Right of First Refusal: Benefit or Death Kell?

Critics of the right of first refusal claim it amounts to a monopoly and will only breed bad service; proponents say it makes in-plants even more valuable to their organizations and improves service.

"The fact that we don't have right of first refusal does force us to focus on customer service more," remarks Ted Bailey, manager of Boise State University's 15-employee Printing and Graphic Services department. "I think it does keep us sharper and more in tune with the customer base."

But others say they can serve their customers better by seeing all jobs and then deciding which ones to print in-house and which to outsource.

"Right of first refusal isn't a monopoly," insists Mike Loyd, director of procurement and auxiliary services at Louisiana State University, in Baton Rouge. "Most places can't do everything. You need to develop your niche and stick with what you are good at. Then you negotiate with outside printers to get [better] pricing."

Both sides have good points. But most of the managers IPG interviewed feel having the right of first refusal can be more beneficial to the parent organization—if handled responsibly. Even Bailey admits that he plans to seek such a policy from the university at some point.

"I'd like to at least have the opportunity to consider whether or not we do the job," he adds.

Not Always Needed

Still, in some cases, mandating that customers send all printing to the in-plant may not be necessary. For Jim Muchler, director of administrative services at Bucknell University, not having the right of first refusal has never been an issue at his 23-employee in-plant. Muchler says his operation, with its $1.5 million budget, competes with about six local print shops in the Lewisburg, Pa., area.

"We are a small institution of 3,500 undergraduates," notes Muchler. "This setting provides intimate contact with most every department on campus. If a client does go off campus to a print shop, I would likely get a phone call from the purchasing department asking if I had a chance to look over the job—but that is because we have a small purchasing department.

"In a larger organization," he continues, "where they are less likely to be able to keep up with the pulse of the workflow, then the right of first refusal is a wise decision, as long as the in-plant focuses on the best value for the institution, but remains intent on providing good customer service. It's really a mixed bag some days. Sometimes I wish I had a policy when I find out that someone has gone off campus."

For other in-plants, having the right of first refusal is a necessity. In fact, the University of Nevada at Las Vegas' in-plant made it a bargaining chip during a major in-plant reorganization in the early 1990s, says Les Raschko, UNLV's director of publications and reprographics.

"As we moved forward with new technology and new services, we realized how important the right of first refusal was going to be in the overall plan," he says.

For UNLV, a 17-employee in-plant with a $2.1 million budget, one of the major benefits in giving the in-plant the right of first refusal was the need to control the university's image.

"At the time of the reorganization, we had a president that was very concerned about the continuity of the university's imagery," notes Raschko.

With the right of first refusal came the responsibility to make sure the university's logos were being used correctly. "If you can go anywhere for services then you have no control over imagery," says Raschko.

While branding issues are important, cost is the issue everyone is interested in. Print costs can be lowered by requiring all print bids to be submitted through the in-plant.

"Nobody on this campus is more of a printing expert than the printing people," says Loyd, of LSU. His 109-employee in-plant has always had right of first refusal and is experienced at buying printing and reviewing specs before jobs go out.

"We catch things that the normal person would not catch," he says. "We know where the commercial printers are going to try and make their money, so we try to minimize it. By acting as a broker for your client and making it transparent to them, you make yourself more valuable and save your organization money."

Raschko agrees: "We are also able to ensure that the designers design in an economically efficient way."

As a result of having the right of first refusal, clients get tighter specifications going out for jobs, they get the finished product they want and the in-plant can act as their advocate if they use an outside printer.

Even when the in-plant is not the cheapest place to print, Loyd notes, it may be the most cost efficient.

"If we have an in-plant, and it is staffed, and we have equipment, then it may be better for us to run it than to have our people sitting around, because we have already incurred those costs," explains Loyd.

Another often-overlooked benefit of the right of first refusal is the need to know what the university is printing, so in-plants can gear their equipment purchases and personnel requirements to what the organization needs.

"If you don't know what your university is printing how can you plan future acquisitions? It's just a guess and a hunch," states Loyd. "If you don't know what is going off campus, then you can't justify your equipment.

"If you know that they are spending millions of dollars outside on four-color processing, and you don't have that, you can say, 'well, hey, if we get this four-color press in here, we can save the university some money in the long run,' " explains Loyd.

In the end, the most important aspect of a right of first refusal policy remains overall service, notes Loyd.

"You just cannot become complacent about service."

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