Preference for Local Bidders?

Not so long ago a question arose over whether the City can give preference to local firms in the awarding of contracts. Last week’s City Manager’s report gave us a little more insight, based on a response by Deputy City Attorney Martha Lantz …

QUESTION PRESENTED: Can the City give preference to local firms when awarding contracts?

BRIEF ANSWER: The City cannot give a preference or advantage to bidders solely on the basis that the bidder is a local firm. However, it may be permissible, on a case-by-case basis, to include locality as one of the factors in determining the lowest and best responsible bidder, or to give additional weight to a firm’s location, if the locality factor is contract-specific and serves a documentable City purpose beyond the generalized benefit of hiring local firms.

The response includes a lot more legal discussion, but makes it clear that “arbitrary preference to local bidders is impermissible.” The 1961 Washington State Attorney General finding referenced protects the competitive bidding process, but does leave room for consideration of bidder location in some cases, particularly when an argument can be made that location could be a factor in defining the “most responsible or ‘best’ bidder” in a particular case.

Tacoma has discretionary criteria for awards pertaining to responsiveness and ongoing maintenance that could allow preference for local bidders, as could the City’s more open-ended criteria that allows for other factors to be considered on a case-by-case basis. Basically, it all appears to boil down to a question of whether a good reason for preference for local bidders can be established on individual projects, and then ensuring that all bidders are objectively evaluated on the same criteria. Or as the Deputy City Attorney’s memorandum put it …

Locality (however it may be defined) can be a permissible factor to be considered in contract award by the City, but the validity of the requirement will depend on the type of procurement and the authorizing laws for that type of procurement. Any locality requirement should be clearly described and made part of the bid specifications as one of the items that will be evaluated in the selection of the lowest and best responsible bidder. Most importantly, any locality requirement must be shown to serve a specific and identifiable City purpose for the contract at issue, and any additional cost imposed by the requirement must be balanced against the value or benefit gained from the requirement.

So, how about it? How much extra credit do we give for being local?