Larger procurement overhaul prompts debate over sales from Roughrider Industries to state employees

House Bill 1122, a broad overhaul of state procurement statutes that includes provisions authorizing the Office of Management and Budget to adopt rules allowing state officials and employees to make personal purchases from state contracts and prison industries, drew extensive testimony and sharply differing views from business groups, corrections officials and disability advocates.

Representative John Nelson, who introduced the Roughrider Industries portion of the bill, told the Government and Veterans Affairs Committee the measure is intended to preserve a market for products made by incarcerated individuals who participate in job-skills training. “Roughrider Industries . . . have been producing job skills for upon release to for a workforce need that's critical in in every community that we have in North Dakota,” Nelson said. He asked the committee to consider a narrowly drawn allowance so residents working at Roughrider can continue to produce items for state purchasers while avoiding unfair competition with private businesses.

Roughrider Director Rick Gardner described the corrections industries program as a rehabilitation and workforce-training enterprise with a low recidivism rate among participants. “Roughrider's recidivism rate is 8.6%,” Gardner said, and he cited a larger Department of Corrections and Rehabilitation recidivism rate of 37.6%. Gardner said Roughrider is self-funded, reinvesting revenues into equipment and training, and that roughly 52% of its revenue comes from government sales.

Office of Management and Budget shared-services director Sherry Nies testified that HB1122 contains many procurement updates developed in consultation with agencies and higher-education institutions and that OMB supports the bill as a framework that would allow OMB, in consultation with the attorney general, to adopt rules specifying what employees may buy and under what circumstances. “There would be a narrowing. There would be specific items developed. There'd be procedures for…what is in the best interest of the state to allow a state official or employee to purchase,” Nies said.

Not all witnesses supported the Roughrider provisions. The Greater North Dakota Chamber’s vice president of government affairs, Andrea Fennig, said her members value Roughrider’s training mission but opposed current statutory language that, in her view, could allow state employees to compete with private businesses. “In this current form, this bill enables the state not only to compete with private businesses, but in some cases may put private businesses at a disadvantage,” Fennig said. She and other business witnesses urged a narrower, workforce-focused approach.

Protection and Advocacy Director Denise Harvey urged removal of “work activity centers” from the bill’s purchasing preferences, citing federal efforts to phase out subminimum wage certificates and concerns that some work activity centers pay far below the federal minimum wage. “To keep in line with the intentions of the United States Department of Labor…and to support integrated employment opportunities for all individuals with disabilities, work activity centers must be stricken from this bill,” Harvey said.

Legislators pressed for technical fixes and compromise language. Representative Ben Koppelman described a related procurement problem — a vendor pool that had effectively locked out other in-state firms — and said he was working with OMB on an amendment that would expand or otherwise fix the vendor pool process. Representative Vetter and others suggested sunsets or interim reviews to reassure businesses and allow the policy to be tested.

OMB staff noted other procurement changes in the bill: clarifying when proposals become public records, modernizing protest and appeal deadlines, adding cooperative-purchasing authority, recognizing certain exemptions (for the State Mill and Elevator and similar entities), and requiring OMB maintain and expand the state procurement website. OMB staff also said they will draft and negotiate amendments with stakeholders.

No vote on the merits of HB1122 was taken in the hearing; the committee closed the hearing after testimony and discussion. Multiple participants said they are open to continued negotiations; OMB committed to working with Roughrider, the chamber and disability advocates to refine language on employee purchases, tie-breaker provisions, and related transparency measures.

Unless sponsors file amended statutory text, the bill remains at the committee stage pending follow-up drafting and potential amendments requested by business groups, the Department of Corrections, OMB and advocates.