Deltek Analyst Luke Harris reports.
In order to grow local economies and tax revenue, many state and local governments now take the location of a vendor into account when making procurement decisions. Law and ordinances called purchasing preferences are being implemented across the county in order to give local vendors a leg up in contracting and thus assist states and localities in generating jobs and revenue.
In 2010, the Virginia Department of General Services compiled a table of 38 states’ purchasing preferences. Preferences vary widely across governments, from general needs to specific good and services. Some apply to all bids, while others apply only to contracts worth more than $50,000 or construction projects.
The city of Los Angeles, Calif. recently passed an ordinance that gives Los Angeles-based vendors an 8 percent advantage for bids on city projects worth more than $150,000. For example, a $1 million bid from a local vendor would be evaluated at $920,000. To qualify, businesses must have an address in Los Angeles County and have either 50 full-time employees or half of their full-time employees working 60 percent of the time in the county. The ordinance will go into effect on November 24, 2011. Sponsors of the ordinance believe the new policy will bring in more revenue through sales, property and other taxes from local business employees. GovWin is currently tracking an estimated $14.2 million worth of Los Angeles contracting opportunities that will be affected by this ordinance.
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This sounds really interesting – would like to see more of the impacts from the policy. Curious how this affects job growth of the entire region and the cities where purchasing preferences have been implemented, would be great if jobs were increasing across the board, rather than shifting between cities.
Pat, I was wondering the same thing. I also wonder if this type of policy would have any affect on vendor prices.
I’m disappointed that my state of Missouri wasn’t included in the table of purchasing preferences 🙂