Local governing bodies would like the Mississippi Legislature to raise the current $5,000 threshold for requiring bids due to inflation and rising costs of supplies and services.
Adjustments to Mississippi’s purchasing laws for cities, school districts, and counties was the main topic of conversation for the state Senate Accountability, Efficiency, and Transparency committee on Wednesday.
Local governments are required to follow purchasing laws when acquiring goods and engaging services.
Current Procurement Law
Under current law, any expense below $5,000 does not require the governmental agency to seek competitive bids. When that expense exceeds $5,000 the city, school district and county are required to obtain at least two written bids.
Expenses that exceed $75,000 require the entities to advertise publicly through local media outlets for a certain period of time, typically two weeks. Some bidding processes require the use of a reverse auction process in the bid acquisition. The Mississippi Department of Finance and Administration defines a reverse bid as “an online auction in which sellers bid against each other to win a buyer’s business.”
The procurement laws are in place to ensure public officials are securing the best services for the least expense, given the use of tax dollars.
At times, a city, county or school district may decide not to take the lowest bid and instead take a higher bid. This can happen for several reasons, such as if the entity has knowledge that a contractor with the lowest bid typically provides subpar work.
Tom Chain, Director of Technical Assistance with the Mississippi State Auditor’s Office, explained to the committee that there is no legal obligation to accept the lowest bid, but they do have to cite why they made that decision.
“Local governments don’t have to pick the lowest price as it stands now. If they don’t pick the lowest price they have to record in their minutes a detailed calculation and a narrative as to why the lowest was not the best,” Chain explained to the lawmakers.
Citing the reasoning behind picking a higher bid protects the local governing body from potential litigation.
“What we tell local governments is that the person you got to be concerned with is possibly the other vendor who was the lowest and you didn’t pick him,” Chain added.
Suggested Changes
The two main points addressed during the Senate hearing were the need to increase the $5,000 limit threshold and the possibility of making reverse auctions an option rather than the rule.
One of the biggest comments Chain’s office receives is that there is a need to increase the $5,000 threshold.
Hattiesburg Mayor Toby Barker (I) agrees that raising the threshold from its current level is needed, especially since the last time it was adjusted was in 2007. Prior to then, the threshold was $3,500. He spoke to the committee as the Legislative Chair for the Mississippi Municipal League.
Inflation and the general rise in prices across the board have Barker suggesting a new threshold of $15,000. Making that change will free agencies up to make purchases faster, a benefit during infrastructure repair emergencies.
“The incentive is there for us to be good stewards and choose the most quality, fiscally responsible option. Because we want our limited funds to stretch as far as they can in terms of projects and services,” Barker described.
Surrounding states such as Louisiana and Alabama have set their limits at $30,000, and Tennessee has a starting limit that can be increased during certain circumstances.
“When you consider that we haven’t raised it in 20 years, when you consider that Louisiana and Alabama are at $30,000, when Tennessee is at $25,000 but they have the option to go to $50,000, we’re well behind on this,” Barker said.
When asked about potential changes to the “lowest and best” language in the procurement law, Hattiesburg Chief Administrative Officer Ann Jones suggested adding more protections for being able to choose the best bid, especially when the lowest bid came from a contractor who has done shoddy work in the past.
“It’s not necessarily the fact that you didn’t follow procurement, it’s the liability that you take on if you don’t select that lowest bidder, and the liability of the litigation from that vendor,” Jones explained.
She would also like to see a faster process than the reverse auction for repairs that could pose a public safety hazard. Jones described a neighborhood in her city that currently has a caved in drainage system. While waiting for the bidding process to play out she worries a child might fall in or some other tragic situation may occur.
“It would be great if we didn’t have to wait that long,” Jones said.
Purchasing Power Through Numbers
Another suggestion offered to lawmakers for consideration during the upcoming session was adding more avenues for group purchasing.
Mississippi currently has state contracts local agencies can use as an option to procure certain equipment and emergency vehicles.
Steve Gray, Director of Government Affairs for the Mississippi Association of Supervisors, would like to see Mississippi consider a system similar to the one currently used in Alabama. There, the state procures bids for contracts that, once secured, cities and counties can use to obtain necessary materials for market value or less.
Gray offered the MAS to act as the third party administrator for such a program, with help from the State Auditor’s Office.
No committee member voiced opposition to the idea during the hearing, but state Senator Chad McMahan (R) suggested that if such a system was put in place it should not limit the number of approved vendors in any particular category.
-- Article credit to Jeremy Pittari for the Magnolia Tribune --
