end up going with what sells, rather than what works. They are in the business of making money; they are not necessarily in the business of helping kids. As procurement specialists an as vendors, there’s an obligation to expect that your product actually works. And news flash—so many don’t.”

Chancellor Levy continued to pounce: “This is not an indictment of the school districts; it is an indictment of the vendor community, who is going after us for as much as they can get. We need to make this market more transparent, and we need to band together to make sure we are not being taken advantage of. That’s why you have this indignation here. It’s just wrong. It’s taxpayer dollars and these are schools.”

Analyst Comment

So—what solutions, what remedies, does this panel recommend for addressing these problems? In my next installment, I will reveal their surprising solution to remedy all of this unwarranted pillaging. Now, please understand where I am coming from. I am a decades-long educator and technology director, someone who served as a huge ed-tech purchaser/decision maker in large school districts. I do not agree with the premise, assumptions, conclusions, or action recommendations of this august panel. Others in the SXSWedu audience also had their doubts. You’ll soon see why. Districts are indeed culpable, as well as some industries. But there’s more to this story. In my next installment, I will fill in the blanks. –Len Scrogan