Did your agency jump on the Local Vendor Preference (LVP) train during the downturn of the economy? Many agencies were directed to adopt a LVP policy to address the local economy to give local vendors a better opportunity to win awards. In some instances, this fast spreading trend did not provide procurement professionals the time or opportunity to really analyze the who, what, why, where, when and how to write this new policy.
Punta Gorda boarded the train and rode it for 6 years. A recent bid award really shined the light on the flaws of the LVP policy, leading Procurement to conduct a cursory evaluation of the policy and use. After the evaluation a presentation was given which threw up the caution lights to the City Council, putting a temporary brake on the train. The vendor was qualified by the City’s current policy as a “local vendor”….. but the question that arose was, were they truly a local vendor who contributes to the economic development and well-being of our community? Procurement was given the green light to analyze the City’s policy, use and what other agencies are doing.
Procurement analyzed the many questions of the policy through surveys of other agencies and vendors. One of the goal’s of the project was to revise the policy to better define qualification requirements, which would also allow Procurement to quantitatively qualify local vendors.
Who? Local Bidders… Who really are “local bidders”? This was a major concern for the City! A nationwide corporation can throw up a store front or rent an office condo with a receptionist and claim to be a local vendor. Do they really contribute to the preference area’s economy? Their equipment, staff and compensation from the local agency are elsewhere. Other consideration of “who” include should an owner or officer work at the location or live in the preference area.
What? Preference methodology. Hats off to the agencies that first came up with the 2 methods of “Meet” and “Meet or Beat”! However, some agencies still award a local vendor at their original bid price if they are within the preference percentage.
Why? The goal of the policy is to give local bidders preference to win awards. But wait only 6 LVP awards in the last 6 years and only 1 LVP award in the last 3 years? An average of 66% of awards, without local preference consideration, was made to vendors within our 4 county area! The why was no longer warranted.
Where? Identify the preference area to be considered a local vendor. Local preference limits competition. If you are in an area that does not have supported vendor base of diverse goods and services the preference policy will affect your process.
When? Does the currently economy warrant local preference policies? Is the policy producing local preference awards? The answer for Punta Gorda was no. The percentage of awards made to vendors in the 4 county area, without local preference consideration, increased from 59% in 2010 to 71% in 2015.
How? Procurement needs to have the ability to qualify local vendors in a manner that is not subjective and fosters transparency in the process. Establishing objective qualification components there are several resources available to validate a vendor’s claim as being “local”.
The City Council reviewed the study results and in conjunction with the initial cursory analysis unanimously voted to derail the Local Preference in April 2015.