FISCAL NOTE
Date Requested: January 12, 2018
Time Requested: 02:08 PM |
| Agency: |
Puchasing Division |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1810 |
Introduced |
HB2936 |
|
|---|
| CBD Subject: |
Finance and Administration |
|---|
|
FUND(S):
Funds fall under the delegated authority at the agency level
Sources of Revenue:
Other Fund Various department funds
Legislation creates:
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
By restricting that purchases of commodities, printing and services of $25,000 or less must not exceed the retail market cost, the language in this bill causes some ambiguity since retail costs may vary among suppliers. Agencies will attempt to ascertain retail market cost, when in many instances, there is no one single determiner of retail market cost. Shipping may also vary the retail cost of an item.
The new language as written also states that written bids are not required for purchases in the amount of $2,500 or less but must be purchased be made at the lowest price. This would lead to believe that bids or some research will need to be required for these small dollar purchases. Current language in statute states competitive bids are not required. However, in purchasing training offerings, it is always noted that competition is always encouraged.
Soft costs, such as employee time, which are not quantifiable will be expended to perform the research to determine the lowest retail market price and to ensure that the retail market price is not exceeded. Additionally, many agencies utilize statewide contracts for commonly-used items. These contracts have consistent pricing and delivery throughout the entire state, from larger cities to small rural areas.
The repeal of the master contract and direct ordering process, formerly known as the secondary bid process, would not have a major effect since to date no agency has requested to utilize this process since its implementation due to the specific dollar threshold allowed. However, based on the notation at the bottom of the bill noting the elimination of master contracts and other statewide contracts, would have a devastating impact on costs not only to state agencies but to many local government entities that utilize these contracts.
Leveraging cost on volume procurements is a standard practice used by all other state purchasing divisions throughout the United States, according to a recent National Association of State Procurement Officials (NASPO) survey. The majority of states (66%) issue an administrative fee for use of statewide contracts. The West Virginia Purchasing Division joins 34% of states that do not require an administrative fee for statewide contracts in order to provide an even bigger benefit state agencies and to create more competition for these volume discounts on frequently-used commodities and services.
The costs to the state and local government entities if statewide contracts would be eliminated could reach in the millions of dollars; however, a confirmed number is unknown.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2018
Increase/Decrease
(use"-") |
2019
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
It is difficult to determine the actual increase or decrease in costs to state agencies; however, soft costs, such as employee time, may need to be taken into account for the research that will need to be performed in determining retail market price research.
In regard to statewide contracts, the costs to the state and local government entities would be eliminated could reach in the millions of dollars; however, a confirmed number is unknown.
Memorandum
Based on the notation at the bottom of the bill, it refers to the elimination of master contracts and other statewide contracts; however, W.Va. 5A-3-10e does not refer to statewide contracts. It refers to the master contract and direct ordering process which is a different process.
By eliminating statewide contracts, it would have a devastating impact on costs not only to state agencies but to many local government entities that utilize these contracts.
Person submitting Fiscal Note: Diane Holley-Brown
Email Address: Diane.M.Holley@wv.gov