The State of Virginia has maintained a system of centralized purchasing for the benefit of its agencies for the past forty-nine years and for the benefit of its political subdivisions for the past forty-five years. In 1960 this system was expanded with the establishment of a Central Warehouse, which permitted the State to make large purchases of certain supplies at reduced prices for resale to various agencies of the State. In 1964 such resale was authorized to political subdivisons.

Since this latter time, 1964, questions have been raised, especially by certain business interests, of whether the legislative intent and purpose of the present purchasing system have been realized. These questions include: Do the political subdivisions actually save money by purchases from the Central Warehouse? Do the service charges imposed by the Central Warehouse cover all expenses of operations or does the State suffer a loss in providing such services? Does the operation of a Central Warehouse impose an unreasonable restriction on Virginia's economy?

These questions provided sufficient impetus for enactment of House Joint Resolution No. 77 by the 1968 Regular Session of the General Assembly.

The Council selected C. W. Cleaton, South Hill, member of the House of Delegates and of the Council, to be Chairman of the Committee to make the initial study and report to the Council. The following were selected by the Council to serve as members of the Committee: A. E. Berlinghoff, Purchasing Agent of Henrico County, Richmond; L. C. Bird, Member of the Senate of Virginia, Chesterfield County; William E. Blalock, farmer and member, Mecklenburg County Board of Supervisors, Baskerville; James E. Bowen, Jr., City Manager, Charlottesville; J. H. Daniel, Member of the House of Delegates, Charlotte Court House; Tom Frost, Member of the House of Delegates, Warrenton; J. Wortham Huffman, Retired Purchasing Agent, City of Richmond, Richmond; W. Stirling King, former Mayor of Richmond and Sales Manager of a printing firm, Richmond; Flournoy L. Largent, Jr., Member of the House of Delegates, Winchester; Paul W. Manns, Member of the Senate of Virginia, Bowling Green; W. Roy Smith, Member of the House of Delegates, Petersburg; Dan Stickley, Farm Equipment Dealer, Penn Laird; J. Warren White, Jr., Member of the House of Delegates, Norfolk; and Landon R. Wyatt, Jr., Automobile Dealer, Danville.

At the organizational meeting of the Committee, Mr. W. Roy Smith was elected Vice-Chairman. G. M. Lapsley and John A. Banks, Jr., served as Secretary and Recording Secretary, respectively, to the Committee.

The Committee made a thorough study of the Department of Purchases and Supply, including a review of published material, a tour of the facilities of the State Central Warehouse, briefings by G. Lloyd Nunnally, Director, and a management team of the Department, correspondence with all other states regarding their purchase activities, and the holding of a public hearing at Richmond.

The material reviewed included: the 1966-67 Annual Report of the Department of Purchases and Supply, the 1960 Report of the Committee for Economy in Governmental Expenditures, which deals with internal management for the State, Chapter 15 of Title 2.1 of the Code of Virginia, and a special report of the State Auditor requested by the Committee concerning the cost of operating the Central Warehouse.

Replies were received from thirty-five states in response to letters requesting information regarding their purchase activities.

Thirty persons addressed the Committee at its public hearing and fifteen others wrote letters to be incorporated into the hearing record.

The Committee completed its study and made its report to the Council. After thorough consideration and review of these matters, we submit the following report.