Library Acqursrtrons: Practice & Theory, Vol. 15, pp. 231-235, 1991 03&1-6408/91 $3.00 + .OO Printed m the USA. All rights reserved. Copyright 0 1991 Pergamon Press plc

ALA ANNUAL CONFERENCE 1990

BIDS AND CONTRACTS: THE STATE ENVIRONMENT

BARBARA A. WINTERS

Head of Acquisition Services

Virginia Commonwealth University Library

Richmond, VA 23284-2033

Abstract - Whereas the process of competitive procurement has historically been a source of frustration for acquisitions librarians, the author posits that the pro- cess can be desirable. She briefly discusses the background of competitive procure- ment in libraries, describes the state environment, furnishes up-to-date impressions of the process, and defends her thesis. Advice on the implementation of a bid pro- cedure is offered to librarians.

INTRODUCTION

Today I will take a different position on the topic of competitive procurement of library materials than I have taken heretofore; it is also a different position than can be found in most of the literature. Today I would like to posit that procurement of library materials via com- petitive bid can be desirable and advantageous.

I have been asked to speak about the bid and contract situation in a state-funded environ- ment. Therefore, I will describe that environment and also discuss my impressions of the bid and contract process after the first full year of implementation. I will briefly defend my the- sis that competitive procurement of library materials can be desirable and advantageous, fo- cus on end-of-the-year procurements, and draw some conclusions.

I have been reading a book lately called Cannibals in the Cafeteria and Other Fabulous Fail- ures. Among other things, the book discusses what can happen to individuals and businesses when they fail to adequately prepare for change. Let me share one of the anecdotes with you:

As part of his vigorous campaign to modernize Abyssinia in 1890, the forward-looking Emperor

Menelek II ordered three electric chairs from New York. Only when they arrived did he learn that for the very best results you need a supply of electricity, which in those days, Abyssinia lacked.

Two of the chairs were thrown out and one was used by the Emperor as his throne [I].

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232 B. A. WINTERS

The analogy is this: plan for this process. Do not think that you can ignore the issue, thereby causing it not to be an issue. Choose competitive procurement by the spirit of the law, if not by the letter of the law, by making it a part of your own agenda before it is imposed on you from the outside. A survey of the recent literature should convince you that competitive pro- curement is indeed a trend in many state-supported and private settings. No longer are pur- chasing agents willing to look at the sizable library budgets spent for materials without requiring that purchases from these budgets be made according to the rules and regulations of competitive procurement.

BACKGROUND

Some of you may at this point be only tangentially familiar with the whole issue being dis- cussed today, that is, the purchase of library materials via the bid process. Let me give you some very brief background. Until last year, if you had searched the literature on this issue, you would not have found much and what you did find would have pointed out the incom- patibility of public procurement with library acquisitions practices. For example:

l Daniel Melcher in Melcher on Acquisition (1971) has written a chapter on the “Fallacy of the Bid Process.” This piece is dated with regard to cost figures but nonetheless con- tains some still-valid information [2].

l Calvin Boyer, in the March 1974 issue of College and Research Libraries, handily dis- cussed “Statewide contracts for library materials: An analysis of the attendant dysfunc- tional consequences [3].

Recent literature may take a different position:

l The proceedings of the 1989 Charleston Conference on Issues in Book and Serial Acqui- sitions contains the text of a practical and informal, but structured, presentation that Stephen Clark of William and Mary and I made on the topic (Library Acquisitions: Prac- tice and Theory) [4]. Since the time of that presentation, 1 have changed my opinion about the desirability of applying open procurement to library materials purchases.

l An article by Christian M. Boissonnas, Acquisitions Librarian at Cornell University (in Against the Grain), describes his reasons for implementing the bid process for procure- ment of library materials and the nature of the process itself [5].

In this section on background, let me remind you that there are a number of standard ways to purchase competitively:

1. Invitation for Bid (IFB): Award of contract goes to the lowest bidder. 2. Request for Proposals (RFP): Award of contract is based on a combination of factors,

such as ability of the contractor to meet desirable specifications, cost, and so forth. When I state that competitive procurement of library materials can be desirable, I am speaking of the RFP process.

3. Purchase of individual titles or backruns of journals via quote, either oral or written.

Bids and Contracts: The State Environment 233

4. Small purchase exceptions: These usually fall under a dollar threshold, specified by the agency granting procurement authority to the library. You must determine whether the requirements for small purchase exceptions in your library are based on single purchases or aggregate annual charges.

In most cases, it is very important to avoid awarding a contract for library materials to the lowest bidder [6]. What librarians are purchasing is a service, not a good. When you are pur- chasing a good, such as equipment, award of contract to the lowest bidder can sometimes be appropriate, although those of us who work in buildings that are heated and cooled with equipment and supplies installed by the lowest bidder may even disagree with that statement. However, in the purchase of library materials, proof of service in various areas should be the basis for the award of contract.

DESCRIPTION OF THE STATE-FUNDED ENVIRONMENT

Although I will describe the environment in Virginia, I believe the description can be gen- eralized to most state-funded environments, federal environments, and some private environ- ments. In Virginia, the state-funded environment is one in which allocations are approved by the state general assembly following a formula developed by the State Council of Higher Ed- ucation for a biennium (two-year period). The allocation goes to the University, which can adjust it. The first year of the biennium is tenuous because we may not know what our real allocation is until well after the beginning of the fiscal year.

It is an environment where monies cannot be carried over from year to year and therefore must be spent. At the same time, there is often an opportunity to transfer end of the year mo- nies from other budget lines (such as revenues and recoveries) into the materials budget, where (it is perceived) there is always a need and always an outstanding encumbrance figure. For ex- ample, at the end of this fiscal year, our business manager phoned me to ask if I could spend a total of $107,000 within a two-week period. So, it is an environment where you have to have encumbrances or, better yet, outstanding invoices to cover this largesse. After all, if you can- not spend the money with little notice, do you really need it?

It is an environment where it is better to overexpend rather than underexpend because new allocations may depend on the prior year’s expenditures. It is an environment where prepay- ments are not permitted, no matter what they are called. It is an environment common to all acquisitions librarians where it is never possible to predict with complete certainty what will be spent on fixed costs, such as serials renewals, during the year. It is an environment in which approval expenditures are predicted based on an expected publication rate.

IMPRESSIONS OF THE PROCESS

In my Charleston speech, I was somewhat ambivalent about the advantages of this process. I am now prepared to say that it can work if you are in control of the process and if you have planned the process carefully. You can do it without any loss of “professionalism.” In fact, you can perform the process in such a way that it enhances professionalism. Joe Barker (Uni- versity of California, Berkeley) is fond of saying that acquisitions is emerging as a subprofes- sion and that the acquisitions librarian can and should manage by policy. Responsible

234 B. A. WINTERS

competitive procurement should be part of the policy that acquisitions librarians set within their libraries, whether external constraints are in place to enforce this or not.

The two most significant advantages of this process are an ability to demonstrate to out- side auditors that there is no favoritism in the process and the chance to negotiate a better dis- count than you might otherwise get. Boissonnas discusses the quotes presented by the winning vendors in the Cornell bid process and points out that “had we had these quotes in 1988/89, when we spent $410,000 for about 11,700 U.S. firm-ordered monographs, we would have been able to purchase an additional 700 titles, or 6% more, on the same money” [7].

SOME PRACTICAL SUGGESTIONS

Arnold Hirshon (Wright State University) and I are coauthoring a book that will discuss managing the process; so I will not discuss that much here, except to make some basic suggestions.

1. Plan for the process. Think about such things as what your mandatories will be. Con- sider, for example, whether you can or should demand financial disclosure on the part of respondents, when financial disclosure cannot be demanded from privately held companies. In the same vein, consider, if the companies were to provide you with annual reports and Dun and Bradstreet ratings, whether you have someone in house who can interpret and compare this information. What you really need is to know about the sta- bility of the company, and requiring that the company has been in business a certain number of years will suffice.

2. Remember, you can write specifications for what you want. The purchasing agents who manage the process for the state in Virginia are fond of pointing out that, if you want a Lambourghini, you shouldn’t write specifications for a Ford. Another example follows: Our vendors have asked us to send them a “fair mix” of orders (that is, no more than 20% of the orders for peripheral items, such as society publications). This has given us leeway to order a number of items direct; we can justify this by stating that the orders are “outside the 20% negotiated.” This is especially useful when we need to place rush orders directly with the publisher or with the campus bookstore.

3. Write specifications so that foreign materials and rare books (or other out-of-print or limited materials) are exempt.

4. Plan on how to deal with sole source or proprietary publishers. Remember end-of-year spending and compare that with the sole-source nature of many traditional library end- of-year purchases (such as large microform sets). Instead, you may want to consider spending end-of-year monies on prepayment of periodicals. In our case, we overen- cumber the discretionary funds of our budget by 20% to cover the amount of materials that will not be supplied and in order to have invoices in hand at the end of the year. In this way, we are spending the monies on materials that are top priority to us in the first place. This has been a safe practice to date because 10% of the materials we request are never shipped and another 10% are shipped but not within the same fiscal year they are encumbered.

5. Rely on the experience of your colleagues in the profession. Other people have written specifications. For example, just about anyone in a public institution in Virginia has done this. Boissonnas’ RFP is an excellent example of simplified specifications that neither require nor contain a lot of state boilerplate-type legalese. Ask for copies of other

Bids and Contracts: The State Environment 235

librarians’ specifications and customize them for your needs. I will warn you to verify first, however, that the specifications were drafted by a librarian and not by a purchasing agent. Here is a brief list of some of the main points you may want to consider: services, such as reports, documented proof of current turnaround time, price prediction capa- bilities, shipping specifications, reimbursements, ability and willingness to search out- of-print items; what types of computer support are available or planned; what charges will be incurred and whether these charges are in addition to the discount offered; pricing method; and invoicing specifications.

CONCLUSION

When my children were young, I used to read them fairy tales. Many times someone would die in these tales. I would always preface the story with a speech about how death is not bad, but that there are caveats. Let me say that competitive procurement of library materials in a state-supported institution is not bad and is, in fact, desirable. However, there are caveats:

1. As the acquisitions specialist, you must have control of the process. You cannot sur- render this control to an agency outside the library, such as a university purchasing agent. Purchasing agents are notoriously unable to understand the difference between procurement of library materials and procurement of other materials. If control of the process is abdicated, purchasing agents may impose such restrictions as disallowing cancellations. This has actually happened to one of the state-supported institutions in Virginia. Be proactive by setting competitive procurement (either formally or informally) as part of your own agenda. Be more conversant about the procurement manual for your governing agency than your purchase agent is. I have formerly encouraged professional organizations to be advocates for acquisitions librarians by demanding that libraries be exempt from competitive procurement. I an now ready to modify that position by encouraging that libraries be granted delegated purchasing authority for procuring library materials, thus bypassing purchase agent review.

2. Plan for the process. Remember to include plans for all exceptions, such as foreign purchases.

3. It is very important to avoid awarding a contract for library materials based on cost alone. Remember, what you are purchasing is a service, not a good.

NOTES

1, Pile, Stephen. Cannibals in the Cafeteria and Other Fabulous Failures. New York: Harper & Row, 1988, p. 70. 2. Melcher, Daniel. Melcher on Acquisition. Chicago: American Library Association, 1971, pp. 46-55. 3. Boyer, Calvin. “State-Wide Contracts for Library Materials: An Analysis of the Attendant Dysfunctional Con-

sequences,” College and Research Libraries, 35 (March 1974), 86-94. 4. Clark, Stephen D. and Winters, Barbara A. “Bidness as Usual: The Responsible Procurement of Library Mate-

rials,” Library Acquisitions: Practice and Theory, 14 (1990), 265-274. 5. Boissonnas, Christian M. “ Firm Order Bidding: The Cheapest Way to Buy Books?” Against the Grain, 2 (Sep-

tember 1990), 23-25. 6. There are exceptions to this rule; for example, procurement of large back runs of journals via quote can often be

based purely on cost, provided all copies quoted are in good condition. 7. Boissonnas, Christian M. “Firm Order Bidding,” 1990.