Buy or lease? Lawmakers look for best deals on wheels

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State agencies’ commodities and purchasing practices — especially how they buy vehicles — was the focus of Wednesday’s round of legislators’ budget working groups.

House Speaker Philip Gunn, R-Clinton

Mississippi Today

House Speaker Philip Gunn, R-Clinton

House Speaker Philip Gunn, R-Clinton, frequently led the discussion about various agencies’ fleet policies and whether leasing or buying new or used vehicles were the best approaches for state agencies.

For example, Gunn led the line of questioning with Mississippi Department of Transportation Executive Director Melinda McGrath about why that agency buys new vehicles instead of used ones, why heavy equipment such as backhoes and excavators are bought instead of rented and why Transportation Department employees don’t use personal vehicles with mileage reimbursement instead of state vehicles.

By Department of Finance and Administration definitions, the Transportation Department has 2,233 vehicles in their fleet, McGrath said, but 986 of those vehicles are heavy duty vehicles like dump trucks, tanker trucks and asphalt trucks.

McGrath said several of the fleet vehicles qualify for federal reimbursements from the U.S. Department of Transportation, and that a cost-benefit analysis showed that owning heavy duty vehicles instead of renting saved the state between $150,000 and $200,000.

As for use of personal vehicles on the job, McGrath cited safety concerns, like flashing lights on state-owned vehicles that couldn’t be installed on personal vehicles, and employee efficiency concerns, like the ability for the public to notify the department when state vehicles are not on work sites.

Melinda McGrath, executive director of the Department of Transportation, reviews a document while meeting with state legislators.

Zachary Oren Smith, Mississippi Today

Melinda McGrath, executive director of the Department of Transportation

“If you reduce (the number of state-owned vehicles) any more, it would reduce our level of efficiency,” McGrath said. “We think where we are now is a reasonable level of vehicles to maintain what we need to maintain.”

At a later hearing with higher education officials, Gunn pointed out that several universities, namely Jackson State University and Alcorn State University, lease vehicles from Enterprise instead of owning them.

Glenn Boyce, commissioner of higher education, said it is his understanding that universities that buy their vehicles generally get the better bargain, but that there are some situations where the choice depends on the colleges’ ability to perform maintenance on the car on site.

In its responses to the legislative panel’s questions, Alcorn officials stated the university can’t afford maintenance and upkeep on the old vehicles and also purchase new ones. “Therefore, the leasing option was more cost effective at this time,” the written response stated.

At an afternoon session with the Department of Finance and Administration Lt. Gov. Tate Reeves raised the possibility of a joint pool of vehicles for state agencies.

Rather than each department having to pay for an individual fleet, the state would have a joint pool of vehicles that each agency would access, Reeves said. Costs for the maintenance of this fleet would fall then fall on a single entity rather than being dispersed to the agency responsible for the vehicle, he noted.

On purchasing in general, the Department of Finance and Administration’s Aubrey Leigh Goodwin said that switching to a centralized procurement process for each state agencies’ commodities could save money in the long run.

Under such a plan, rather than each agency having their procurement division and process, there would be a centralized procurement division under the Department of Finance and Administration. All procurement would go through that agency.

Such a program of  bulk purchase leveraging, Goodwin said, could save the state money.

“Vendors would have a certain level of predictability’ Goodwin said. “We will be able to leverage all of our purchasing at once.”

The three education agencies – K-12, community colleges and colleges and universities – all emphasized they follow state law when making purchases.

Sen. Gary Jackson, R-French Camp, questioned the Institutions of Higher Learning on its higher threshold for purchases that require board approval. While other state agencies required board approval for purchases over $100,000, IHL’s board review kicks in at $250,000.

Commissioner of Higher Education Glenn Boyce

Rogelio V. Solis, AP

Commissioner of Higher Education Glenn Boyce

“I’m not sure there’s a reason for why it was set at that threshold. There’s a lot of discussion about whether that threshold is too low, not too high,” Boyce told the group.

Legislators also questioned community colleges head Andrea Mayfield about the lack of a central oversight committee for individual colleges’ purchases.

Sen. Briggs Hopson, R-Vicksburg, asked how the community colleges draw the line between what’s done at the board level and what’s done at the local college level.

Mayfield emphasized that large purchases such as the network for the state board connectivity, firewalls and security, already are made through a consortium, but that purchases unique to each college are not necessarily done through a consortium.

“They are certainly free to engage in consortium purchasing if they want to, but it’s not something they would mandate. We know that their needs vary – they’re going to know what they need and when they need it,” Mayfield said.

The working group session was part of the series of meetings designed to assess the state’s tax structure and 13 state agency budgets. They have previously focused on topics such as personnel, contracts and travel.