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Purchasing change could hurt IC

BY EMILY BUSSE | JANUARY 26, 2010 7:30 AM

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Gov. Chet Culver’s proposal to centralize UI purchasing could potentially save the university money, officials said, but it could have negative effects on local suppliers.

Under the system, common university supply needs such as paper or computers could be purchased from central contracts among the three public universities instead of from several different vendors.

While consolidated purchasing was pushed as a change in the regent institutions’ spending five years ago, it will go to legislation this year, said Robert Bailey of the governor’s communication department.

UI spokesman Tom Moore deferred questions regarding purchasing to the state Board of Regents, but he said the university is always open to saving money and efficiency ideas.

“We have to evaluate each potential suggestion and take a close look and determine if it really will be cost-effective,” he said.

But a potential negative for centralized purchasing is a loss of business for local suppliers to the UI.
Though it was “never the intent to cut out local mom and pop vendors,” Bailey acknowledged it may be harder for those smaller businesses to compete with big box stores when bidding for a contract.



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The UI has been one of City Electric’s largest customers since “day one” in 1954, according to general manager Rich DeVepo. In a list of the UI’s top local business vendors, City Electric ranked at 22 out of more than 300 in fiscal 2009.

The local company has already seen a downturn in business with the UI, and centralized spending is a “major concern,” DeVepo said, noting the loss of UI buying has left the company with large amounts of inventory exclusive to the UI in stock.

“It’s hard to justify having as much inventory or staff,” DeVepo said, noting the firm employs 21 families from the Iowa City area. “If it would come to having to let people go … it would make a negative impact on the community.”

DeVepo said he hopes the UI will follow the strategy of buying local first, statewide second, and out-of-state last. For him, he said, it comes down to support.

“We’re taxpayers, we’re supporting the university in our own personal lives going to sporting events, going to Hancher, and it just seems fair it should support the local business people first,” DeVepo said.

But Bailey said centralizing purchasing is common sense.

“It would be money not spent so we don’t have to raise taxes,” Bailey said. “That’s what everyone wants to hear.”

A consolidated contract was included in efficiency study suggestions for the state from Public Works LLC, he said.

He said the change could be implemented fairly easily because parts of the state are already operating under centralized purchasing. For example, if the state has a negotiated contract with Office Max for paper, other state entities such as school districts and local government offices can use the same contract to save money.

And smaller businesses aren’t necessarily out of the running despite the fact that big box stores may “process thousands of more product than them.”

“Local businesses can always find an advantage in service,” Bailey said, “because they care and they’re part of the community.”


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