CEDAR RAPIDS — Losing a city contract can be a big blow to the bottom line of a small business. When the contract goes out of state, the sting of defeat bites that much more, a local business owner said.
Nina Brundell, owner of Kieck’s Career Apparel, 222 Third Ave. SW, still feels the pain of losing contracts to sell the city police and fire uniforms in the past two years to an Illinois company for what she considered small price differences.
“I get the city does it to be as low as possible, but it is sad when we pay all of these taxes, renovate these buildings, and the city sends these contracts not just out of the city, but out of the state,” Brundell said.
After the first defeat in 2015, she urged city officials to consider whether small, local businesses, particularly those owned by women, minorities and disabled veterans, should have an advantage over the rest. The suggestion paid off.
The Cedar Rapids City Council approved a new policy on Tuesday creating a 2 percent leeway for certified small local businesses majority owned by women, populations facing social or economic disadvantages, or service disabled veterans bidding on city purchasing contracts. This is in addition to an existing sliding scale “buy local” preference for vendors from Linn County.
“She asked if we should consider looking at them different than we do other businesses, and it made some sense because we want to encourage those targeted businesses,” said Kris Gulick, a City Council member and chairman of the finance committee, which recommended the new policy.
He said the policy mirrors a federal targeted small business program that is used across the country.
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Normally, Cedar Rapids awards contracts to the lowest bidder meeting the requirements. The preference policies require the city, in most cases, to purchase from the local small business owner if their bid is not much more expensive than the lowest bidder.
The buy local scale allows a 10 percent higher bid for amounts less than $25,000, no more than 5 percent higher for amounts equal or greater than $25,000 but less than $200,000, and no more than 1 percent higher for bids equal to or greater than $200,000. The targeted small business preference adds 2 percentage points to the buy local amounts.
Kieck’s has been in business in Cedar Rapids for more than 60 years. Brundell became the owner in 2010, and in 2013 she moved to Kingston Village into the old Barron Motor Supply building, which had been closed since being ravaged by the 2008 flood. Her husband Paul Brundell renovated it.
In 2015, Kieck’s vied for a $75,000, two-year contract to supply the Cedar Rapids Police Department with uniforms, but was out bid by Ray O’Herron, a company out of Danville, Ill. This past June, she lost out on a Cedar Rapids Fire Department uniform contract worth $30,000 per year to the same supplier, and the city renewed its contract for the police uniforms for another two years without rebidding it, which has been standard for these contracts.
Winning the police contract would have meant new business, while Kieck’s had held the fire uniform contract since 2013, so losing it will cut into revenues, Brundell said estimating 30 percent of her business comes from the city.
Brundell examined the two bids, comparing line-by-line the roughly 100 individual clothing items requested, and found a $500 price difference for the police contract and $200 difference for the fire contract. The city staff analysis recommending O’Herron for the police uniform contract doesn’t show how the two bids were compared nor a total value of each bid, noting the “total bid amount cannot be determined due to the large number of line items and unknown quantities to be purchased during the contract period.”
City staff defended the contract.
They applied the buy local preference, but it did not impact award. Even with the extra 2 percent targeted small business preference, Kieck’s still wouldn’t have come out on top, Diane Muench, the interim purchasing services manager, said in an email released through the city communications office.
“Where there are multiple items on a bid, such as the police and fire apparel bids Kieck’s is referencing, each line item is multiplied by the estimated quantity the department anticipates it will purchase,” she said.
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Kieck’s bid on the police contract averaged 17 percent higher than O’Herron’s, with many of the higher volume items 25 to 35 percent higher, according to a city memo, while Kieck’s was 12 percent higher on the fire contract, Muench said. That translates to a $17,370 difference on the police contract and $3,600 difference on the fire contract, based on her percentages.
“I don’t know if it would have made a difference in who got the bid, but that wasn’t the point,” Gulick said. “It was the idea she came across with we wanted to look at.”
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