Fixing an unfair system
The State has admirable goals for inclusion of small and minority-owned vendors. But the State rarely meets its goals for IT hardware because current law permits unfair competition.Current law allows manufacturers of IT hardware to provide special discounts to their favored resellers for state bids, ensuring the favored resellers win low bid contracts.Price parity where the buyer mandates that all resellers get the same price from the manufacturers is a better way. Price parity creates a level playing field by requiring the manufacturers to offer the same low price to all resellers, not just their favored companies.Without a price parity law, only the big resellers with special lower prices from the manufacturers win low bid State business. That locks out minority-owned resellers from State contracts.SB2724 (Preston) and HB5014 (Slaughter) sets up a single pilot procurement with price parity for the Department of Innovation and Technology and the University of Illinois. It authorizes the Department and the University to use price parity more often, but doesn’t require them to do more than just the one pilot project. The bill is a reasonable, incremental step to try out price parity in only one procurement for the Department and the University.This bill is initiated by EC-United, a Black-owned IT technology company that discovered this policy after losing out on three dozen public procurement bids. They kept losing – even with tiny margins – because the large competitors had special large discounts on the same product.For example, on a bid for buying a $1,000 laptop, only the largest reseller gets a special 50% discount from the manufacturer while the local reseller is stuck with a standard 20% discount, the largest reseller can mark up their $500 price by $200 and win the bid with a $700 offer. The local company with a price of $800 loses even without any markup. On State bids using price parity, every reseller gets the same deep discount.The price parity policy will drive savings to the state, allow the resellers to compete on a level playing field and help the state achieve its small business and minority spending goals.Supported by the Illinois Hispanic Chamber of Commerce and the Business Leadership Council.
