Disputed Contracts Place Procurement in Spotlight

by Kyle Massey  on Monday, Mar. 13, 2017 12:00 am  

Sen. Jimmy Hickey, R-Texarkana (AP Photo/Danny Johnston)

Disputes over recent state contracts have put Republican lawmakers at odds with the Republican governor, angered potential vendors and muddied understanding on what businesses can expect from the process of awarding state work.

Since December, procurement issues have embroiled the governor’s office and bedeviled state agencies and the Legislature, while scrutiny has grown for the Office of State Procurement.

That office, part of the state Department of Finance & Administration, oversees the competitive bidding meant to save taxpayer money and assure that public business isn’t steered to cronies or political favorites.

“This procurement stuff is not glamorous or pretty. Actually, it’s kind of boring, but it’s where the money is,” said state Sen. Jimmy Hickey, R-Texarkana, a leader in a movement to revise the system.

Hickey and Rep. Kim Hammer, R-Benton, filed a bill this month to make bottom-line pricing a greater factor in state bid solicitations and to make the judging system in competitive situations more transparent to those seeking state contracts.

The bill, to be considered in the waning weeks of the current legislative session, is being revised, Hickey said last week. But he is convinced that a new focus on pricing is essential to getting the best deal for taxpayers and for bolstering businesses’ confidence that the system is fair and bias-free.

Mary Scott Nabers, a former Texas railroad commissioner who now leads Strategic Partnerships Inc., a consulting firm that advises companies seeking government work, also sees pricing as an essential factor. “Politics should not play any part in state contract decisions,” she told Arkansas Business. “It should strictly be who’s got the best solutions at the best price.”

A 2014 amendment to the state Constitution was seen to give lawmakers greater power over executive branch contracts, but that conclusion hasn’t been tested in court and has drawn considerable pushback from Gov. Asa Hutchinson.

The procurement office handles a fraction of the state’s annual budget of well over $5 billion. State paychecks, health care expenses, many highway contracts do not fall under the procurement process. However, the billions of dollars in work awarded through the procurement law in recent years is “a monstrous number,” Hickey said, and well worth a look from taxpayers and businesses.

Businesses bid for procurement contracts by responding to bid solicitations. Written proposals are submitted to judges selected by the state agencies issuing the contracts. A bid solicitation known as an RFP (request for proposals) makes pricing a prime consideration. Another type, the RFQ (request for qualifications), has by law allowed price negotiations only after a vendor is chosen.

Traditionally, RFQs solicited highly technical services like engineering or architecture, but state agencies were allowed exceptions. A multimillion-dollar pact for marketing the Arkansas Department of Parks & Tourism, for example, was initially issued as an RFQ but was withdrawn and reissued as an RFP earlier this year. Clarifying the RFP-RFQ process and making pricing a major component of both are goals of Hickey’s legislation. (See Bill Seeks to Change Procurement Process; Businesses Want to Understand It.)

Regardless of method, state contracts face legislative review after a winner is selected. Since judging is by nature subjective and disappointment inevitable, losing bidders have always vented. But the rocky course of three recent contracts — one for running facilities for troubled youths and two for marketing services, for the state lottery and for Arkansas tourism — put the system under a microscope.



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