Other counties’ local preference rules
Dawson: Offers a 3 percent local vendor credit for qualified businesses in the county
Forsyth: Offers a 5 percent credit for qualified businesses in the county
Chatham: The lowest county vendor gets an opportunity to match the lowest out-of-county vendor.
Oconee: If a county vendor’s bid is within 5 percent of the lowest noncounty bid, the local business can match the low bid.
“Buy local” has become a popular phrase among small businesses looking for loyal customers among their neighbors.
Now the Hall County Board of Commissioners is considering its own buy local policy to help local businesses when it purchases supplies and services needed to run the government.
Government seeks outside vendors for everything from office supplies to food for the county jail, including consulting services on the Glades Reservoir and janitorial services for county buildings.
A “local vendor preference” is a policy that offers advantages to local businesses over those out of the region. That typically mean giving local businesses a leg-up in the bidding process for contracts.
It’s becoming a fairly common practice across the country as local governments try to boost their economies.
The city of Gainesville has a preference policy in place. State lawmakers passed also passed a bill aimed at evening the playing field for state businesses.
County commissioners are debating how to implement such a policy.
“These folks live here, they pay taxes here and they employ people who pay taxes here,” Commissioner Scott Gibbs said. “I want to support the folks in Hall County.”
So why buy local?
“We need to be spending our government money with people who are contributing their hard-earned taxes to the county,” said Frank Norton Jr., president of Norton Agency real estate and a tracker of the local economy.
Norton has been a vocal advocate of local preference for government purchases.
Norton argues that government spending in Hall would remain in the county with the potential to boost job growth and future tax revenues.
“Local vendors create local employment,” he said.
In the current environment, Norton said he knows of local small-business owners who choose not to bid with the county because of the perception that the local government prefers big outside firms.
But some critics of the local preference policies argue the practice actually hurts local taxpayers. They say the policy causes governments to spend more money on goods and services.
“I’d like to think Hall County should be open for business for anyone who wants to do business here,” said Commisssioner Craig Lutz, who has been vocal about his reservations with such a policy.
Lutz advocates keeping the current system where no business gets a government advantage. That arrangement, he argues, offers the best deal to the county, which means the best deal for taxpayers.
“There are a lot of problems with ordinances like this in place,” he said, arguing the extra money paid to local businesses becomes a “tax” to the county “because what you’ve done now is pay more for a product.”
Additionally, Lutz noted that it costs businesses money to put together bids, and a local preference policy may dissuade competition, further escalating higher prices for the county.
“Eventually, it’s going to drive away bids from people outside the county because they’re going to know that they’re at a disadvantage in the first place,” he said.
Commissioners would need to pass a new ordinance to institute the purchasing policy, according to county attorney Bill Blalock.
Currently, county officials are exploring different types of existing local preference policies.
Here’s how some of those work:
Often when local governments seek supplies or services from businesses, they put their requests out for competitive bids to get the lowest price.
Without the local preference, the lowest qualified bidder wins the contract regardless of its address.
Local preferences can give local businesses “credits” that narrow the difference between bids from outside the county.
Forsyth and Dawson counties have these measures in place according to their websites, offering 5 percent and 3 percent credits, respectively.
In other cases, local bidders get an opportunity to match the low bid of nonlocal governments. Gibbs said he favors that kind of policy.
“That way, the county isn’t out any money,” he said.
Gainesville’s purchasing policy allows local businesses a chance to match, but only if the local company’s original bid was within 3 percent of the other offer. Those are for purchases between $20,000 and $100,000.
Georgia forbids local preferences for costs exceeding $100,000, Blalock said. That means the biggest government projects, like building and road work, are ineligible for such a policy.
“None of this has been tested in court of whether it stands up constitutionally,” Blalock told commissioners this month. “Sooner or later that should probably happen.”