Several months ago, representatives for John Deere chafed at the requirements being drawn up for a state contract to sell tractors to state agencies and local governments, contending the specifications favored a competitor.
This kind of problem wouldn't happen, they said, if the state issued "multiple award" contracts that allow governments to choose among several vendors.
Last week, the state legislature gave the company what it wanted.
Not one lawmaker opposed House Bill 713, which calls for the state Division of Purchase and Contract to use the multiple award method to purchase ground maintenance, construction, forestry and communications equipment.
But in doing so, state lawmakers changed the bidding rules in a way that may tip more business to a farm and lawn equipment manufacturer that has a substantial presence in the Triangle - with a political action committee that handed out more than $100,000 to legislative candidates last year, including $20,000 to seven sponsors of the bill.
It is not certain the legislation will provide the best equipment at the lowest price, state purchase and contract officials say.
Many states have adopted similar bidding requirements, said State Purchasing Officer Sam Byassee, but the savings aren't readily apparent.
"I haven't seen any hard numbers that would indicate whether it is significantly cheaper or more expensive than another way of doing it," he said.
His agency and the UNC system told legislators the bill could require more staff and training to handle the bids at a cost of $400,000, and UNC officials said it could cost them an additional $1.2 million annually on purchases.
The legislature's fiscal staff disputed those costs.
John Deere has a corporate office in Cary, a training center in Morrisville and a manufacturing plant in Fuquay-Varina that combined employ more than 700 people. The lawmaker who first proposed the House legislation, Rep. Paul Stam, an Apex Republican and House majority leader, has the manufacturing plant in his district.
Three other sponsors are near the company's operations, and another, Rep. David Lewis, is a Harnett County farm equipment dealer who carries the John Deere line.
Lewis, Stam and other sponsors said they advocated the legislation because it gives state agencies and local governments more options for goods and services, at a discounted price and with less government red tape.
"It will save money because it will save time," said Lewis, a Dunn Republican. He said his business will not profit from the legislation because it does not sell to governments.
Joe Lanier, a lobbyist for John Deere, confirmed the company sought help from state lawmakers. It had been lobbying the state purchasing division for years, he said.
"We strongly stand behind the public purpose of this legislation, which is to allow purchasers off the state list to get the best product for their purchase," he said.
Best value vs. low bid
The legislation would make a major change in the way the state chooses a preferred vendor at a guaranteed price.
Typically, the state does this on a product-by-product basis, seeking the preferred vendor for, say, tractors at a specific horsepower, and then selecting the vendor with the lowest responsive bid. State agencies and local governments go to the preferred vendor for the guaranteed price over the term of the contract, which typically runs three years.
The presumption is the vendors will cut their prices to win the contract because they are likely to sell a higher volume of goods and services.
Multiple award contracts are much broader in scope. The state chooses multiple preferred vendors for a variety of products or services. Selected vendors would offer their full catalog of products at discounted prices, and buyers could choose the item that best suits their needs.
Byassee said the legislation will likely affect state purchases worth several million dollars annually. State records show that in the 2008-09 fiscal year, the state purchased slightly more than $1 million worth of John Deere equipment.
The legislation allows for more than price to be considered: lifetime use, warranties, quality of service and past performance.
Those factors work in favor of a business with products that sell for more, but cost less in the long run because they need fewer repairs or come with strong warranties. John Deere has a reputation as a higher-end manufacturer of products with durability.
Lanier said that's why the company supports the legislation.
"In order to have our type of equipment to be considered by governments, you have to have a best-value proposition rather than a low-bid proposition," he said.
The original bill covered construction, forestry and ground maintenance equipment. State Sen. David Rouzer, a Benson Republican, said he allowed the bill to be amended to include communications equipment at the request of a lobbyist for communications equipment maker Alcatel-Lucent.
Lewis and Byassee said they knew of no opposition to the legislation. Lewis said that Caterpillar, which often competes with John Deere, supported the bill. It, too, has a strong presence in North Carolina.
Will it save money?
Lewis predicted the bill would lead to fewer bid requests and therefore save the state money. Byassee said there may be fewer requests, but each one would take more time to make sure governments are getting a good deal.
"We're trying to provide more flexibility so that different agencies can meet their own needs while doing it in a way that doesn't just completely let go of our obligation to save the state as much money as possible," Byassee said.
State lawmakers have required the multiple award method in one other area: furniture purchases. But their intent wasn't to save money. It was to make sure North Carolina furniture makers got a piece of the action.
Staff writer Joseph Neff and database editor David Raynor contributed to this report.
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