Bill challenges current state purchasing

February 25, 2012|By ANDREW SCHOTZ |
  • The exterior of MCI on Roxbury Road off of Sharpsburg Pike.
File photo

A state contract for building maintenance supplies was questioned on Thursday by local business representatives who said they can do better.

Sen. Christopher B. Shank, R-Washington, is trying to pass a bill to let state agencies drop out of cooperative purchasing agreements if they can get better prices on the same goods and services from local vendors.

He told the Senate Education, Health and Environmental Affairs Committee on Thursday that a state contract with a company called Grainger is at the heart of his bill.

According to a packet he shared with the committee, vendors from Hagerstown and the surrounding area could sell the state certain parts and supplies for a little or a lot less than Grainger charges.

Examples from the list, looking only at purchases for the state Department of Public Safety and Correctional Services, include:

  • Electrical connectors: $79.49 from Tristate Electrical Supply in Hagerstown, $721.75 from Grainger in 2010
  • Copper fittings: $972.71 from Foltz Manufacturing & Supply Co. in Hagerstown, $1,660.75 from Grainger in 2010
  • Fan and air-handler belts: $667.08 from Transply, $1,762.56 from Grainger in 2010
  • Belts: $652.52 from Apparatus Repair & Engineering in Hagerstown, $1,432.81 from Grainger in 2010.
Most products on the list are not identified more specifically, making it difficult to independently compare or confirm the prices.

Shank said his office compiled the list of more than two dozen cost comparisons during the last two years.

“We have contacted the Department of General Services, to no avail, to try to remedy the situation,” he told the committee.

The department’s response mentioned “price versus cost, and to this day, I have no idea what they’re talking about,” he said.

Contacted on Friday, representatives for Grainger and the Department of General Services, which purchases supplies and materials for most state agencies, hadn’t seen the chart of cost comparisons and couldn’t comment on them.

However, DGS spokeswoman Susan Woods said the department looks at “the best overall deal for taxpayers,” not the cost of a few specific items, when considering purchasing contracts.

Grainger spokeswoman Debra Ceffalio said multiple governments often join together to negotiate discounts for bulk purchases.

“We’re really confident that our contract is saving the state time and money,” she said.

However, Shank told the committee Grainger “is nothing more than a catalog that you open up and order parts from, but it costs a tremendous amount of money more.”

He said local businesses “right around the block” could give the state better prices and supply parts in hours or days, instead of weeks.

Ceffalio said Grainger is based in Chicago, but has six locations in Maryland, with about 100 employees, and can fill orders quickly through its nationwide distribution center network.

Some vendors on the comparison chart are based in or around Hagerstown, but others are based elsewhere and have Tri-State branches or dealers.

The Department of Public Safety and Correctional Services has not taken a position on the bill, spokesman Mark A. Vernarelli wrote in an email on Friday.

The current Grainger contract went into effect last month and expires April 29, 2013, according to Shank.

Two Washington County businessmen testified Thursday in favor of Shank’s bill.

H. (Tim) Foltz, president of Foltz Manufacturing & Supply Co., said his industrial supply company is available 24 hours a day, matching the facilities that use their products.

He said the Grainger contract, which started in 2008, has cut into his company’s sales to the state by about 75 percent. That loss has contributed to Foltz Manufacturing & Supply Co. cutting its work force from 16 employees to 10, he said.

“I’m concerned not only as a business owner, but as a taxpayer,” Foltz said.

Mark Sites, director of operations at Hardware Discounters in Hagerstown, said his company’s sales to the state have dropped about 83.5 percent because of the Grainger contract.

“Procurement officers’ hands are tied,” he said.

A state Department of Legislative Services analysis of Shank’s bill says intergovernmental cooperative purchasing agreements are “for governmental entities to pool their purchasing needs to obtain better pricing and to reduce administrative costs associated with individual procurements.”

During Thursday’s hearing, Sen. Ronald N. Young, D-Frederick/Washington, a member of the committee, said he has seen inefficient spending practices firsthand.

“We could save a lot of money (in) a lot of places if somebody would review all this,” Young said.

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