Monthly Archives: January 2015

PPEA: A way for Virginia to discriminate against small businesses?

The other day, I saw a solicitation on eVA for a product that we sell.  Seeing an opportunity, I prepared a proposal for said product and the associated services.  I decided to hand deliver this proposal.  I was fortunate enough to be able to hand my proposal to the local County Administrator.  After some small talk, he asked me if I had my $5,000.00 check?  I was confused!?!  What was he talking about???

It was at this point that he informed me that the County was only accepting proposals that complied with the PPEA procedures adopted by the County.  So, I started my research…

  • PPEA is the Public-Private Educational Facilities Infrastructure Act of 2002. It is outlined here:  https://dgs.virginia.gov/PPEA/tabid/62/Default.aspx
  • PPEA allows Counties to establish their own Purchasing Policy implementing PPEA.
  • This PPEA Purchasing Policy can include a “Proposal Review Fee.”
  • This particular PPEA Purchasing Policy says: “the County will require an initial processing fee of Five Thousand Dollars ($5,000.00) with an additional proposal fee of Ten Thousand Dollars ($10,000.00) to be charged should the project proceed beyond the initial review. The initial processing fee shall be submitted with the initial proposal or competing proposal. The County will refund any portion of fees paid in excess of its direct costs which include, but are not limited to, all staff costs, outside consultants, financial advisors, engineers and attorney’s fees associated with evaluating the proposal. In the event either the initial processing fee of Five Thousand Dollars ($5,000.00) or the additional proposal fee of Ten Thousand Dollars ($10,000.00) is insufficient to cover all of the direct costs incurred by the County, the proposer shall pay such additional direct costs incurred by the County in reviewing the proposal.
  • It is not uncommon for these PPEA Proposal Review Fees to reach $50,000. Here are some examples:  (I wish I was able to charge $50,000 to read every proposal that comes across my desk.)
    1. http://resources.dhrm.virginia.gov/rfps/ppea/emails.pdf
    2. http://www.vita.virginia.gov/itpartnership/default.aspx?id=445
    3. http://www.rrha.org/2009/html/11pdfs/Summary.pdf

So, Counties (and State Agencies & Institutions) in Virginia apparently have the right to charge businesses $5,000 to $50,000 (or more?) just to read their proposals for products and/or services.  In my example above:

  • A big manufacturer paid a County $5,000 to read their ~$2,500,000 proposal
  • the County was unable to read a local small business’ $777,000 proposal

In summary, it looks like PPEA is a mechanism for Virginia to discriminate against small businesses.  And, I have a hard time seeing how the County is going to benefit by purchasing a solution that is ~$1,700,000 more expensive, but included a $5,000 initial processing fee.