Original article published on Linkedin by Dustin Lanier, CPPO
"Now, who are you again?"
Tips on validating new suppliers in public procurement during emergency response
COVID-19 has created a crisis with a unique characteristic for public procurement – the need for an urgent response that spans across government jurisdictions, and through government layers, all at the same time. Never has a hurricane (no matter the magnitude) required response across 3.797 million square miles, and through all layers of government from federal, to state, to regional, to schools, to airports, to utilities. It is breathtaking in its span.
The skyrocketing demand for necessary goods and services has created predictable outcomes, including:
Contracts which have in the past had predictable supply now have to be validated by hand, increasing the time and effort to fulfill;
Competition between public entities for scare items, and a steep learning curve for jurisdictions without prior disaster response experience, which Governor Cuomo has described as like being on eBay with 50 other states;
State of Emergency Declarations have loosened procurement requirements – to date 23 states have implemented relaxed procurement procedures in response to the need for urgency.
Under these conditions, it is predictable that both legitimate and illegitimate new suppliers will present themselves to procurement agents at every level. Those purchasing agents will feel conflicts between the need for urgency and the desire to uphold the public trust. How can we know that this supplier, who has never done work with us before, can be trusted not to scam a quick dollar and disappear during the chaos? How can we mitigate the risk to my organization under such extraordinary conditions without slowing down?
Below are some easily applicable vetting steps that you can complete rapidly to develop confidence when new suppliers comes forward in this new normal:
Visit the company website. If not immediately obvious that it is a long-standing company, complete a “whois search”. Check the supplier’s Creation Date, is the date a reasonable age for the type of goods/services they are offering?
Verify that the supplier registered to do business in your state. If not yet registered, at least confirm the supplier is in good standing in their home state by searching the Secretary of State’s respective corporation list.
Verify the vendor is not listed as an exclusion in SAM.Gov, which is both generally smart and a required action for potential FEMA reimbursements in the future.
Review the proposed price list, if applicable. Do a spot-check to compare it to price lists from major cooperatives or other public contracts to ensure the supplier is not attempting to price gouge. (Direct links to most major Co-ops are compiled here)
Verify shipping and handling charges. This is an area suppliers can easily hide costs.
In the case of goods/services from an existing contract, verify that they are in scope and were properly competed.
If available, have an expert in Personal Protective Equipment (PPE) or other surge purchase areas(i.e. Water, fuel, transportation, temporary housing, food, paper goods, etc.) help with establishing minimum quality levels and/or reviewing information sheets to filter real offers.
Finally, be skeptical of new suppliers who present requirements to wire funds or pay before receipt of goods/services. If you are confident from the prior steps, work with your finance department to do a pre-note test of the bank and/or an IRS match. While these are times where action is needed, know that networks of scammers who will be attracted to this situation to test and probe for opportunities to take advantage of perceived hardships.
These simple steps will help create some common-sense filters for the new supply that is being presented in an unsolicited way in an effort to help. We need new suppliers to pivot to the demand, and employing these simple steps will help elevate legitimate suppliers.
We have created a resource page with multiple articles, free to use templates and direct links to all of the major national cooperatives to allow for rapid spot-checking.