THE FEDERATION of Philippine Industries (FPI) urged the government yesterday to patronize locally made construction materials for state mass housing projects.
In attempts to give Santa Fe businesses an edge over out-of-town competitors, Santa Fe’s city officials will consider changing procurement rules so that a 10 percent local-preference discount will apply to companies with the majority of their assets in Santa Fe, according to The Santa Fe New Mexican.
Dundee looks at keeping it local: “If we have local people who can do the work, without it being cost-prohibitive, we should try to bring them in,” he said. “I’d like to make it happen, if it’s feasible — to keep those dollars here in Yamhill County [Oregon].”
The chairman of the Institute of Procurement Professionals in Uganda, Benon Basheka, says there is a need for more participation of the local contractors in public procurement processes.
City Wants to Favor Local Bidders
According to City Manager Steve Gantt, several recent contracts have gone to out-of-state bidders with Columbia (South Carolina) bidders placing a close second. And with the city preparing to bid out at least $200 million in water and sewer projects, City Council wants to do something about it.
Council is considering adding a local preference to the city’s procurement process. That means local companies would get an automatic boost — extra points for being local, as it were.
“This is our own stimulus program,” Gantt told Council.
Many cities have local vendor preferences. But critics of the policies say they can raise project costs and stifle competition.
The details are the tricky part, though. The city plans to contract with a consultant to review and recommend changes to the city’s procurement code
The consultant, whom the city will pay $202,500 over the next two years, is based in Baltimore, M.D.
And now for a bit of real analysis rather than simple minded boosterism.
Buy-local policies growing By: Brendan Reimer
[Winnipeg, Canada] Mayoralty candidate Judy Wasylycia-Leis recently sparked discussion about government-procurement practices when she suggested that locality be a consideration in the City of Winnipeg tendering process.
Commentaries have pitted this as an either-or debate regarding protectionism versus free trade, the higher costs associated with preferring local business over cheaper ones and about the ramifications of us doing something that the rest of the world supposedly is not.
To begin with, this debate is not an all-or-nothing conversation. Trade has its benefits, but it also has its flaws. To pretend that "free trade" and "fair tendering" are really free and fair is naive. Free trade has allowed some local companies to expand and hire more Manitobans, while others have been forced to move, close or sell out, resulting in lost jobs.
Extreme measures either way do not make responsible public policy. Our public institutions are mandated to act in society's best interest, and our best interest is not served by blind adherence to the cheapest bid. This is why tendering policies already consider a host of other criteria. Adding locality to this mix is not in and of itself protectionist; it ensures maximum value for publicly spent dollars.
Some fear that local preference will escalate costs and result in fewer or lower quality service and products. Again, it is not simply one or the other. When weighing competing bids of similar quality and cost, it is possible to add other considerations, such a locality, as tie-breakers.
In looking out for the public good, governments increasingly consider safety, quality as well as life-cycle and ongoing operating and maintenance costs of various tenders in addition to up-front prices. We should also favour businesses that reduce taxpayer costs related to poverty, crime and incarceration, unemployment and health care while increasing government revenues through payroll and income tax revenues and consumption taxes. This is not about charity, this is about efficient use of government funds.
To present this approach as something no one else is doing is also misleading. Integrating economic, social and environmental objectives, also known as a "triple bottom line" approach, is becoming increasingly common and governments and other institutions are getting on board through their procurement policies.
For example, the Vancouver Olympics gave consideration to social enterprises in their procurement process. As a result, social enterprises employing women returning to work, inner-city residents and aboriginal youth working in social enterprises produced the flowers presented to medallists and the podiums that they stood on. The City of Calgary has implemented a sustainable environmental and ethical procurement policy. Ontario's recently released poverty-reduction strategy includes commitments to developing procurement policies that support social enterprise. New Westminster, B.C., recently adopted a living-wage policy, ensuring that work it contracts out is awarded to companies that adhere to wage and benefit standards greater than what is legally required.
The Scottish government is implementing a policy that gives 10 per cent preference for social enterprises in certain procurement fields, including three per cent for subcontracting to social enterprises. In Great Britain, a Conservative MP has brought forward a bill in support of social enterprise procurement preference. Italy has long given extra weighting to purchasing from co-operative businesses, recognizing that their business model of collective ownership creates economic democracy and a more equitable distribution of wealth.
Our neighbours to the south understand the value of balancing free trade with strategic purchasing. More than 140 municipal governments have passed "living wage" ordinances regarding their procurement contracts, including big cities such as San Francisco, Santa Fe, N.M., Washington, D.C., Baltimore, Boston, Los Angeles and St. Louis. The U.S. government has targets of procuring five per cent of contracts from small female-owned businesses, three per cent from service-disabled, veteran-owned businesses and gives small businesses located in "HUBZones" (historically underutilized business zones located in economically distressed communities) a 10 per cent price evaluation preference on tenders and aim for three per cent of all federal contract dollars to be awarded eligible businesses. In Minnesota, targeted small businesses that are located in economically disadvantaged communities or are owned by racial minorities, women or people with disabilities are given up to 6 per cent pricing preference. The U.S. Army has a green procurement strategy.
Leaders around the world are beginning to understand the ripples of procurement. They are seeing how even incremental cost increases in procurement are dwarfed by the direct financial payback that certain enterprises provide, never mind the longer-term financial savings relating to the costs of poverty and poor health. Municipal governments could catch this wave.
This is consistent with what I've previously said about this subject:
Because procurement law is a specie of government, be it municipal, state, national or whatever, matters of community welfare weigh heavier than they would in a strictly commercial context. Some preference may be justifiable as a means of putting money back to work in the community from which the tax dollars came. That argument is supported by need of government to shore up and expand its tax base.
As with many good ideas, though, it can often be abused or lead to more detriment than benefit. Where particular preference is given to particular interests, for instance, favoritism begins to seep in, which begins to feed on itself and spread corruption of the whole system. It can lead to propping up failing ventures that do not really benefit the community at large; that do not expand the tax base but consign it to old technology or the maintenance of inefficient production or outmoded products.
Moreover, there becomes the question as to just what is a local provider? The world is by an large a much more complex and interconnected economy, and the geographic "home" of enterprise often belies its supply lines and production base. This is true at a legal level as much as at a political or economic level. We aren't in Kansas anymore, Toto.
Finally, there comes the big economic-political issues involving trade subsidy and protectionism. We learned from the world wide Great Depression of the early 20th Century that protectionism can horribly exacerbate the economic downside of the business cycle. However popular it may be with the populace, where a little local preference may be a good thing, we find out too late that a lot of it is not such a good thing.
MORE
Local NAACP to make sure disadvantaged, local firms get slice of N.O. recovery pie
The [New Orleans, Louisiana] City Council last year approved a law calling for 50 percent of all public spending to go to locally owned companies and for 35 percent of all public spending to be directed to "socially and economically disadvantaged businesses, particularly of those businesses located in storm damaged areas."
"It's not a black or white thing. It's a New Orleans thing. That's money that's going to circulate and recirculate and recirculate in this city," Local NAACP president Danatus King said. "We're not pushing for anything extra. We're just pushing for the law to be enforced."
If just half of the $640 million slated to be spent on the latest round of projects stays in the local economy, "that will go to increase our tax base, which in turn will improve our public education system and help us repair our streets," he said.
Initially pegged as a $1.5 billion recovery program, Landrieu has scaled back the effort to rebuild public assets destroyed by Hurricane Katrina to $1.2 billion because of budget shortfalls. About 311 projects with a combined value of $367 million have been completed or are under construction.
To make sure the participation goals are met, the NAACP branch plans to recruit volunteers -- ideally, one per project -- to monitor the procurement process, King said. The effort has been dubbed the Citizens' Compliance Campaign.
Inspector General Ed Quatrevaux also raised questions about the whether the 2009 ordinance and an executive order issued in 2006 by former Mayor Ray Nagin conflict with earlier court rulings that prohibit "gender- and race-based criteria for DBEs [disadvantaged business enterprises]," though he stopped short of concluding that current rules may have to be tossed out.
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