AUGUSTA, Maine — State officials defended the government’s procurement process this week in the wake of a Milo businessman’s complaint that the state wasn’t doing enough to support Maine businesses.
Last week, Walter Lougee, 67, owner of World of Flags USA of Milo, faulted the state for awarding the contract for American and state of Maine flags to Quinn Flag of Pennsylvania when his bid for the American flags, he said, totaled only about $30 more than Quinn’s — a figure the state says is not accurate.
The small-business owner had counted on supplying the flags to the state as he has in past years. Lougee said his bid had remained the same over the years with free shipping even though his business costs had increased. He learned in January that an out-of-state firm received the contract, a move that left him simmering. Lougee suggested the state needed a “buffer” — or slight preference when bids are close — to help Maine businesses compete, especially since Maine businesses pay an assortment of taxes and make contributions to local communities.
Without any preference or buffer on the books in fiscal year 2008, 56.8 percent of the state’s purchases of commodities were from Maine businesses or businesses with Maine addresses, Betty Lamoreau, director of the state Division of Purchases, said Wednesday. In addition, 87 percent of the contracts awarded by the state were to businesses that have a significant presence in Maine, she said.
“We do what we can to reach out to Maine businesses, and they respond,” Lamoreau said.
Martin Sheehan, director of the Maine Heritage Policy Center, which operates a Web site — MaineOpenGov.org — that details much of the state’s spending, figures the state could do much better.
An analysis Sheehan did of 2007 state spending showed that vendor payments were a little more than $1 billion, and of that, 64 percent, or $647.5 million, went to Maine companies. Of the remainder, about $52.8 million went to Massachusetts companies.
“Are there things you can buy in Massachusetts that you can’t buy in Maine? Yeah, I’m sure there are, but there’s also office supplies and office furniture, there’s all kinds of stuff” that can be purchased in Maine, Sheehan said Thursday.
He said Maine used a New York advertising agency for its tourism promotion for about five years. In the last year, the contract was awarded to a Maine agency. In other words, Sheehan said, the state was paying a New York firm to tell people what a great place Maine is to visit. “You just can’t make that up,” he said.
As for businesses that have a significant presence in Maine, Sheehan cited Irving Oil. He said the company, which received $1.3 million from the state in 2007 for services and supplies, lists Lewiston as its Maine base, but it’s clearly a Canadian firm.
Lougee said last week that the loss of the state contract will mean fewer hours for his part-time employee and fewer local donations. “I just don’t understand it,” he said of the state’s policy.
Only one combined request for proposals was put out late last year by the state for 288 state of Maine and 288 American flags, Lamoreau said. Lougee’s total bid for the American flags was $115.20 higher than the lowest bid and his bid for the state flags was $806.40 higher, for a total difference of $921.60, or about 13 percent. Lamoreau provided copies to the BDN of the requisition and the bids submitted.
The state does not specify that the flags must be made in the U.S., but both Lougee and Quinn Flag sell only U.S.-made products. Shipping was included in Quinn Flag’s bid.
Lougee’s bid was for 144 American flags and 144 state flags, which is what he said he had supplied the state over several years. What he didn’t realize until Wednesday was that the most recent state request was for 288 of each flag.
The state’s requests for proposals are now computerized, which is difficult for Lougee, who said he is not computer-savvy. Lougee said he called the Division of Purchases in December and, when asked about submitting a bid, he told the clerk his bid would be the same as last year. When the clerk offered to enter his bid price over the telephone, Lougee said he was never told — nor did he ask — that more flags were being requested this year than in previous years. He said he just assumed it was for 144 flags each.
Had he known the request was for 288 each, Lougee said his price would have dropped considerably. “The more flags I buy, the more I can drop my price; I could have matched that [lowest bid],” he said.
Lamoreau said it’s the responsibility of bidders to be aware of what the request for proposals covers, and if they need clarification, they should ask questions.
Despite the misunderstanding about the number of flags to be provided, Lougee said the state should do more to support Maine businesses. He said he was concerned not only about his business but other businesses across the state striving to keep their doors open.
Maine had a 5 percent “preference” — or buffer favoring Maine businesses — in the 1980s, according to Lamoreau. She said a southern Maine manufacturer submitted a bid to another state during that period, and the firm’s bid of about $250,000 was the lowest submitted. Because Maine had a preference, the other state inflated the firm’s bid by 5 percent, which caused it to lose the job, she recalled. The Legislature reversed the law soon after that because it recognized how damaging it could be to Maine businesses, she said.
In addition to Maine, 34 states have no buffer that favor their in-state businesses, according to David Farmer, a spokesman for Gov. John Baldacci’s office.
The procurement process is guided by the Legislature, according to Lamoreau. “The statue requires that we make purchases by competitive bidding,” she said. “We take that very seriously and we think that it’s important that we have a fair and level playing field for everyone.”