Should the City Give Preference to Local Businesses When Awarding Contracts?

The City of College Park recently went through the process of identifying a company to redesign the city's web site. Since , which is located in College Park, builds web sites for non-profits, associations, and small businesses, I decided to submit a proposal. The budget for the web site was about half of what we usually bid for something of the scope outlined in the city's RFP, and as such, I offered a 50% discount in our proposal—I wanted to give back to the community that I've called home for 30+ years, more than I wanted to actually make any money on the project. But my company hasn't done any municipal work before, and that was one of the factors listed, so I didn't have very high hopes of winning the contract. I was recently notified by the project manager that we didn't make it to the top two for the project, and was a little disappointed, but we have a ton of other work, so I moved on with life, and all was well.

As I was reading through the agenda for the city council worksession on 3/20, I discovered that despite stating a preference for an open source content management system (CMS) in their RFP, the city staff was planning to recommend a provider that will use a proprietary CMS for the web site. That may not be a big deal to the average person, but I've had plenty of clients get burned by using a proprietary CMS, and so I commented on it here on the . Another commentor apparently took my comment to be sour grapes for not winning the project, focusing more on my statement that my company is local, than my dissatisfaction about the choice to go with a proprietary CMS. His comment was, "So, you have no municipal experience and you cost more then the other company but expect to get the contract because you are local? If you worked for the gov what would your criteria be for selecting vendors?"

That got me thinking, and when I think I tend to also do research. Should the city give preference to local businesses when awarding contracts? Yes! And here's why:

• Giving preference to local businesses will help stimulate economic growth within the community
• Keeping business in the city will help create new jobs in the city
• Awarding contracts to businesses in College Park will keep at least some of the money from those contract in the city
• It helps promote good will to local businesses, and might encourage other businesses to move to College Park
• Who knows the city better than the people that live and work here? 

So what can the city do? Let's take a look at what other cities are doing, to help stimulate their local economies by giving a preference to local businesses. This is just a small sample of the hundreds, if not thousands of municipalties, around the US that have local preference ordinances:

• Los Angeles, CA has a Local Preference Ordinance. In a low-bid scenario, it reduces the local business bid by 8% (so if the local business bids $1 million, the bid used for comparison would actually be $920,000). For RFP situations, the ordinance awards additional evaluation points to the local bidder. According to a press release from Santa Ana, CA, which also offers a Local Preference Ordinance, 92 cities in California have similar local preferences.
• Lancing, MI, also has a Local Preference Ordinance, which requires getting a quote from at least one Lancing based business on purchases over $1,000 when possible. It also lowers the bid price for Lancing based businesses by 5% for purchases over $15,000.
• Philadelphia, PA gives a 5% bid preference for certified local vendors.
• Yuma, AZ also gives a 5% bid preference for local contractors.

A 5-8% difference in price wouldn't have given the bid that my company submitted any competitive advantage, plus we still don't have municipal experience, so it probably wouldn't have mattered in the case of the city's web site. But it might matter the next time the city needs to hire an architect, caterer, marketing firm, or graphic designer. And by asking the city's staff to at least think local first when it comes to purchasing, we'll help keep that money local.

What do you think? Would it help the city to enact a similar ordinance?