First in a Series
Four months ago, C&BP published an analysis of how New York City is paying 340 times more per agency than the City of Dallas for custom-built eProcurement software. It was supposed to help city agencies buy goods and services more cost effectively.
There are growing concerns that NYC’s purchase of that software has itself become an example of how not to buy things. Ivalua, the French company hired to build the software system had no experience servicing any U.S. government agencies. The product is on track to cost nearly $50 million and still doesn’t work as promised. City officials even passed on the opportunity to get $25 million back after Ivalua’s initial failures.
By contrast, the City of Dallas bought off-the-shelf eProcurement software for under $50,000 – one-tenth of one percent what NYC is paying.
The New York Daily News ran two stories (here and here) on this taxpayer boondoggle, including one that quoted NYC Comptroller Scott Stringer, who declared, “Private companies cannot be allowed to overcharge taxpayers and under-deliver services.”
Spend Matters Defends Ivalua
Rushing to Ivalua’s defense was the influential procurement industry news site, Spend Matters. In its lengthy article, “Watchdog Gone Wild? Why New York City’s Procurement Technology Overhaul Is a Good Thing,” it argues that our analysis is “an apples-to-oranges false equivalence.”
Spend Matter’s full-throated defense of the Big Apple boondoggle caused us to take a look at the online publication itself. We were surprised at what we learned.
The earliest articles in Spend Matters about Ivalua were on January 12 and January 18, 2010 in a two-part series, “Ivalua: The Broadest Spend Management Suite Vendor You’ve Never Heard Of.” On January 21, 2010, Founder Jason Busch announced:
“I’m very excited to announce today that Ivalua has become an Associate Sponsor of Spend Matters… Ivalua’s timing was perfect: we knew only a few of days ago that the opening was coming available and had not had time to advertise it to the broader community.”
In a laudatory November 2013 article, Jason Busch wrote,
“[W]e think that if Ivalua were to build formal relationships with firms such as Deloitte, KPMG, PWC, and E&Y (which should embrace it), Ivalua’s growth would be even greater.”
Spend Matters UK/Europe’s Peter Smith met with Ivalua’s founders, including David Khuat-Duy, in Paris in October 2015, after another positive article earlier that year. The following spring, Smith spoke at a dinner Ivalua held at Claridge’s Hotel in London.
Ivalua Breaks Through U.S. Government Market
In May 2016, NYC signed a $30.5 million contract with Ivalua to custom-build an online eProcurement system that was to be used by up to 40 New York City departments. Samir Khushalani, then of KPMG, is described in the contract as the project’s “executive sponsor.” KPMG was subcontractor.
What Was Jason Busch’s Role?
Seven months later, Ivalua issued two consecutive news releases: the first on December 6th trumpeted its alliance with KPMG, with quotes from Ivalua CEO Dan Amzallag and KPMG’s Khushalani.
But there was also a third quote attributed to Spend Matters Founder and Head of Strategy Jason Busch:
“Partnerships such as this are a ‘win/win’ for the market…The increasing diversity and capabilities of source-to-pay procurement technologies combined with individual organizational needs makes ‘one size fits all approaches’ less appealing than before.”
One day later, on December 7th, Ivalua announced its big New York win with quotes from Amzallag and Khushalani — but not Busch.
Why was Busch in Ivalua’s December 6th announcement?
- Is it a coincidence that it was issued the day before Ivalua told of its big NYC win?
- Why did Ivalua remove the release with Busch’s quote from its website? (We found it on a web archive.)
The Project Melts Down
Two years after the contract was signed, not even the design was done. Nothing had been built except for a vendor management system — even though NYC already had such a system called Vendex.
KPMG had been replaced with Accenture. The Commissioner who signed the contract, Anne Roest, had resigned and the NYC Chief Procurement Officer Michael Owh had left town.
Rather than cancelling the contract and collecting Ivalua’s $25 million performance bond guarantee, then Commissioner Samir Saini gave Ivalua another $15 million in taxpayer dollars, and another $1.3 million a few months later, to keep trying to build what it had promised but failed to do.
Jason Busch Responds
Why did Spend Matters run its aggressive 2,011-word response in “Watchdog Gone Wild”? What is Spend Matter’s relationship with Ivalua? We asked Busch for comment and he responded quickly:
“Ivalua has been a long-time client, but not in any capacity related to public sector, new york, or anything related… Like others, they buy our research.”
Busch gets a tip of the hat. Coming up, we’ll publish our Q&A interview with Jason Busch.
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Scott Peterson is executive director of Checks and Balances Project, an investigative watchdog holding government officials, lobbyists and corporate management accountable to the public. Funding for C&BP is provided by Renew American Prosperity and individual donors.
You May Also Want to Read:
Which NYC Official Failed to Collect Ivalua’s $25M Bond for Non-Performance — and Why?
NYC’s Chief Procurement Officer Left Town as Ivalua eProcurement Project Melted Down
Did the de Blasio Admin. Collect Ivalua’s $25 Million Bond for Non-Performance?
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