S.C. to buy computers out of state–Cost-saving measure draws fire from small business advocates

by Lauren Markoe, Staff Writer, The State

In the name of thrift and to the chagrin of local businesses, the state plans to stop buying computers and related equipment directly from South Carolina companies.

South Carolina intends to join a group of 15 Western states formed to cut purchasing costs. The Western States Contracting Alliance buys only from large computer manufacturers, so South Carolina would no longer place computer orders with smaller, in-state suppliers.

State estimates show that the new computer-purchasing plan, which would take effect May 1, would save $1.5 million a year.

Gov. Mark Sanford has focused his administration early on cost-cutting, but he also has presented himself as a strong advocate for small businesses — which he identified during his campaign for governor as “the forgotten engine of economic development in our state.”

“Will you be able to perfectly balance those two objectives in every instance? Probably not,” Sanford spokesman Will Folks said.

While the governor is working to improve the business climate for smaller South Carolina companies, Folks said, he has no say in state procurement policies.

Frank Knapp, executive director of the S.C. Small Business Chamber of Commerce, called the state’s intention to purchase through the alliance “inconsistent with the policy of supporting small businesses.”

In a letter to the state procurement office dated Wednesday, his group formally protested the new procurement plans.

Fourteen small computer businesses will take a hit under the new policy, he said.

Knapp also questioned whether the state would actually save $1.5 million, contending that the figure doesn’t take into account what the state could lose when South Carolina computer companies lose state business.

“Those companies pay state taxes,” he said. “They pay employees who pay state taxes.”

Fred Reavis, owner of Data Network Solutions of Chapin, estimates that state contracts make up 30 percent to 40 percent of his business.

“I would hope they would rethink this,” he said, “and keep the contracts in state with local small businesses.”

The state spent $75 million on computer in fiscal year 2002.

Mike Sponhour, spokesman for the State Budget and Control Board, said most of the $1.5 million saved through the new procurement program would not impact small South Carolina businesses.

The state buys 78 percent of its computers through direct contracts with computer giants Dell and Gateway. By joining the Alliance, South Carolina will pay less for those computers and will get most of the $1.5 million in savings through those cost reductions.

Local dealers would be hurt in the elimination of state sales contracts for other computers. For example, 10 South Carolina companies provide the state with HP-Compaq computers.

But Sponhour says those local dealers can expect some involvement with the alliance contracts, possibly as distributors.

Sanford was not involved in the decision to join the alliance, Sponhour said. State information technology procurement officials began the initiative last fall, before Sanford was governor.

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