State procurement rules expand
By Dan Heuchert
Owners of small businesses, as well as minority and female merchants, just want a fair shot at earning U.Va.’s business. And the University is giving them that opportunity.
The Office of Procurement Services recently implemented plans for complying with two new state purchasing policies. The rules — one requiring purchasers of goods and services to seek quotes from certified minority- or woman-owned vendors, and another that promotes the state’s eVA electronic purchasing system — became effective Oct. 18 and Oct. 1, respectively.
“It is critical that we support women and minority business,” said Carol S. Wood, assistant vice president for University Relations. “For too many years, both women and minorities were unable to compete on an equal footing in the competitive bidding process.
“During the General Assembly, Virginia Gov. Mark Warner took a strong stand on this issue and asked state institutions to help him broaden the net and work to a more inclusive procurement program. This is an important initiative and one the University fully supports.”
U.Va. has targeted spending 29.7 percent of this year’s procurement budget on products and services from small, women-owned and minority-owned firms, and increasing that figure by 5 percent each year thereafter, said Eric N. Denby, director of procurement services.
Procurement Services has held several informational meetings to explain the new regulations, and Denby said he has been hit with a barrage of questions.
Departmental purchasers are “concerned,” Denby said — “basically, that this will add more work to end users and increase the amount of time for small purchases.”
Their concerns are legitimate, he said. “It is going to take more time. But like anything, once they get used to it, they’ll get more efficient with it.”
Diversifying vendor pool
The requirement that purchasers seek out quotes from women- or minority-owned businesses before making a purchase has its roots in a state study that “showed that woman and minority firms were not receiving much business statewide,” Denby said.
Denby’s office has long maintained a list of small, women- and minority-owned businesses in the University’s vendor file, but there was no requirement that individual departments refer to the list for their smaller purchases — generally, those under $5,000, Denby said.
The state is now requiring that departmental purchasers seek out a price quote from one of the vendors certified by the state’s Department of Minority Business Enterprise before making a purchase. If the DMBE-certified business meets the required conditions and offers the best price, the purchase should be made there, Denby said.
“It matches right up with the University’s mission, and the interest of the Board of Visitors in diversity,” he said. “The University has long been interested in increasing the level of diversity in its procurements.”
The University has 1,400 vendors listed in its database of women- and minority-owned vendors, but by mid-October only about 100 had been DMBE-certified, which involves filling out an application and having it verified, Denby said. Letters went out Oct. 25 to all of the vendors on the list, urging them to seek certification, he said.
Purchasers can access the list through the Procurement Services Web site (www.procurement.virginia.edu/).
If no DMBE-certified firm provides the goods or services being sought, then purchasers can make note of it on their paperwork, Denby said. However, he urged purchasers to check the list frequently, as it will be updated at least weekly.
The requirement to seek a quote from women- and minority-owned vendors does not apply to purchases made from firms already under contract with the University, he said, because those contracts went through an open bidding process.
All about eVA
The University established its own online purchasing system in 1988, but many state agencies had no such resource until more recently, Denby said.
The state established the eVA purchasing system in 2001, allowing its participating agencies to search for vendors of items or services they wished to purchase. Combining the purchasing power of individual state agencies allows the state to command lower prices for higher volumes of purchases, Denby said.
Vendors who wish to register with eVA must pay either $25 or $200, with the higher fee providing additional services, such as automatic notifications of agencies seeking to purchase goods or services and posting of online vendor catalogs, Denby said.
American Management Systems, which administers eVA, charges vendors a 1 percent fee on each transaction, to a maximum of $500 per order — a practice that, while not yet commonplace, is not unusual for group purchasing organizations, Denby said.
Gov. Warner has expanded the eVA system. First, he required that all state agencies make specified amounts of eVA purchases. The University easily surpassed its target amount of $111 million during the past fiscal year, spending $130.7 million through eVA, Denby said, mostly through the central procurement office.
On July 1, the state began requiring its agencies to use eVA for all purchases, with very few exceptions. Vendors are required to accept all eVA terms and conditions — including the registration and transaction fees — or risk losing their state business. Vendors may notify each purchasing agency that they refuse to accept the terms and conditions, but then would go to the back of the line in selling their goods,
behind eVA-participating vendors, he said.
For its part, the University must purchase from an eVA vendor unless there is a “compelling” reason not to do so.
Non-eVA vendors also may be used in other cases — for instance, if the continuity of an ongoing research project would be jeopardized by switching chemical vendors, or if no eVA vendors — but the
departments making the purchase may still be required to pay a 1 percent transaction fee, Denby said.
Price may also be a compelling reason to use a non-eVA vendor, Denby said, if a purchaser can find goods priced cheaper by a non-eVA vendor. Vendors will not be allowed to charge the transaction fee to the University by adding it to their invoices, but could include it in the price quoted. “That’s what’s probably going to happen,” Denby said.
Purchases made through the existing purchasing system are automatically routed through eVA in a behind-the-scenes interface, Denby said. A searchable list of eVA-refusing vendors also is available through the Procurement Web site.