State tends to choose South Dakota companies over out-of-state contracts

KELOLAND.com Original

PIERRE, S.D. (KELO) — One criticism of Gov. Kristi Noem’s (R-SD) meth awareness campaign lodged by the advertising industry and people on social media is that Noem’s administration chose an out-of-state company to spend the nearly $1.4 million.

That decision isn’t what happens in a majority of competitive proposal contracts, a KELOLAND News analysis of 2019 contract data found.

How contracts work

First, let’s explain how contracts work in the state. When a South Dakota state government agency is looking to purchase goods or services there are five ways to do it:

  1. Competitive bids. This is where the state asks for something like the construction of a government building. The state asks for bids from construction companies and the lowest bid (as long as they qualify) is awarded. State law draws up some rules on how the state should award the bid. Most contracts in the state follow this process.
  2. Competitive proposals. Often in these situations, the state is looking at more the conceptual idea vs. just price. This is what we’re looking at in this story and is the process the state chose to award the meth campaign award.
  3. Small purchases. This is for most purchases below $25,000. The state has specific laws on how to choose either through an informal bidding process or “in the best interest of the state.”
  4. Sole source procurement. This is when a contract is awarded for a supply or service that is so unique that it could only be done by one place.
  5. Emergency procurement. If there is a threat to public health, welfare or safety, the state doesn’t have to go through the standard contract awarding process.

Some background

With the “Meth. We’re on it.,” campaign, the state chose to go with the second option: competitive proposals. This allowed Noem and her administration to look at the messaging rather than solely looking at the price.

In awarding these contracts, there is a lot more discretion on where money can be spent.

For the meth campaign, Noem’s office chose a Minnesota ad agency over nine from South Dakota. Broadhead was one of 18 agencies that submitted a proposal to the state.

Choosing an out-of-state agency brought criticism on social media. However, in a reply to questions from the agencies, the state wrote no preference would be given to in-state agencies.

“Preference will be given to (agency) who best describes the familiarity and understanding of the demographics and geographical changes of the State of South Dakota related to this campaign,” the state wrote.

The South Dakota Advertising Federation came out strong against the decision in a statement on Tuesday.

“When public, in-state entities decide to award large advertising budgets to out-of-state companies, we can’t help but throw a red flag and remind the public of the implications,” the group said.

They say that in-state talent is aware of the seriousness of the issues affecting the state and they are passionate about the state’s future.

“The budget dollars that are now exiting our state could have been put to great use here. They could have saved positions at agencies that are looking for new business. The dollars could have given new graduates opportunities to stay in state,” the federation said. “The dollars could have delivered a message by South Dakotans that resonates with South Dakota.”

In an interview with KELOLAND News this week, Noem defended the decision of choosing the Minnesota company.

“I’ve told everybody that when I became governor, that I would be wise and be a good steward of taxpayer dollars. That we would have a competitive bid process. That we would allow people to make proposals and always choose the best that was the most responsible with the hard-working people of South Dakota’s tax dollars going forward,” Noem said.

What we found

Doing this, however, isn’t the norm. In 2019, there were nearly 65 times that the state looked for proposals. Of those only seven times did the state choose an out-of-state company vs. an in-state company.

The number of total contracts awarded out-of-state was 28, but in most cases, there were no in-state proposals submitted or the state awarded contracts to both an in and out-of-state company.

Choosing to keep the money local is actually more common. 15 times the state chose to award an in-state instead of an out-of-state contract. 22 times a South Dakota business were the only applicants.

Proposals come from across the country, but most are from South Dakota.

Many of these proposals were for architecture services to design buildings across the state. Some were food contracts. There was a $35.5 million contract for the next generation of 911 services awarded in-state to Century Link.

More than 100 contracts were awarded through the competitive proposal process. Several RFPs led to awarding multiple contracts.

Trying to figure out where the most money is being spent is challenging due to a lack of information on South Dakota’s government transparency portal.

In our analysis of all data on the OPEN SD website, the state spent $28 million more out-of-state on RFPs. This number isn’t a complete picture, however.

There were five contracts awarded in-state and six awarded out-of-state where KELOLAND News was unable to get the amount of money spent either because the contract wasn’t put publicly on the website or it didn’t give an amount. There were also several contracts that didn’t have an exact amount; instead, it varies based on hours billed or meals served (in the case of an inmate meal contract).

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Trending Stories


 

Don't Miss!

More Don't Miss

Our Contests

More Contests