While reverse auctions are the law in Mississippi, the state’s Public Procurement Review Board has handed out hundreds of exemptions for state and local government entities each year.
In just the last two years, the board has approved 209 exemptions that are worth an estimated value of more than $156 million.
That represents a massive increase from 2018, the first year the law was in effect. State agencies and local governments requested 68 exemptions from the procurement law that year for an estimated total of $71.1 million.
A reverse auction is one where sellers bid against each other to win a buyer’s business, usually electronically. The lowest bid wins the auction. Each vendor is pre-qualified and it allows a seller to purchase commodities from multiple bidders. Also known as an E-auction, the auction facilitator receives a fee for helping put on the auction and secure bidders.
In 2017, the Mississippi Legislature passed a bill, House Bill 1106, that was later signed into law by then-Gov. Phil Bryant that changed public procurement in Mississippi. Reverse auctions, barring an exemption granted by the procurement review board, are required on commodities or equipment of more than $50,000 purchased by government entities both at the state and local level.
The bill’s author, state Rep. Jerry Turner, R-Baldwyn, says reverse auctions are a great way of saving money for taxpayers.
There is a way for state agencies and local governments to use a standard sealed bid process and avoid using a reserve auction. They can ask for an exemption from the board that is a fourth-month process. They must justify to the Mississippi Department of Finance and Administration why they should be exempt from the law requiring reverse auctions. Some of these exceptions include a lack of bidders in a reverse auction, a product that can only be procured from a single source (a good example of these were two under-bridge inspection trucks procured by the Mississippi Department of Transportation) and using a vendor that doesn’t participate in reverse auctions as a manner of company policy.
The entity provides DFA officials with an estimated value that the total contract will likely entail. If the award costs more than the estimate or the length of the contract that was provided an exemption is extended, the procurement board is required to approve any changes once it has approved an exemption. Also, with some exemptions like those awarded for rock salt for the Mississippi Department of Transportation and ice, bottled water and manufactured housing for the Mississippi Emergency Management Agency, those are only for emergency use and are often not utilized completely or at all.
In 2020, the procurement board approved 90 exemptions (more than $76.9 million in estimated value) after approving 119 ($79.1 million in estimated value) the year before.
The breakdown of exemptions given included:
- There were 65 exemptions given for E-Rate purchases totaling more than $63 million. The E-Rate program is a Federal Communications Commission program for the Schools and Libraries Program of the Universal Service Fund, which provides affordable broadband access to schools and libraries nationwide. Discounts for support of the service are dependent on whether the school or library is in an impoverished area and whether that area is urban or rural.
- Twenty one purchase exemptions were approved worth more than $42 million in estimated value in Apple products such as iPads and MacBook laptop computers. Apple has a policy of not participating in reverse auctions.
- The board approved 30 exemptions for asphalt-related products worth more than $37.5 million.
- There were 23 exemptions for gravel and loose rock, known as rip rap worth more than $10 million.
From 2018 to 2020, the largest requester among local governments of reverse auction exemptions included:
- Rankin County, which requested 15 exemptions from the reverse auction law worth an estimated $25.4 million.
- Harrison County, which requested 18 exemptions worth an estimated $3.16 million.
- Clarke County, whose supervisors asked the board for 18 exemptions worth an estimated $9 million.
- The Mississippi Department of Transportation requested 17 exemptions and those contracts represent an estimated value of $42.6 million.
The largest three exemptions in the last three years included:
- The Department of Health requested $35 million exemption for food and nutritional products for the WIC program in 2018.
- The Rankin County School District requested an exemption worth an estimated $15 million for Apple products.
- In 2019, MEMA requested a $10.5 million exemption for manufactured housing to accommodate residents made homeless by natural disasters such as floods, hurricanes or tornadoes.
- MDOT requested an exemption in 2018 for $10 million worth of asphalt.
