The State Administrative Board’s Finance and Claims Committee (the “Committee”) recently released the agenda for its February 23rd meeting. Generally, the Committee must consider all state contracts valued at $250,000 or more, and make a recommendation to the State Administrative Board (the “Board”) as to whether or not to approve those contracts. Next week, the Committee will consider a number of such contracts, but, more importantly, this agenda also shows that the Committee is being notified of several emergency contracts related to water infrastructure in Flint. Among these are a $30M contract between DTMB and Home Depot to “procure enough water filters, filter replacement cartridges, bottled water, and plumbing supplies for the city of Flint” and a $778,650 contract between LARA and Johnson & Wood, LLC, a mechanical contracting company in Burton, Michigan, for the replacement of plumbing fixtures in Flint.

These Flint-related contracts are exempt from Board approval because both were entered into pursuant to Administrative Guide Procedure 0510.38 (the “Procedure”) which allows an executive agency to make an “emergency purchase” without going through the typical procurement process. An “emergency purpose” is defined in the Procedure as:

  • A purchase in an emergency situation of a commodity or service which has a value in excess of a department’s delegated purchasing authority; and
  • A purchase made to protect the immediate health, safety or welfare of individuals or property.

Under the Procedure, once an executive agency determines that “an emergency exists and that a service or commodity is needed to protect individuals, property or governmental services,” the agency may identify a suggested vendor to provide the necessary goods or services. If the emergency occurs during normal working hours, agency program staff forwards the emergency request to the agency’s procurement staff.

When the agency’s procurement staff receives an emergency request, they must commence contacting vendors. If the goods or services necessary to address the emergency are related to an existing contract, the staff must start by contacting the vendor for that specific contract. If that vendor can timely provide the goods or services necessary to address the emergency situation, then procurement staff issues a purchase order contract to that vendor.

However, if that vendor cannot timely provide the services or sufficient goods to address the emergency, or if the necessary goods or services are not related to an existing contract, procurement staff must then call as many relevant vendors as time permits, including the suggested vendor, in order to receive estimates related to price and delivery timeframe. The procurement staff then issues a purchase order contract to the vendor who can best meet the immediate needs of the emergency.

If time does not permit the agency’s procurement staff to call multiple vendors, they must then contact the suggested vendor, or another known vendor, in order to receive a quote related to price and delivery timeline and issue a purchase order contract to that vendor.

If the emergency occurs outside of normal working hours, the aforementioned process can be conducted by agency program staff, as opposed to procurement staff. Regardless of whether procurement or program staff issues the purchase order contract, once it is issued, the agency must notify the State Administrative Board, the Civil Service Commission, and other applicable entities.

Conclusion

These contracts demonstrate two important points related to procurement. First, in order to expedite relief to the City of Flint and to more efficiently deliver goods and services related to the water crisis, the State will use available tools to bypass the typical procurement process. Second, interested vendors need to be aware of the State’s evolving contract needs related to Flint, and to be well-informed with regard to the State’s procurement processes.