The state’s new contract for office supplies will save taxpayers $2 million, according to officials, but 17 New Jersey businesses contend they never had a chance to bid for this business.
On Sept. 1, the state will replace its contract with local suppliers with a new statewide contract with Staples, State Treasurer David Rousseau announced Aug. 17. Rousseau said the change saves the state roughly 23 percent on the $9.8 million it spends annually on office supplies. In addition, officials say all small businesses registered with the state can benefit from lower supply costs by purchasing through this new contract.
However, the 17 state businesses say they will lose a tremendous amount of business, and were caught unaware when the state announced the deal — they had recently bought thousands of dollars in catalogs they were prepared to deliver to government offices when they learned they’d lost the contract.
In addition to losing the state money, the businesses expect to lose the contracts of many school districts and municipalities, who may look to save money by joining the state contract rather than individually putting their contracts out to bid.
Allan Feldman, owner of Able Office Products, in South Plainfield, said those 17 New Jersey businesses were eliminated from consideration without a chance to bid.
“We’re not looking for gifts,” he said. “We just got bamboozled in this deal.”
Treasury spokesman Thomas Vincz said the state was fulfilling its primary responsibility of minimizing the cost to taxpayers.
By joining the National Joint Purchasing Alliance, New Jersey will take part in the last year of a five-year contract that was advertised in Minneapolis in 2005. Vincz said the contract satisfies the state’s public advertising requirement.
State officials said a broader group of businesses certified to do business with the state — including all small businesses and those owned by women and minorities — will benefit from the deal, as they will receive the same discount as the state.
Rousseau said the change will save the cost of leasing warehouse space to store supplies.
Vincz said the Legislature passed a law in 2006 requiring officials to join cooperative purchasing agreements to lower costs and save tax dollars, but Assemblyman Jon M. Bramnick (R-Westfield), a supporter of the New Jersey office supply vendors, said when he voted for that law, he didn’t intend for New Jersey businesses to be cut out of the process. He added that he is concerned about the effect similar contracts will have on other smaller New Jersey vendors.
Sonny Arora, owner of Action Office Supplies, in Lakewood, estimated that the businesses would lose more than $200 million due to the change, because county, school and municipal contracts also would shift to Staples.
“All we want at the end of the day is the opportunity to bid,” Arora said.
Carl Streko, owner of Supplies-Supplies Inc., of Kenilworth, said 60 percent of the revenue at his 14-employee business comes from the state. “It’s going to put us under,” he said of the state’s change.
The group sent a request to the state Aug. 24, asking for the state to stop the contract until they had a chance to bid on it. If it doesn’t receive a response, the group will file a lawsuit to block the sale, said Michael P. Turner, the businesses’ spokesman.
Turner said the state could eliminate the cost of storing supplies and stay with the New Jersey businesses. He also questioned whether the state had the legal ability to negotiate a different office supply price for registered small businesses.
“They’re interfering with the free market at that point,” said Turner, managing principal of Government Process Solutions, of Trenton.
Each YEAR, the state awards millions of dollars in contracts without advertising, and while chasing this business can be tough for small and midsize businesses, experts say the opportunities often are worth the trouble.
The government office that oversees most of the state’s purchases last year paid more than one-third of the $1.8 billion in contracts without any public advertising. The state issues “waivers” from advertising for a variety of reasons, including when a utility or similar company is the only one that provides a service.
However, many contracts that are not advertised still are bid on by multiple companies, state officials said. Consultants who work with businesses encourage them to reach out to state officials to pursue these unadvertised contracts.
Division of Purchase and Property Acting Director Alice K. Small said the state is seeing “a demonstrable reduction in the number of waivers,” although statistics for past the 12 months aren’t yet available.
The process for pursuing advertised competitive contracts is straightforward: Businesses must register with the state, and small businesses can register to pursue small-business set-asides. Then, businesses must keep track of advertised contracts, in newspapers, trade publications, on the state Web site or through e-mail.
Pursuing a contract that is not advertised is more complicated.
If the purchasing staff members in a state agency believe that a contract should be given a waiver, they must submit an application that is reviewed by the state attorney general’s office and a procurement analyst, according to state officials. After these reviews, the state treasurer makes a judgment about granting a waiver. Only contracts above $29,000 are subject to competitive bidding.
Businesses seeking contracts that aren’t advertised still have a chance if they have registered with the state, but they must be contacted by state officials.
After the waiver is granted, the agency awarding the contract must seek quotes. Small said agencies look at the list of businesses with government-purchasing codes that cover the area of the contract. In addition, they review the list of businesses registered with the state Office of Supplier Diversity, including small-, minority- and women-owned businesses, officials said.
While the state’s Division of Minority and Women Business Development focuses on competitive contracts, its director, Francis Blanco, said officials encourage business owners to be aware of all contracts.
Henry Savelli, a consultant for companies seeking state contracts and a former Treasury purchasing official, said it is impossible to judge just from the percentage of contracts that are given waivers whether these waivers are inappropriate.
“You have to look at each waiver on its merit,” said Savelli, who owns Henry Savelli & Associates, in Trenton. For instance, one area where state officials may have more discretion in offering waivers is in consulting services, he said.
Savelli said companies that want to be considered for quotes should work to become familiar with the purchasing agents for the different state departments, as many state agencies maintain a list of vendors.
While state officials declined to respond to Savelli’s suggestion, “it’s not harmful to reach out” to officials, Small said.
Business owners should keep tabs on when waiver contracts in their field of expertise are expiring, Savelli said.
Savelli said small-business owners can have difficulty finding their way through the state process.
“They think the state is a morass of paperwork and bureaucracy,” he said, adding that businesses can learn to navigate the system. “It is confusing — it is intimidating.” |
