AUGUSTA – As unhappy as Lloyd Willey was with state bidding practices that he claimed shut him out of a lucrative contract with the University of Maine, he was more concerned about the state’s failure to monitor vending sales for what he calls a scam that cheats customers out of their profits.

A vendor, for instance, contracts with a city to place machines in municipal buildings in return for, say, 20 percent of the profits on the snacks and sodas sold.

The scam, known as the “R factor” within the vending industry, involves the use of a software program by some unscrupulous vending operators that automatically underreports sales in each machine.

The “R” in “R factor” stands for “reduction” of sales.

For example, a machine that sold 100 candy bars at $1 apiece should provide the university with $20 profit. If the software underreports the sales by 20 candy bars, however, the university will get just 20 percent of 80, or $16.

The only way the city could verify the numbers produced by the software would be to compare the figures to the number of sales displayed on a counter inside the machine.

“Most places don’t have the time or staff to do this,” said Willey.

Willey insisted he was not suggesting any of his competitors were using “the R factor” to cheat anyone out of his share of vending machine profits. But he was astonished the state’s Division for the Blind and the Visually Impaired had no provisions within the Business Enterprise Program to check for the presence of the scam.

“They didn’t have any criteria there for auditing for the ‘R factor,'” Willey said. “They were so naive about everything they had no way of protecting the state’s money. The only thing the division is interested in is maximizing revenues from these contracts. They don’t want to hire the administrative help they need to do the job right.”

Harold “Bud” Lewis, executive director of the division, said his agency performs audits on machines in some of its high-traffic areas. But he added that those duties are just part of a larger range of responsibilities delegated to two of the division’s employees.

“We square the readings with the machines with the readings the vendors are giving us,” he said. “But I wouldn’t want anyone to think that every week we go to every machine and check the counter. That wouldn’t be realistic.”

In 2001, Willey filed an appeal of the division’s award of the University of Maine’s contract to the state Department of Administrative and Financial Services on grounds that the division’s bidding process was flawed. The problem with the procedure, Willey said, centered on the division’s refusal to perform strict and frequent audits to identify the “R factor.”

The state upheld the division’s contract award to Willey’s competitor and concluded that the division’s infrequent auditing practices served as an adequate deterrent to inappropriate reporting of sales. Willey then took his concerns to the state Attorney General’s Office, which essentially promised him it would look into his allegations if he could provide investigators with some shred of evidence substantiating the existence of the “R factor” in Maine.

The existence of the scam has never been verified in Maine, but that doesn’t mean it is not being used here, Willey said. According to Elliot Maras, editor of the national vending industry magazine Automatic Merchandiser in Cleveland, Ohio, in most cases a customer “would never know if the ‘R factor’ was being applied.”

“I’m not going to name any names of software companies, but it’s a known fact that this practice exists in the industry,” Maras said.