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Favoring regional companies in bid process is not financially smart

Capitalism is great until the company from out of town, region or state is the low bidder. That is the expanding philosophy of skewing local government purchasing policies from Commissioner Jack Mariano who wants Pasco to join with other area governments advocating protectionism on a regional basis.

The idea comes from Hillsborough County where Commission Chairman Ken Hagan asked Mariano in an Oct. 15 letter if Pasco wanted to creating "a regional presence criterion that would be incorporated by all Tampa Bay area government in their procurement process.'' In other words, favor companies from Pasco and its neighbors when buying goods and services at public expense.

"I like it,'' Mariano jotted on the top of the letter before forwarding it to county staff. Tuesday, he presented the parochial idea to the rest of the commission saying it would be beneficial to Pasco.

Not really. It's a short-sighted, feel-good gimmick that is more about public relations than public stewardship. Such local preference rules can limit competition from bidders and suppliers and raise the cost of goods and services to taxpayers.

Despite the push for a regional approach, support elsewhere is waning. Tampa City Council voted 5-2 last week backing a business association's effort seeking a state law banning local preference ordinances. Tampa's administration even provided data deflating the value of such an ordinance — 83 percent of the dollar value of the city's construction contracts, and 54 percent of the goods and services, already go to businesses in a five-county Tampa Bay area.

These homegrown economic stimulus pushes from Mariano and others stem from a simplistic notion that governments should give preference to local businesses (now regional, according to the new version) when awarding contracts and making purchases because it keeps money within the community and saves jobs. Except it interferes with free market competition, invites abuse and creates the potential for the locals to raise their prices because outsiders are discouraged from bidding.

Pasco commissioners Ted Schrader and Michael Cox correctly raised the red flags. Schrader wondered at what point an ordinance would kick in if two bids are comparable, and how it would differentiate between a locally owned company and an out-of-town firm renting a local post office box.

Here's a better one: If the ordinance is to be regional in nature why should Pasco care if, for instance, the two lowest bidders are from Manatee and Polk?

Cox called local preference a great theory, but indicated it was imprudent for Pasco County to consider paying more for goods and services just because the contractor is from the area.

Indeed. Commissioners charged with watching the public purse should be seeking the best deal possible for taxpayer-funded goods and services. Somebody's ZIP code shouldn't be part of the check list for ranking private-sector competitors seeking public dollars no matter what level the local jobless rate.

Favoring regional companies in bid process is not financially smart 11/18/09 [Last modified: Wednesday, November 18, 2009 5:36pm]
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