Jane Gonzalez was called a trailblazer in the community, a small-business owner pushing City officials to award her medical supply company a share of one of its largest contracts and lay the groundwork for other minority business owners like her to do business with the City.
Gonzales, president of MEDwheels, thought she had scored a victory in June 2017 when City Council voted to unbundle a $2.4 million contract for life-saving defibrillators and other supplies used by the City’s Emergency Medical Services (EMS) so that MEDwheels could win a portion of the business. The entire contract was previously set to go to a Massachusetts-based medical manufacturing company, Zoll Medical Corp.
But now Gonzalez is back at City Hall demanding to know why the inventory of defibrillator accessories she was required to purchase, according to the contract terms, is still sitting on warehouse shelves.
A 2015 study conducted by the City’s economic development department showed that local small, minority- and women-owned business enterprises (S/M/WBEs) experienced disparities in the public sector, including low representation in public-sector contracting. Among the programs and processes the department put in place to correct those disparities is unbundling of the kinds of contracts that previously had consolidated two or more procurement requirements in order to make them more suitable for a small business.
Founded as a family-owned business in 2005, MEDwheels is a national distributor of medical supplies with a 3,500-square-foot warehouse located east of downtown, five full-time employees, and five contractors.
In 2017, with Zoll getting the lead defibrillator contract, MEDwheels was awarded the accessories supply side, a three-year deal valued at $886,000 a year. Winning such a contract gave a S/M/WBE like MEDwheels the “proven capability” experience it needed to grow and compete for other prime municipal government contracts in the region.
“It gives MEDwheels a leg up. The City of San Antonio is one of larger cities in the United States so it brings a lot of credence to our capabilities,” Gonzalez said. “The contract really afforded a local S/W/MBE the opportunity to act as a prime [contractor]. By acting as a prime, we’ve proven there are local companies that we can do service at larger pieces of the pie.”
The City contract states that MEDwheels is required to stock a 90-day inventory so that when the City issues purchase orders to replenish its supply, the items are available.
But nearing the end of 2018, the City had issued only half of the purchase orders it had the previous year, and much of Gonzalez’s 90-day inventory had not been purchased. That led her to feel she was a victim of retribution over contention surrounding the contract.
“I was very naive to think that the City of San Antonio was going to abide by the terms and conditions of that 90-day supply, not knowing that the City had front-loaded the majority of this inventory upfront,” she said of the possibility the City bought up supplies ahead of time to avoid doing business with MEDwheels.
Since late 2018, Gonzalez and City officials have met twice to resolve the excess inventory issue and the City has purchased four of the five contracted items MEDwheels had collecting dust. The City asked Gonzalez to work with the medical diagnostic manufacturer on returning the remaining item, valued at $12,000. The manufacturer, Welch Allyn, has since refused to accept it, Gonzalez said, leaving her company on the hook for the cost.
“Hopefully we can figure out a resolution soon,” Gonzalez said. “If not, I’m going to then have to figure out other buyers. But technically this inventory belongs to the City because I abided by the contract mandating I bring it to my warehouse.”
Fire Department Deputy Chief Carl Wedige said the City acknowledges overstocking some items in the months before the contract went into effect so they wouldn’t run out, but denies front-loading.
“The 90-day supply numbers are estimates,” Wedige said. “I will admit, in a couple of cases, they were not accurate.”
When the City enters into a contract, he said, it sets money aside for what it believes the City will spend during the contract period. However, the City might spend only a portion of that money. “It’s an estimate of what we think we might buy,” Wedige said. “As with any business, our needs change all the time.”
In the case of the MEDwheels contract, Wedige said some of the usage estimates may have been outdated, or not updated properly when the solicitation was released. In the past, the supplies came directly from a manufacturer that stocks more than a 90-day supply.
“Moving into a local vendor that is stocking those, it became an issue and we realize that now and we are working with her to get through that,” he said.
Following those initial meetings with Gonzalez, Wedige said the City agreed to purchase the remaining stock, realign the agreement, and meet with MEDwheels quarterly to review usage. “If we’re the only one she’s selling that to, and we use that item, and it was our number that put that stock on her shelf, then we need to work with her on those, which we have done,” he said.
The City is looking at various ways to resolve the issues with MEDwheels, Wedige said, and he’s confident they can do what’s best for both the vendor and the City of San Antonio.
“These issues that have come up are a product of the ‘local buy’ piece and getting that adjusted,” Wedige said. “And once we get the numbers worked out, then it becomes a non-issue from here on out.”
For that reason, Gonzalez said she is trying to view the problems she’s now experiencing in a positive light, as lessons learned for running her business going forward. And she was able to secure a small-business loan from LiftFund to help cover her operational expenses as she works through the issues with the City.
“I’m very encouraged and highly hopeful that this can be a demonstration of how, in any given contract this size, problems are going to happen,” Gonzalez said. “Invariably, we are going to have to deal with problems; that’s the nature of running a business. It’s just the manner in which those problems get resolved. It has to be a joint partnership, especially for a local, Latina-, woman-owned small business to be able to be a part of the supply chain for the community.”
