Rewarding local companies could cost Gwinnett more

Gwinnett taxpayers could pay up to 15 percent extra for some high-dollar contracts under a proposal the county commission will consider Tuesday.

The plan, called Buy Gwinnett, would enable any Gwinnett-based company to quote a price up to 15 percent more than the lowest quote on certain kinds of county business and still win the contract. Its supporters say Buy Gwinnett will stimulate the local economy and reward businesses that hire county residents and pay local taxes.

The commission proposal is part of a larger economic development initiative proposed by the Gwinnett Chamber of Commerce.

“We’ve got some businesses in Gwinnett that are suffering,” Commissioner Shirley Lasseter said. “I think we’ve got to take care of our own first.”

But the cost could be steep for taxpayers. For example, under the 15 percent exception, the county could pay an extra $45,000 on a $300,000 contract -- more than enough to pay the $37,648 salary of an entry-level police officer.

“Right now, when all taxpayers are wanting our government to watch every penny they spend, I don’t think it makes sense to say we’re going to pay extra because someone happens to be located in Gwinnett County,” said Sabrina Smith, chairwoman of Gwinnett Citizens for Responsible Government.

The proposal could affect county contracts covering such areas as transportation consulting, park planning, housing inspections and professional brokerage services.

Other metro area governments also try to spend their money at home.

Clayton, Cobb, DeKalb and Fulton counties and the city of Atlanta have various “local preference” provisions in their purchasing laws. Often they involve awarding a contract to a local firm in the event of a tie on the low bid.

Gwinnett’s proposed rules in some cases are more generous than what some other metro governments offer.

The county expects to spend about $635 million on goods and services this year. Gasoline, groceries, life insurance, medical services -- you name it, the county probably buys it.

Under county law, most purchases over $100,000 are done by competitive bidding, and the company submitting the lowest bid wins the contract.

Other six-figure contracts -- for professional services, highly technical equipment and other products where price isn’t the primary consideration -- are done by competitive “proposals” that are evaluated on a 100-point scoring system. Criteria vary from contract to contract but take into account such factors as price and the company’s experience and financial stability.

Under the Buy Gwinnett proposal, the company submitting the lowest price would still get the county’s business on competitive-bid contracts. But if two companies -- one from Gwinnett and one from elsewhere -- submitted identical low bids, the Gwinnett firm would get the contract.

Under contracts awarded through the proposal process, Gwinnett firms would get an extra 5 points during the evaluation process. In the event of a tie score, a Gwinnett firm could quote a price up to 15 percent higher than a non-Gwinnett firm’s price and still win the contract. If the local firm’s price was more than 15 percent higher, it would not win the contract.

The Buy Gwinnett provisions would not apply to public works projects, like constructing or demolishing a building, which are regulated by state laws.

It’s unclear how often Gwinnett firms would benefit from the provisions.

Finance director Aaron Bovos said the county completes about 37 six-figure contracts through the competitive proposal process each year. Though tie scores occur, he said it happens infrequently and he couldn't recall an example.

Lasseter said the 15 percent price advantage for local firms in the proposal process is a cap that protects taxpayers while still giving local businesses a needed boost.

Unveiled last spring, the Gwinnett chamber's Let’s Do Business Gwinnett program includes government and private industry incentives for homebuyers. It also encourages local businesses, governments and residents to bring 5 percent of the money they normally spend elsewhere back to Gwinnett.

The chamber believes redirecting 5 percent of local spending could pump more than a billion dollars into the county economy over five years.

“Every dollar helps when you have the kind of economic malaise we’re in,” said Chamber Vice President Demming Bass.

Laurie McClain, managing partner of the accounting firm McClain & Co. in Suwanee, took the local spending pledge. She tries to do business with local firms whenever she can. She said it doesn’t cost more and she gets better service from local firms.

“It’s not about getting people to spend more money than they’re spending anyway,” McClain said. “It’s about getting them to spend at home.”

The Norcross City Council also has responded to the chamber’s call. Under recently adopted purchasing rules, qualified city firms can win the city’s business in some circumstances if their price is within 2 percent of the lowest price submitted by an out-of-town company.

“It keeps the money in the community,” said Norcross Mayor Bucky Johnson.

Though she doesn’t have statistics, Jacqueline Byers, research director for the National Association of Counties, said the vast majority of counties nationwide have rules favoring local vendors. But she said many government leaders she speaks with are moving away from such provisions to cut costs in a tough economy.

“I don’t think they’ll desert that [preference] policy, but the reality is they’ve got to go where the best price is,” Byers said.

Some object to Gwinnett’s proposal on different grounds. They say it could harm out-of-county companies that employ Gwinnett workers.

Bill Gilman, who works for an engineering firm with offices in Atlanta, told commissioners recently that half of his employees live in Gwinnett.

“We’d be at a total disadvantage,” Gilman said.

Gwinnett officials are still trying to address that concern. The chamber’s Bass said one possible solution is giving preference to Georgia companies instead of just Gwinnett firms.

“If we can get local governments and local companies to at least take their out-of-state spending and bring it back in state, that’s the ultimate goal,” Bass said.

Rules in other metro counties

Examples of metro government rules that favor buying goods and services from local firms:

Atlanta: To win a contract worth less than $500,000, an out-of-town firm must submit bids that are 10 percent lower than the lowest bid offered by a qualified local firm. To win a contract worth $500,000 or more, an out-of-town firm must submit a bid that's 5 percent lower.

Clayton County: In the event a county-based firm and a noncounty firm tie for the low bid, the local firm wins the contract.