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Local preference in bidding is fiscally irresponsible

It is an imperative duty of county commissioners to be good stewards of the public purse. Trying to skew government purchasing rules to favor local companies contradicts that obligation.

On Tuesday, Hernando commissioners are scheduled to again discuss a potential local preference ordinance. This marks at least the third time they will have kicked around some version of this bad idea. Their own legal and purchasing staffs have objected in the past, with good reason. It's great public relations, but poor public policy.

The direction this time is to allow local companies — defined as having local operations with full-time employees in Hernando — a 5 percent credit on contracts up to $500,000. Local companies bidding on projects exceeding $500,000 can get a 3 percent discount, but bump it higher by documenting local vendors to be used as subcontractors.

Essentially, if a local company's bid is within 5 percent of the lowest bid coming from an out-of-county vendor, it can be awarded the contract.

So much for tea party frugality. This reference policy can increase the cost of government services and shut the best companies out of the bidding process. Taxpayers shouldn't pay more for the same, or even inferior, services or products just because one of the bidders has a local ZIP code.

Such a policy also interferes with free-market competition, which normally would drive down prices. It invites abuse and can create even cozier relationship between government and its contract vendors. The result can discourage outsiders from bidding, which can drive up prices. Likewise, it also can spur bid challenges and/or litigation, which can delay contract awards and add expenses to be absorbed by the taxpayers.

Hernando's commissioners have a hard time saying no to the local business community under the guise of a homegrown, yet unsophisticated economic stimulus plan. Building impact fees are not being charged; the commission indicated last week it will waive the cost of permits so businesses can more readily fly flags and banners for on-site advertising; and now comes the looming discussion on how to funnel more public money to private companies in the county.

The modern bid system provides the best protection for taxpayers and the local economy because it encourages competition and fairness — allowing all companies, regardless of their location, the ability to bid for business on an even playing field. Tilting that field — even just 5 percent — toward Hernando-based companies wins political points, but does not guarantee the best product for the best cost.

Local preference in bidding is fiscally irresponsible 03/31/12 [Last modified: Saturday, March 31, 2012 9:06am]
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