More Calls for Local Bid Preference Laws

As the crippling effects of the Great Recession continue to squeeze both the private and public sectors, many public agencies are evaluating whether local businesses should be given a competitive edge when awarding government contracts.

Janelle Rettig

Iowa Official Speaks Out:  The trend toward bid preferences is an understandable response.  Most recently, one Iowa state official bemoaned that fact that the state is preparing to award a $282,816 public works fish barrier contract to a Minnesota contractor, whose bid was only $4,000 less than the second lowest bidder - a contractor from Iowa.  

Janelle Rettig, a commissioner with the Iowa Department of Natural Resources, said that:

"There should be a change in the legislative rules that allow us to award it to an Iowa company within a certain percentage."

Bid Preferences Cost Governments More:  The irony behind bid preferences, especially in an era of government budget cuts, is that bid preferences result in public agencies paying more for goods and services.  In an attempt to award work to local or in-state businesses, government agencies are effectively subsidizing private businesses with the bid preference, even though government budgets are facing record deficits and cuts.

Bid Preferences Stimulate Local Economy:  The argument in favor of bid preferences is that they stimulate the local economy by providing jobs to local residents who spend the money locally, bringing in more tax revenues for government agencies.

More Non-Local Contractors Bidding:  And, of course, government agencies are seeing more bids from contractors outside the area, as businesses seek bidding opportunities wherever they may be found.  

Washington State Completes Survey of Bid Preferences:  The State of Washington recently approved a bid preference law for public works projects.  The state's Department of Enterprise Services (formerly General Administration) has completed the first task assigned by the legislature: survey all the states to find out what their public works bid preferences are.  The survey is now posted online, and DES has until December 1, 2011 to submit the survey and their recommendations on implementation to the legislature.  

Applying the Washington Bid Preference: Once the instructions for applying the new law are approved, DES will notify all public agencies in the state.  Agencies will then apply a percentage increase to the public works bid of an out-of-state contractor in the amount of that state's bid preference.  If a Washington contractor is lower than the increased price of the out-of-state contractor, the Washington firm would be awarded the contract - at their actual bid amount.

Mike Purdy's Public Contracting Blog 

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