At the December 5, 2022 GHAPS school board meeting the board voted unanimously to purchase 130 chairs for $70,748. It was stated that these chairs were purchased for the high school and it will be the first time since the building opened that chairs have been replaced. Not one board member asked a single question regarding the chairs, so we decided to investigate to see if there was any more to the chair story.
According to board policy 6320 – Purchasing
“All procurement transactions shall be conducted in a manner that encourages full and open competition and in accordance with good administrative practice and sound business judgement.
Each year the State of Michigan informs the School of the legal amount for purchases which require a formal bidding process of a single item.
[] Purchases in a single transaction that are in excess of the dollar amount permitted by State statute shall require competitive bids and, whenever possible, have at least three (3) such bids for substantiation of purchase and shall require approval of the Board prior to purchase.”
For the 2022-23 fiscal year, $28,048 is the threshold amount at which school districts, ISDs, and public school academies must competitively bid for: (1) labor and materials for construction projects (RSC Section 1267), and (2) the purchase of supplies, materials, and equipment (RSC Sections 623a and 1274).
So how did GHAPS purchase chairs for S70,748 without getting competitive bids when the threshold set by the State of Michigan is $28,048? It turns out the district used the State of Michigan’s MiDeal program which is 100% legal according to Michigan law. This process is addressed later in board policy 6320 and also in board policy 6440 Corporate Purchasing.
The GHAPS Executive Director of Business Services was kind enough to explain the program. “We utilized the State of Michigan's MiDeal program to adhere to the State's procurement law which allows cities, universities, districts, etc to buy goods and services through State contracts. In essence, the State completes the bidding process and awards contracts to vendors for various categories of goods and services. Eligible entities can then utilize those contracts when making large purchases.”
The chairs were purchased with bond funds issued on June 5, 2020 for $10,780,000. (2021-2022 Audit Report). According to the Business Services Director, “Entities must spend 85% of the issued amount within 36 months of the issue date.”
So in the near future the high school will be receiving 130 Haworth Zody ergonomic chairs (SZT-20-720MA1). Haworth's proposal lists the price for $1950 but the sale price on their website is around $1300. According to the contract the district will receive a 65% discount off standard pricing and will pay $750 per chair, but if the purchase price of $70,748 is divided by 130 chairs the price is closer to $550 per chair. Regardless, a quick internet search returns results for Haworth Zody chairs ranging in price from $400 to $1200, so the GHAPS price is definitely in the ballpark.
So, what’s the point? This is just another example of government entities and big business working together. Who is the winner? – Is GHAPS getting a deal on chairs? That’s debatable. To me it looks like the winners are Haworth who is the recipient of numerous contracts through the MiDeal. I can’t really say taxpayers are losers on this one, but these types of agreements make it extremely difficult for new businesses to enter the marketplace and these agreements limit competition.