Incline Village GM’s Corner: ‘To bid or not to bid’ (opinion)
May 29, 2018
When a public agency or a private company wants to purchase an item or service, they typically go out to bid. Getting bids gives businesses the chance to sharpen their pencil and get you the best price for a good or service.
Seems logical right? Most of the time — yes. However, there are exceptions to the rule.
The vast majority of the time, and always consistent with the requirements of the Nevada Revised Statutes (NRS), we competitively bid our goods and services. However, there are times where it is more cost effective to not bid out a purchase and the NRS has specific allowances for these instances.
For example, we frequently have items on our Board of Trustees agenda to purchase a good or service from a "sole source" and skip the competitive bid process.
The NRS allows us to purchase from a sole source under specific terms and conditions. The state of Nevada realizes there are times where the public interest is better served by utilizing purchasing methods that can provide a superior product or a lower price via an alternative method of purchase.
One reason for using the "sole source" method is when we can leverage the resources of a larger public agency that has already competitively bid purchases of items or equipment. The district can use "joiner" clauses in other governmental contracts to purchase items directly from a vendor at the competitively bid price. The district often completes purchases via this method by utilizing contracts competitively bid by the state of Nevada.
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Similarly, the Federal Government General Services Administration (GSA) has established contracts with commercial firms to provide access to millions of products and services at volume discount pricing. GSA extends that volume pricing to state and local governments. Through this program, we were recently able to secure prices for two pieces of equipment for the golf course at a nice discount compared to the price we would expect in a competitive bidding situation. It also saved us the administrative time and expense of going through the bid process.
Another reason for using the "sole source" method is when standardization of equipment provides operational efficiencies and savings, thanks to commonality of spare parts, training and maintenance procedures. Here's a specific example, every few years we replace 50 percent of our rental skis at Diamond Peak. We had gone through a competitive bid process to select Salomon skis a number of years ago. We selected Salomon based on their competitively bid price as well as for the simplicity and reliability of their rental binding system. Doing so has allowed us to have a very efficient process for renting skis. It also provides a consistent product offering to our customers.
This simplified process makes it easier to train seasonal employees, reduces the risk of mistakes during set-up and speeds overall transaction time. Additionally, their bindings come factory mounted which saves labor costs and mistakes during assembly.
As we complete the partial replacements of our inventory of rental equipment, it would be quite disruptive to introduce a new ski system into our rental program. The NRS specifically allows exceptions to the competitively bidding process to allow for this type of equipment standardization. The state recognizes it is far more cost-effective to "sole source" and allow governments to maintain a standardized equipment inventory that doesn't require new training or a new inventory of replacement parts.
I should also note that we do stock a small number of demo skis from other manufacturers. This allows us to continually evaluate whether or not we should transition from Salomon skis at some point in the future. In addition, there aren't the same factors and efficiencies associated with our rental snowboards. We competitively bid our snowboards when they are due for replacement.
Our solid waste contract for collection is another example of where we decided to negotiate directly with our current contractor. All solid waste collected must go through a transfer station. Our contractor owns the only transfer station in town. It is highly unlikely we could cost-effectively provide an alternate transfer station. It also is highly unlikely a competing contractor could provide us with a rate equivalent to our current contractor due to the lack of an alternative transfer station.
A potential vendor has to consider their costs in getting the business, as well as providing the product or service. Bidding also can affect ultimately what they charge, thus saving the costs of the formal bidding process, can also save in the purchase cost.
This why we began negotiations well in advance of the trash contract expiration. That way, if we hadn't come to a mutually beneficial agreement with our contractor, we still would have had time to conduct a competitive bid process.
So "to bid or not to bid" is a much more complicated question than you may have thought.
The bottom line is that we always attempt to select the purchasing method that provides the greatest benefit to our community. And by the way, we work very hard to outreach to our local businesses to make sure that they have a chance to provide goods and services to IVGID, and will continue to do so in the future.
GM's Corner is a monthly column from IVGID General Manager Steve Pinkerton, who discusses issues and offers updates regarding various district matters. He may be reached for comment at firstname.lastname@example.org.
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