Does this sound honest to you?

As some of you know, I run/manage a couple of small labs at an SEC university (go ahead and guess). I am entrusted with ~ $50K/year for Operations and Maintenance to keep things running and to keep needed stores on hand for future use.
In pursuit of this, I have become very adept at Internet Shopping. I'm really good at finding vendors for different materials at the lowest price/shipping comination of pretty much anyone here. People come to me for suggestions on how to save money on projects.
Over the last 5 years, this institution has installed more and more "Preferred Vendors" for various goods. It started with Rental cars (2004). Then, Scientific supplies (2004). On to Computer peripherals (2006), Computers (2008), Office supplies (2009) and Shipping (2010). These have never meant much to me in my position.
And now, Operations and Maintenance Supplies (2011). This last means pretty much everything not listed in the previous catagories. These contracts have been struck without knowlege of the needs of any department representatives. The term "unilateral decision" comes first to mind...
I'm sure that many of you out there are in a similar position as I-you have X amount of dollars to spend per fiscal period. To squeeze every penny you can, you have done as I: researched to find the very best vendors for any given commodity for the very best price. This can also be a balance of price vs. delivery vs. availablity vs. quality. I've found over a long career that McMaster-Carr has been a valuable resource for most of my needs.
This new contractor is Grainger Supply. One I have turned to many times in the past for pumps, motors and hoses for various projects. Not for fasteners, raw materials or electrical goods. Their prices are just too high and it takes 2-4 days for delivery.
Now for the particulars: if you are a researcher, you get contracts and grants from a number of sources. U.S. government, Corporate, private funding etc. When this money is received, our institution places a 5.75% cut on it for "Overhead". OK, Granted. When one signs the contract, it states in various ways that the PI (Principle Investigator) must find the most economical means of procurement. OK too-one is a fool if he runs out of money by NOT finding the most economical means of procuring goods.
Now for my problem: after looking through 1 year (126 separate orders) and comparing the prices (including the 10% discount Grainger has given us, their prices still range from 10% to 200% higher than McMaster-Carr. With poorer dilivery. and, to boot, many of the items I need are not carried by Grainger. BUT I have to submit, in writing, the reason I want to use a different vendor for any given purchase in this catgory. And mere price (taxpayer cost savings) is not an acceptable reason. I started to ask around of other folks in my position and found that everyone is really pissedoff about this. Lots of money will be wasted by this manouver. Suspicions were raised about why they even did this to us. Are they accepting kickbacks? Sweetheart deal? Hmmmm. Please read on (Cut and Paste from our PPS website, the X's are to hide my employer):

Preferred Vendor Contracts
Frequently Asked Questions
General

Are we required to purchase from the Preferred Vendor Contracts?

Once you see the pricing on these contracts, we think you're going to WANT to purchase from them due to their very competitive pricing! Beyond that though, these vendors have been designated as the "Preferred Vendors" for XX for these particular commodities. In general, making purchases outside the contract shouldn't be necessary. However, there may be occasions when there is a very valid reason for going outside the contract. In that situation, please just attach a note of explanation to the voucher/purchasing card recon. In some cases, PPS may follow up with you…in others cases, the Preferred Vendor may follow up with you.
Do keep in mind that the Preferred Vendor contracts have been negotiated with the best interest of XX as a whole in mind. With several of the contracts, in addition to deeply discounted pricing and any other financial incentives the vendor may have provided XX, the University will receive rebates based on the total expenditures of the University (including XXXX, XXXX and XXX).

What if I can get a better deal on a particular item with a vendor/store other than the Preferred Vendor?

Keep in mind that the Preferred Vendor contracts were negotiated with the best interests of XX as a whole in mind. While you may be able to find a particular item at a lower "fire sale" price at any given moment, use of these contracts leads to: Increased financial incentives, higher volume discounts and rebates, and better data for negotiating larger discounts/cheaper prices in the future.

Do PI's (or other University employees working on C&G projects) have to use these contracts?

Yes. Any money, regardless of the source of funding, becomes XX money/funds when it is received by the University and is therefore subject to XX policies and procedures.
As we move toward more and more "contracts" I feel our purchasing options are becoming quite constrictive with very little room for shopping for the best prices.
Contracts are negotiated by PPS in an effort to assist XX departments with procuring the items they need at great prices in an effort save budget dollars. The Preferred vendors have been very forthcoming with financial incentives to XX including volume rebates, signing bonuses, and scholarship dollars...all of which will greatly benefit the University. PPS worked hard to consolidate discounted purchasing with vendors so that campus departments do not have to spend their time "shopping around" but concentrating on advancing the efforts of their mission. Before these items go out to bid again, we will evaluate if this approach best served XX...if not then we can try something different.

So, through Kickbacks, signing bonuses and rebates, this institution is taking even more of the contract and grant money on the back door (I wonder if the grantors and contractors know this?). And, in my case, the very money handed down from the University to the College to the department to me is being funneled back to the general fund and tying my hands as to purchasing power. They mention "... in an effort save budget dollars. ".

I have proven to myself, and others, that I can buy items from the other catagories for less and MUCH less than the Preferred Vendors" prices

I say BullSh!t. What do you think?