Starting in June, West Virginia state agencies will have a new purchasing law that aims to clamp down on reckless spending and misuse of grant funds.

This week, Gov. Earl Ray Tomblin signed into law his purchasing reform bill (356) that the Legislature passed on March 8.

The new law follows two scathing legislative audits last year that targeted West Virginia's use of $126.3 million in federal stimulus funds to expand high-speed Internet across the state.

"What we're doing is stating in code, in black and white, that competitive bidding is the gold standard," said Sen. Herb Snyder, D-Jefferson, who worked with Tomblin's office on the purchasing reform bill.

The law sets stiffer penalties and higher fines for state employees who "knowingly and willfully" violate purchasing rules.

The law requires agencies to follow state purchasing rules while spending federal grant money.

For the first time, the secretary of administration and purchasing division director will have the power to stop any contract or purchase that doesn't comply with state law.

Also, the new law sets limits on state government "secondary bid" procedures, which allow state agencies to buy products and services quickly, bypassing formal and comprehensive purchasing regulations.

State agencies won't be able to spend more than $1 million on technology equipment or services without permission from the state Purchasing Division, and there's a $50,000 cap on purchases of products and services.

Agencies typically use the secondary bid system for routine, day-to-day purchases.

In 2010, state officials used secondary bids to buy more than 1,000 Internet routers for $24 million. The routers were designed for facilities with hundreds of Internet connections, but the state installed many of the devices in small schools and libraries with only a handful of computer terminals.

The Legislative Auditor found that government officials wasted at least $7.9 million - and up to $15 million - by purchasing oversized routers.

A follow-up audit revealed that agency administrators skirted purchasing laws for a $38 million microwave tower project designed to improve emergency communications. State officials also ignored directives to stop tower construction.

The funds for the routers and towers came from the state's $126.3 federal stimulus grant.

"Under the new law, the secretary of administration can stop any contract or purchase, if he thinks there's something wrong," Snyder said.

Tomblin's purchasing reform package also requires state agency managers to attend annual training seminars on purchasing rules.

"It is extremely important for those individuals who direct our state agencies to have a full understanding of state purchasing laws, rules and procedures to ensure safeguards are in place to make ethical and cost-effective purchases within state government in West Virginia," Administration Secretary Ross Taylor said Tuesday.

The new law takes effect June 6.

©2014 The Charleston Gazette (Charleston, W.Va.)