First published in Forbes, January 22, 2018

POST WRITTEN BY

Charles Duarte

Charles serves as VP of Business Development for Diamond Assets, promoting sustainability in maximizing residual value for Apple hardware.

There is a British saying, “Don’t be penny wise and pound foolish,” which cleverly warns against making decisions that save small amounts of money (pennies) that end up costing more in the long run (British pounds — or in our case, dollars). The saying describes perfectly how many school districts approach educational technology purchases.

When school districts decide to upgrade or refresh EdTech devices for students and faculty, they are often also trading in used equipment. At this point, some districts will implement a formal bid process for a disposition company to purchase the used devices, and this money will help to offset the cost of the new technology.

Formal bids are used by administrators for good reason: Used technology is a valuable asset and administrators are obligated to be good financial stewards for their schools. Unfortunately, formal bids often are hyper-focused on the pennies at the expense of the dollars. It’s not uncommon to see the winning high bidders unable to fulfill contracts because they lack the necessary experience, staff and funding, and this can cost school districts dearly.

While price is and should be an important factor in the bidding process for used equipment, there are other equally critical criteria that should be worked into the evaluation:

What is the bidding company’s reputation? Ask for and check references for all the companies bidding on projects. Since companies have been known to adopt a “Doing Business As” (DBA) to skirt reputation issues, ask if they are operating as a DBA. One of the best sources for an unbiased assessment is the technology company from which you’re acquiring your new devices. The sales teams from these companies work closely with disposition firms and know their reputations well.

What is the bidding company’s financial source? When trading in used equipment, it’s common for the disposition company to take possession of devices, assess them and then provide payment based on a reconciled value. Some school districts may be entrusting millions of dollars worth of equipment to a company on the promise of payment. It’s important to know if the company has defaulted on any transaction in recent years and to have proof that the company can pay its obligations. While bid bonds requiring the upfront payment of 10% of a bid are a smart idea, they still won’t prevent underfunded companies from defaulting. Even if the company hasn’t yet taken possession of the school’s equipment, a default can cost the district time and resources to re-open the bid.

Is the company equipped to handle the project? Depending on the scope of technology upgrades, school districts could be swapping out 10,000 or more devices. Ask companies if they have experience with your size refresh project. Determine if their employees are skilled at quickly packaging and assessing equipment and are equipped to handle data privacy with integrity. Find out if they have a secure facility that’s large enough to handle the production of your devices. Also, administrators need to understand what’s included in the bid price — will the school district be required to inventory, pack and ship devices, or does the company arrive on-site and do this turn-key?

Does the company meet the payment terms? After taking possession of equipment, disposition companies will assess any damage or wear and tear on devices and then will adjust their final purchase price based on this reconciliation. Ask the company for their average variance from the bid price, as this can quickly even the playing field among other contenders. Since school districts rely on expeditious payment in order to fund their next technology purchase, quick and reliable payment is important. Will the company guarantee payment within a specific timeframe? Has the company ever missed a payment date without a valid reason?

While a high bid for used devices can sound very appealing to a school board, a little due diligence during the bidding process can save school districts money and reduce their risk. Which makes me think of another wise saying, “If it seems too good to be true, it probably is.”

To view the original article click this link: https://www.forbes.com/sites/forbesbusinessdevelopmentcouncil/2018/01/22/price-should-be-a-smaller-factor-in-edtech-purchases/#7a9860fe5fc9