Q. Under the Micro Purchase guidelines, the Best Practices Manual talks about not "Bid Splitting" to avoid having to use another method of procurement. This makes sense if I'm buying 5 buses and split the procurement into 5 separate purchases; but it is not as clear on other items. For instance, does this mean that I need to watch how much we spend with a certain vendor on just oil filters, or how much we spend with a certain vendor on auto parts generally - likewise for office supplies, should I just look at big items like paper, or should I look at general office supplies purchased from one vendor?
For example, we purchased $4,000 worth of various office supplies from one particular vendor last year, each one was considered a Micro Purchase. This year, if we expect to spend a similar amount, should we consider the whole $4,000 as one non-Micro Purchase (and therefore use a Purchase Order, etc.)?
A. Bid Splitting - There is no specific formula for determining that bid splitting is or is not occurring. An agency may have, for example, a very valid reason for only buying one or several months' requirements at a particular time. Perhaps there is an expected change in the product line and the agency does not want to commit to any more than necessary before the new products become available. Or perhaps there are limitations on the available inventory space at the agency's facility.
We think that the important thing to be considered is the pattern of the agency's buying for any particular item. In other words, one would have to review the buying history and make a judgment that the pattern of buying indicates contracts being awarded at rather frequent intervals for amounts that were under the thresholds for micro-purchases or small purchases, and also that there was no sound reason for the buying pattern.
We would also say that the issue of splitting would not normally arise in a reviewer's mind when agencies award contracts for customary (and longer) periods such as one to two years. Also, the contract files should reflect how the contract period of performance was determined in order to avoid any judgment by a reviewer that bid splitting was occurring. Why, for example, does the agency buy only two months worth of its needs at any given time when it could be soliciting bids for one or two years' requirements and presumably getting much better prices? One thing an agency might do to avoid any criticism of its buying patterns is to periodically review the repetitive purchases to determine if consolidation and larger procurements would be warranted. The results of the agency's review could be documented to reflect its findings as to the items reviewed. This documentation would then be available should anyone later question the buying patterns.
The bottom line with regard to bid splitting issues concerns the reasons the agency is doing what it is doing, and the file should explain that decision in such a way that it makes sense to an independent third party. Multiple periodic orders would be considered "splitting," then, when the agency had no good rationale from a business or programmatic perspective to continue to buy an item repetitively at frequent intervals instead of consolidating its procurements and soliciting bids for such a length of time and for such quantities as to get good price competition from a number of suppliers that could meet your delivery requirements.
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