Should the low-bid law change?
As the regional Jingle Bells contest kicks off, enticing folks to buy locally, the difference between the public and private sectors couldn't be more obvious.
The local economy, like the regional, state and national economies, has been hurt by industry downturns, layoffs and foreclosures.
We need work, new businesses, tourists, hunters and shoppers, especially to tide us over what could be another long winter.
Unlike consumers, government can't necessarily shop locally. State laws trump local preferences, in the words of Hubbard County coordinator Jack Paul.
When Park Rapids recently awarded the low bid for signs at the municipal liquor store to a Fargo company, a local sign vendor questioned the process when the finished product didn't meet the original specifications. He maintained he could have undercut the Fargo company if he'd been able to bid a smaller message board similar to the one installed.
It was an unfortunate outcome, but through no fault of the city's. All three vendors submitted bids for the same initial specifications. The local bidder simply wasn't the lowest. The city followed the law. Cities and counties don't have the luxury of selecting local companies to receive government largesse. Low bid wins. Period.
The state law does come with a caveat, but a dicey one fraught with peril. If a governmental unit has an ongoing relationship with a local vendor, it can bypass the low-bid option and select that local business.
"Ongoing relationships" have been the subject of lawsuits filed by disgruntled bidders.
Overall, the low bid law works against rural industries. Small town vendors can never offer the volume discounts that big-city businesses can when they're eking out a profit. If they bid, they're at or near costs, a suicidal strategy.
And to throw a monkey wrench into the bidding process, the state can also bid on items such as squad cars. Its huge volume of purchasing can bring even deeper discounts.
The reason behind the low bid law is, as Paul puts it, "to give taxpayers the best bang for the buck."
Some states have legalized bid preferences, allowing a local bidder to raise or lower a bid to compete. Others give small businesses percentage rate discounts in bidding, allowing them to be more competitive. There are minority-owned business preferences. Why not dinky business preferences?
Local government can try to keep the bidding process local, advertising in hometown or regional publications only. But out-of-town companies looking for work are casting wider nets in hopes of finding that work, so it's almost impossible to keep outside vendors out.
As the economy struggles to right itself, Minnesota lawmakers should look toward ways to stimulate local business.
Otherwise rural participation in public bidding processes could dwindle, benefiting no taxpayers.