City Manager's Blog

Steve Pinkerton has been the City Manager of Manteca since June 16, 2008. He served as Redevelopment Director for the City of Stockton, California from 1994 to 2008. He has also worked for the cities of Long Beach and Redondo Beach. Born in Wisconsin, Mr. Pinkerton has a Master’s degree in Urban Planning and and a Master's Degree in Economics from the University of Southern California, and Bachelor’s degrees in Economics and Geography from the University of Missouri.

Monday, April 13, 2009

Local Vendor Preference Program

Economic Development is a high priority for the City of Manteca. This not only includes bringing new businesses to Manteca, but retaining our existing businesses as well. To this end, we are investigating every means possible to help sustain local businesses during the economic downturn. One means to sustaining local businesses is to ensure that the City of Manteca is using local businesses whenever legally possible.

This past Tuesday, the City Council formally adopted the Local Business Enterprise Preference policy. Essentially, eligible local vendors for publicly bid contracts are provided a 5% preference, and eligible local vendors offering professional services are provided a 5-point preference in staff’s evaluation of the proposals.

This program will provide the best of both worlds. The City of Manteca is assured of getting the lowest cost possible for its purchases while still providing local vendors with top priority in competing for our purchases.

A copy of the policy is attached.
Local%20Vendor%20Preference%20Policy.docx

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posted by City Manager @ 11:52 PM  

5 Comments:

  • At April 14, 2009 11:15 PM , Blogger American Hero said...

    Doesn't this rule make the taxpayer of Manteca pay more for projects? (The city is required to contract with the higher priced bid in some cases?)

     

  • At April 14, 2009 11:32 PM , Blogger City Manager said...

    No, if the Manteca bidder wants the project, he has to match the low bidder.

     

  • At April 15, 2009 5:05 AM , Blogger American Hero said...

    Thanks for your comment. I see where the "local guy" has to "match" the winning bid. (Word 2007? You're killing me with this fancy government software.) But what about perverse incentives?

    If the local guy knows he can after the fact lower his bid to win doesn't that create less of an incentive to enter a low bid to begin with? I.e. there will be a tendency for local bids to come in higher, hence the taxpayer has to pay more.

    Also, there's a disincentive for the out of town jasper to be deterred by reluctance to put in a bid at all knowing that after all the work to submit the bid it may be thrown out even if it's the low bid. Hence for the "local guy" there's less competition which further allows the local guy to enter a higher bid than he would have otherwise.

    Which sounds good if you happen to be the local guy but not so hot for the taxpayer who has to pay more.

     

  • At April 15, 2009 6:59 AM , Blogger City Manager said...

    I tend to see the glass as half full. I don't think it will discourage outside bidders, it will get them to sharpen their pencil and give us the best bid possible.

    It will also send the message to vendors that we encourage businesses to locate here in Manteca. When they locate here, they'll get a preference--so maybe they'll decide to come here instead of Tracy or Lathrop.

    In addition, I believe that those who do keep their dollars local should get an advantage since a local business generates more local jobs and generates more funds to keep our government functioning.

     

  • At April 15, 2009 8:13 AM , Blogger American Hero said...

    I guess that's why they call it the dismal science. Economics doesn't depend on how we choose to "see things" like if the glass is half full or empty. All of those incentives exist regardless if we like it or not.

    You may not be considering that there's a cost associated with submitting bids, and the business must weigh that cost against the possible reward. The "local advantage" policy is from the perspective of the non-local a disadvantage. So the cost is the same but the possible payoff is less. In no case can an activity be encouraged by making it more expensive.

    Maybe in some cases it would cause them to "try harder" to get the lowest bid, knowing he has to beat the "local guy" by at least five percent. But if that's a good policy, why stop there? Why not just tell businesses in the north side of town they have to beat the south side of town by 5 percent. That would, by that logic, encourage them to "try harder." Or, just tell businesses that start with names that start with A-M they have to beat the preferred businesses with names starting with N-Z?

    There is an incentive to "move to Manteca" too, but again there's a cost to relocating a business. If government policy requires them (or encourages them) to incur a cost, then they by definition become less competitive and less prosperous.

    There's a reason why just about no economist says that a "buy local" is a good idea. First, any time it's been tried in the history of mankind on earth one can never point to a single example of a state, city or nation that has increased its wealth by enacting such a policy. In fact the opposite is true, in all cases when comparing like vs like, an entity that erects trade barriers becomes poorer.

    Lastly, if this is a good policy, why stop at 5 percent preference? Why not make it 10 or 100 percent? Heck, why not just make it a requirement to buy everything in town or require that every bidder move to the city or simply only accept bids from "local guys?" The answer is obvious, it would be a disaster but as long as it's "only" a small preference, the negative effects are simply harder to see. But they must be still there.

    If you remove just a little water from that half full glass, it's a little less full no matter how we decide we like to look at it.

     

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