Local businesses losing out on sales to university

CHAMPAIGN — At the Do It Best hardware store, sales to the University of Illinois are down.

But not for lack of the university's demand for nuts, bolts and other supplies.

Instead, more of the university's business is being outsourced to companies beyond Champaign-Urbana, as a result of the university's efforts to cut costs and centralize purchasing.

Over at Nick's Paints in Champaign, sales to the UI in recent months also have declined and by "a pretty big chunk," said owner Nik Lyons.

"I'm disappointed. From what they've told me, we earned their business," Lyons said.

It's one thing to lose sales to another company if you make errors, if you mix up deliveries or if a customer is not satisfied with the service, but "to have someone tell you, 'We want to buy from you, but we can't' — that's frustrating," he said.

In previous years, the university had standing purchase orders set up at local stores, and UI employees could go to the stores and buy light bulbs, paint or other items. Now that practice is being discouraged.

Purchases orders can still be set up with local vendors, but the amount that can be spent at each store is capped at $52,100 a year for commodities and related services and $73,100 for construction and construction-related services. Employees are being encouraged to order from a "preferred vendor," a company with whom the UI has a contract for certain products (preferred vendors include Grainger, Wesco, CDW-G and many others). Shopping at local stores is limited to emergency-type purchases.

"We are under the directive of the (UI) board of trustees that we bring in every dollar of savings we can on procurement," said Maxine Sandretto, the assistant vice president for business and finance.

In recent years that has meant reorganizing and centralizing the university's procurement, including moving more and more toward an online buying system. UI employees from all three campuses view online catalogs for items such as laboratory beakers or copier toner, move them to a virtual shopping cart and "checkout," with the items being shipped to the university a la Amazon.com. Preferred vendors are chosen by sealed bid or by RFP — request for proposals.

It also has meant complying with the state procurement code. Big-ticket purchases and contracts, such as a tractor or a construction management contract, are awarded through sealed bid or RFP, according to the code. The UI is not required to issue a bid or an RFP for purchases that don't exceed a certain dollar amount — $52,100 for commodities and $73,100 for construction. In previous years, a purchase order with no set limit would have been opened at a local store because a UI department or unit may not have known exactly how much would be spent within the year at that store, according to Sandretto.

The code, which dates to 1998, has been modified several times since then, including, more recently, in 2010 with the establishment of chief procurement for higher education and state procurement officers who review purchasing decisions made by the university.

The shift away from the practice of keeping open standing orders at local stores was prompted by two things, Sandretto said.

"First is the guidance we are receiving from our (state procurement officer) and (chief procurement officer) on these types of procurements, and second is the university's desire to maximize our savings through requiring units to use vendors with whom we have already negotiated contracts for best pricing and service," she said.

"We still have a place for our local vendors," Sandretto added.

In previous years, Do It Best, located a few blocks from campus, sold an average of about $150,000 worth of goods to the university in a year, owner George Edwards said. Now that number is limited to about $52,000 with the policy change.

Edwards said he was aware of the $52,100 limit, but it wasn't until this past fall he noticed it being "imposed."

"We have such a nice broad base of customers — do-it-yourselfers, landlords — the impact wasn't as dramatic had the university been my only account," he said.

Still, he said he was bothered by seeing university business go to out-of-town companies despite his business being in a convenient location and being "aggressive in our pricing to the university."

"It's my corporation. The money stays in this community," he said of Do It Best, which employs about 23 people.

Local stores can still be used when employees need to fix something immediately and overnight shipping is not soon enough, or they need to see the item to check a part, said Janet Milbrandt, the UI's interim director of purchases and contracts. UI employees, especially those who in the past have frequently used local stores, can still use a purchase order to go to the store and get what they need. Units most affected by the policy change have been in Facilities & Services and the Housing Division, where trade unions work on any number of projects around campus.

"It's been a culture shift. (Facilities & Services) is a big unit. We've tried to help their folks out. ... They should know when going to the local store they should be careful not spending over the maximum quickly over the year," Sandretto said.

"It's a learning curve for everyone. Everyone is trying hard to understand and get new rules in place," Sandretto added.

Although UI administration has informed university employees, no specific announcements were made to local businesses about the changes in the procurement process.

"The university is conscious of our relationship with our local community, and we are seeking ways in which we can meet the requirements of the procurement code" as well as the goals of the administrative review and restructuring process going on internally at the university, Sandretto said.

Discussions also are under way between UI officials and the state procurement and chief procurement officers to figure out if there's a way to include more local vendors.

Sandretto said she could not elaborate on what will be allowed or in what circumstances, but that the talks were ongoing.

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Sid Saltfork wrote on February 19, 2012 at 2:02 pm

Sadly, the local vendors who have served the U of I seem to be experiencing the same thing that has hit the local, small grocery stores.  People only buy their necessary, immediate groceries locally; but buy the bulk at the Big Box stores.  It saves money; but it hurts the local economy.  Stores close; and employees are out of work.  It trickles down to other businesses who depend on local employees like restaurants, car dealerships, etc.  It hurts the local tax base also.  I hope that Dr. Hogan, and Dr. Troyer can continue to patronize local businesses.  Maybe, the fish and goose soirees can be outsourced to Sam's Club to save money also.

Mqqneyes wrote on February 20, 2012 at 7:02 am

  So tell me News Gazette, where are they buying from now?

birdfarmer wrote on March 06, 2012 at 5:03 pm

Please, please, News-Gazette.  Do not blindly accept the easily mis-proven "fact" that UI Purchasing is getting "best pricing and service" even if stated by people with three-word titles after their names.  Not only are local stores being hurt, but the University is daily getting taken to the cleaners on pricing.  Ask for anonymous examples; it will make for a great story, will hopefully lead to a housecleaning at OBFS and re-envigorate purchasing from local vendors at prices good for them and the University.