Allen,


The reason that they can get away with this is the bidding process and the
near monopoly control of a few companies.  When a state sends out an RFP for
the construction of a test, the proposal may cost as much as one hundred
thousand dollars to prepare.  Only McGraw-Hill and Harcourt-Brace can afford
to prrepare such an expensive proposal.  Some of the other medium sized
companies like Riverside,  NCS, and/or Advanced Systems can go in with
another company and try to compete.  The way the bidding processes works in
the states with which I am familiar  is that a panel picks the winning
company without knowing anthing about costs.  Only if more than one proposal
is acceptable will the less expensive get the bid.  Because these big
companies can afford the expertise and other expenses of a huge proposal,
they can run other companies off and charge whatever they want.  Like all
companies who are responsible to their stock holders they charge as much as
they can get away with.  They do not see themselves as providing a community
service and aligning what they charge with their actual costs.  Departments
of education who are involved in the final decision are not spending their
own money, so they are not that concerned about expenses.


When I tell others in the field how Kentucky spent a billion on testing in
eight years, some are appalled.  Others think that this is good, that the
money is well spent, and that other states should get on the ball and spend
similar amounts.


George K. Cunningham
University of Louisville


-----Original Message-----
From: Assessment Reform Network Mailing List
[mailto:ARN-L@LISTS.CUA.EDU]On Behalf Of Flanigan, Allen
Sent: Tuesday, May 02, 2000 4:46 PM
To: ARN-L@LISTS.CUA.EDU
Subject: Test item cost markup




The figure that has been floated is $15 per item from item writers.  The
testing companies then massage these items, "editing" them, rejecting some,
rewriting others, and field test them to bring the total cost to $150
dollars per item.  They then charge, according to Virginia's figures for
SOL, 12 thousand per item for the tests that use these "elaborately and
expensively" developed items.  Similarly exorbitant cost claims by Riverside
were also mentioned in your dismissal hearing, weren't they, George?


To say that this seems like a huge ripoff would be an understatement.  I
don't think street drug dealers mark up their product this much (from 5 to
ten thousand percent markup).


Maybe Deanna's lawyers can forward this to her so she can explain how this
sort of cost inflation is actually justified and reasonable.


Allen Flanigan


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