OIG Bulletin, February 2022: Procuring Supplies During Market Disruptions and Supply Chain Delays

Over the past few months, delays in global supply chains and other market disruptions have affected us all. At the state and local level, supply chain challenges have hindered the ability of procurement officials to obtain the supplies their jurisdictions need. However, it is important to be aware that Chapter 30B, the Uniform Procurement Act, remains in effect, and jurisdictions cannot ignore its requirements because of supply chain delays.

If you are having trouble procuring supplies that your jurisdiction needs, you may need to adopt a more creative approach to procurement that still conforms to Chapter 30B requirements. The provisions of Chapter 30B are flexible enough to allow your jurisdiction to obtain supplies and services while maintaining the accountability that spending public money demands. The following suggestions may be helpful for local jurisdictions dealing with supply chain issues:

Undertaking a new procurement for needed supplies is always an option.

Having an existing contract with a vendor does not preclude you from conducting other procurements for the same supplies. To save time and resources, however, we recommend that you consider using statewide contracts or cooperative contracts. See M.G.L. c.30B, §§1(c) (statewide contracts), 22 (cooperative contracts). Statewide contracts, available on the Operational Services Division’s website, are deemed to comply with Chapter 30B. Therefore, you do not need to conduct your own competitive procurement process when using a statewide contract. The same applies to cooperative contracts, which are contracts that an in-state or out-of-state political subdivision, or federal or state agency, has already competitively procured.

Using smaller contracts for a particular supply may be another way to get the supplies you need.

Entering into contracts for the short term or for a smaller quantity may decrease risk from fluctuating markets or supply chain issues. Seeking smaller contracts does not constitute bid splitting unless your intention is to evade Chapter 30B requirements. See M.G.L. c. 30B, § 11 (“No person shall cause or conspire to cause the splitting or division of any procurement, specification, invitation for bids, request for proposals, proposal, solicitation, or quotation for the purpose of evading a requirement of this chapter.”). For instance, splitting purchases into smaller contracts that only require price quotations to avoid the competitive bid dollar threshold would be a violation of Chapter 30B. However, dividing purchases for legitimate and verifiable business reasons is acceptable under Chapter 30B. If you are concerned that your actions may be perceived as bid splitting, we strongly advise you to include a written explanation of your reasons for dividing purchases in your procurement file.

You can unbundle related purchases into separate procurements, even if you typically bundle them.

Although bundling purchases can lower procurement costs, you will not violate Chapter 30B by unbundling your purchases. For example, you can purchase paper clips separately from copy paper; Chapter 30B does not require you to purchase all of your office supplies together. It may be easier to buy these supplies together when not faced with supply chain issues. In these uncertain times, however, when a single vendor may not be able to deliver all the items you need, unbundling your purchases may be a better option.

Finally, consider whether you really need a particular supply right now.

Can your purchase wait until markets stabilize? Can you seek out an acceptable alternative that might be more readily available? For example, if you are seeking to replace broken equipment, could you pay to repair it instead?

Other considerations

Of course, Chapter 30B does allow for emergency procurements when complying fully with the statute would endanger the health or safety of people or their property. See M.G.L. c. 30B, § 8. However, market disruptions and supply chain issues on their own do not constitute an emergency.

It is important to note that a vendor’s inability or refusal to comply with the terms of a contract is not necessarily a Chapter 30B issue. It is a potential breach of contract, and you need to consult with legal counsel to determine the best course of action for your jurisdiction if that occurs. Also, remember that even if you are sympathetic with the challenges faced by a vendor, you cannot change the terms of an already executed contract by accepting higher prices (unless the contract expressly allows it) or by altering the contract’s scope because of supply chain issues. Doing so would undermine the process that Chapter 30B requires to obtain the best, most competitive prices.

Conclusion

The current market and supply chain issues require thinking outside of the box. The options outlined above may create more work for your procurement staff. However, ignoring Chapter 30B is not an advisable option, either legally or financially, and failing to follow Chapter 30B will not make supply issues go away. Remember why Chapter 30B exists: not to impose rules for the sake of rules, but to create basic controls that ensure accountability, transparency and integrity regarding the expenditure of public funds. Taking advantage of the flexibility inherent in Chapter 30B by following the recommendations above will help you get the best price for your jurisdiction even in these uncertain times.

If you have Chapter 30B questions, our Office is here to help. Our Chapter 30B Technical Assistance Hotline is available by calling [phone], by emailing [e-mail] or by filling out our online form.

Date published:	February 25, 2022