Council should avoid local preference
November 12, 2009
It will be easy for the Tampa City Council to adopt a rule that would give local vendors priority when the city awards a contract.
The proposal by Council member Mary Mulhern is scheduled to be discussed today.
Under the most likely scenario, companies in the region would be given a chance to match the bid of the lowest bidder - if the local bidder was within 5 percent of the outside firm's price.
The idea is to boost the local economy, and it's politically appealing. After all, who's not for helping community businesses and creating local jobs?
And allowing the local company a chance to match the lowest bid would not increase the city's costs - or at least that is how it appears. But in fact, such a skewed process would likely curtail competition and cause many outside companies to forgo trying for the city's business.
The end result: Less competition and higher prices.
As Mayor Pam Iorio's administration points out in its analysis of the plan, local preference "eventually reduces the pool of competing bidders. It costs money for companies to prepare bid packages" - something council members should remember.
Why would a firm waste time and money seeking a city job when it knows the deck is stacked against it?
There can be advantages to hiring an outside firm.
Sometimes outside companies actually hire more local workers than the area firm. Once an outside firm begins work in a city, it may decide to open a local branch. Occasionally, a company might even relocate its headquarters if it finds the community to its liking.
Discouraging outside firms from doing business with Tampa is not going to energize the area's business climate.
Iorio's team points out that administering a complex bid formula would increase the time and staff requirements of the process.
And if Tampa adopts a local preference rule, other communities could respond by adopting similar restrictions, which could keep local vendors from winning contracts in other areas.
There is no good reason for the city to take such risks.
Already some 76 percent of city contracts go to companies in Hillsborough, Pasco, Pinellas, Polk or Manatee counties.
The city also has the Small Local Business Enterprise program, which sets aside certain projects that may be bid on only by eligible small businesses in those counties.
Regional businesses now get the bulk of the city's contracts. The local preference measure is a solution in search of a problem.
The council should drop it and let all vendors compete fairly to offer Tampa the best deal possible.
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