FISCAL NOTE
Date Requested: February 12, 2025
Time Requested: 08:16 PM |
| Agency: |
Purchasing Division |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1459 |
Introduced |
HB2107 |
|
|---|
| CBD Subject: |
Finance and Administration |
|---|
|
FUND(S):
N/A
Sources of Revenue:
Other Fund This legislation does not affect the WV Purchasing Division's funds.
Legislation creates:
Increases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
This bill proposes to amend W. Va. Code §5A-3-10. The changes noted would not have a direct fiscal impact on the Purchasing Division but would have unintended fiscal consequences on agencies seeking goods or services that are offered by non-profit workshops.
Currently, fair market value is determined by the Purchasing Division through the bidding process, with the low bid establishing fair market value. By mandating that purchases be made from non-profit workshops without competitive bidding and with advice from the Committee on the Purchase of Commodities and Services from the Handicapped, agencies will be required to use workshops for a wide array of goods and services, and likely pay more than they would if they were solicited through competitive bidding.
Additionally, the current system utilizes a Central Nonprofit Agency (“CNA”), which is referenced in 5A-3A-2. This CNA represents nonprofit workshops, providing the Master Agreements with the Purchasing Division, which connect the State with the services provided by nonprofit workshops. The CNA receives 4.1% of all contract awards as a fee for their services. Mandating the use of nonprofit workshops under the existing system also mandates the state pay an additional 4.1% for all of the commodities and services offered through the program.
This was evidenced through a previous solicitation in which a non-profit workshop submitted a bid for a substantially lower price than what the Committee deemed the fair market value for that good or service.
Further, requiring the advice of the Committee in evaluating fair market value will offer little to reign in state spending. Last year, the Committee approved a proposal recommended by the CNA to provide up to 30% price increases for services. The realistic application of this legislative proposal would allow any number of cost increases without significant checks, resulting in increased costs to state agencies for necessary services such as janitorial work, while also allowing the CNA to keep 4.1% of the increased pricing.
In summary, the State of West Virginia already utilizes nonprofit workshops in all areas where it is feasible, and a mandate would do very little to change that usage, except to provide further limits in competition by providing no opportunity for state agencies to seek alternative sources for these necessary services and products when the pricing becomes unworkable. So while this would have no significant fiscal impact on the Purchasing Division, it would lead to fiscal impacts on other agencies utilizing those services. When a workshop is allowed to bid independently on solicitations, they are more competitively priced in nature and payments are made directly to the nonprofit workshops to support their missions.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2025
Increase/Decrease
(use"-") |
2026
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
This bill proposes to amend W. Va. Code §5A-3-10. The changes noted would not have a direct fiscal impact on the Purchasing Division but will likely result in unintended negative fiscal consequences on agencies seeking goods or services that are offered by non-profit workshops.
Memorandum
Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form.
Person submitting Fiscal Note: Samantha Willis
Email Address: Samantha.L.Willis@wv.gov