Food fight: Small vendors spar over DGS contracting

Citing “unintended consequences,” a small business group is trying to repeal a bill relating to state supplier contracts that they supported last year. They say they have a pair of authors in the Assembly and will get a bill in by the legislative deadline.

Meanwhile, the bill’s author and the main agency affected, the Department of General Services (DGS), both say the fix the group is peddling doesn’t match the alleged problem. One major small business group is likely to oppose the change as well.

At issue is the often byzantine world of state supplier contracts, particularly the $100 million or so the DGS spends each year buying food, much of that for the Department of Corrections and other agencies that run large residential institutions. It is state policy to give much of this business to small businesses, as well as those run by disabled military veterans.

Making it easier for these vendors to get these contracts was the stated intent of AB 31, a successful bill by then-Assemblyman Curren Price, D-Inglewood. Previously, the law allowed agencies to award contacts of up to $100,000 to these businesses without going through the normal state bidding process. Price’s bill, signed by the governor in October, expanded that limit to $250,000.

But a group called the Coalition of Small and Disabled Veterans Businesses has been looking for an author to repeal the bill. The group’s lobbyist, Lori Kammerer, said that since going into effect on Jan. 1, it is having the opposite of its intended effect.

“The way this law is worded gives DGS the ability to structure these contracts in a way that small businesses cannot bid on them,” Kammerer said.

Kammerer said Tuesday that her group had found a pair of Assembly authors, Bill Berryhill, R-Stockton, and Kathleen Galgiani, D-Tracy. Neither office had replied to a request for comment by press time.

Price, now in the Senate, said that he would oppose a repeal of AB 31.

“Small food vendors and suppliers claim that they experience difficulty in competing with large nationwide companies for state contracts and I am generally supportive of their efforts to level the playing field,” Price said. “However the language that is being circulated to address this issue does not match their stated intent.”

The Coalition has been distributing a spreadsheet they say shows agencies are increasingly ordering from large vendors, often at higher prices, because it can be more convenient than putting a contract out to bid. For instance, they said, small vendors had been delivering a case of Cheerios to Corrections for $17.65, but that Corrections had started buying the same case from a large vendor, U.S. Food Service, for $29.52.

“It’s easier to pick up the phone and call U.S. Food Service,” Kammerer said.

She said her group has been filing public records requests to try to prove that agencies are moving to bigger vendors. While creating a new contract with a small vendor saves the state money, it does take more personnel time—something that cash-strapped agencies don’t have enough of in this era of thrice-monthly furloughs. The State Auditor’s office will release a report on DGS purchasing in June.

Matt Bender, a spokesman for DGS, said that the Coalition’s figures date from early last year, and the group had failed to show an actual increase in purchases from large vendors at the expense of small providers.  

“I would point out that AB 31 took effect on January, 1, 2010,” Bender said. “If you were looking for data to evaluate the effect of AB 231, I would imagine that one would look for data that was gathered after the effective date of the bill, not a year before.”

Another group representing small businesses, the National Federation of Independent Business (NFIB), said they would oppose changes to AB 31. The group’s legislative director, Michael Shaw, said that there are numerous issues around agencies ordering outside of normal contracting procedures, but that the fix the Coalition is proposing wouldn’t actually affect these practices. He also took issue with the idea that the Coalition supported the bill in the first place.

“They pulled away from the bill at the end and were encouraging people to vote against it,” Shaw said.

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