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Local preference in Idaho’s state procurement act

December 26, 2018
Marvin K. Smith

As online (which in many cases means out of state) purchasing becomes increasingly popular, local and state governments continually look for ways to keep purchases in the community and to stimulate the local economy. A way in which some local and state governments have attempted to accomplish this is through local preference laws in government bidding and purchasing. In certain circumstances, local preference laws provide certain advantages or preferences to local businesses or businesses with a significant presence in the community or state.

There are many different types of local preference laws. In 2010, the city of Cleveland, Ohio, adopted a local and sustainable purchasing ordinance, which provides a 2 to 4 percent bid preference for companies that source products locally or are certified as a sustainable business. Cleveland also provides bid discounts and evaluation credits to companies that buy at least 20 percent of their contract amounts from regional food growers. Other local preference laws allow a local bidder a preference by providing a local bidder the opportunity to match the low bid of a non-local bidder if certain conditions are met, essentially granting the local bidder a right of first refusal against non-local bidders.

In 2016, the Idaho Legislature rewrote and updated the Idaho Procurement Act, which governs the approximately 42,000 contracts awarded annually. The State Procurement Act is found at Idaho Code §§ 67-9201 et seq. There are several provisions within the state procurement that provide a local preference for Idaho businesses. Idaho Code § 67-9209(2) provides: “to enhance small business bidding opportunities, the administrator shall seek a minimum of three (3) bids from vendors having a significant Idaho economic presence as defined in section 67-2349, Idaho Code.” Idaho Code § 67-2349(1)(a) and (b) defines a significant Idaho economic presence as a bidder who has maintained fully staffed offices, sales offices, divisions, sales outlets, manufacturing facilities or warehouses in Idaho and is registered and licensed to do business in the state of Idaho with the Idaho Secretary of State for a period of one year preceding the date of presenting a bid. Idaho Code § 67-2349(1) also provides a preference for Idaho bidders competing against non-Idaho bidders from states that provide an un-level playing field for Idaho businesses competing for government contracts in those states. Specifically, for a non-Idaho bidder to be successful on government contract in Idaho, the non-Idaho bidder would have to submit a bid the same percent less than the lowest bid submitted by an Idaho bidder as would be required for an Idaho bidder to succeed over the non-Idaho bidder on a similar contract in the non-Idaho bidder’s home state.

Idaho law also provides for a local preference when there is a tie in the bidding process. Idaho Code § 67-9210(2) states: “Where both the bids and quality of property offered are the same, preference shall be given to property of local and domestic production and manufacture or from bidders having a significant Idaho economic presence as defined in section 67-2349, Idaho Code.” Idaho’s administrative code also provides: “Award shall not be made by drawing lots, except as set forth below, or by dividing business among tie responses. In the discretion of the buyer, award shall be made in any permissible manner that will resolve tie responses. Procedures that mat be used to resolve tie responses include: … Award to an Idaho resident or an Idaho domiciled vendor or for Idaho produced property where other tie response(s) are from out of state or to a vendor submitting a domestic property where other tie responses are for foreign (external to Idaho) manufactured or supplied property.”

Further, Idaho law directs that political subdivisions should purchase good and services locally. Idaho Code § 67-2801 states: “Efficient and cost-effective procurement of goods, services and public works construction is an important aspect of local government operations. Local public agencies should endeavor to buy goods, services and public works construction by way of a publicly accountable process that respects the shared goals of economy and quality. Political subdivisions of the state shall endeavor to purchase goods and services from vendors with a significant Idaho economic presence.”

In conclusion, Idaho statutes currently provide a legal framework for providing a local preference for businesses having a significant Idaho economic presence in the procurement of contracts with state agencies under certain circumstances. Additionally, while certain legal and political issues would need to be analyzed, if a local community wanted to advance “buying local” in an effort to stimulate the local economy it may make sense to explore the idea of adopting some type of local preference ordinance or policy.

Marvin K. Smith is an attorney with Hawley Troxell and a native of Idaho Falls. He concentrates his practice in the areas of medical malpractice, hospital law, collections, personal injury, employment law, and wrongful death. Smith has significant experience defending hospitals and physicians through the pre-litigation and litigation stages of a medical malpractice action. He also maintains an active collection practice.

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