Gunnison County decides buying local isn’t always better

Out-of-town contractors stimulate their share of the economy

According to Gunnison public works director Marlene Crosby, the new public works facility and county jail have hosted out-of-town workers at Gunnison County motels for a total 5,052 nights. Assuming a nightly rate average of $60, Crosby says, that’s $303,120 streaming into the local economy. Add the daily budget for food, and that means $303,738 more spent at local restaurants and grocery stores.

Crosby shared the information with the Board of County Commissioners at a working meeting on Tuesday, June 14. The commissioners had asked Crosby and county manager Matthew Birnie to look into the impacts that a local purchasing policy that favors local contractors would have on Gunnison County’s economy.
“What’s in none of these numbers is entertainment, if they go have a beer or go get a movie,” Crosby said. “So a local preference benefits one group, but outside contractors also benefit another part of our economy, [in this case likely] to the tune of over $700,000.”
According to Birnie, Gunnison County does have a local purchasing policy in place for office supplies.
“We essentially pay more for the same products if [the local bid] is within 5 percent of the lowest bid,” Birnie said. But, he suggested, applying a similar policy to construction projects—or a policy that would allow local contractors to meet the lowest bid—is a different matter. For many companies, lowering by 5 percent could eliminate their profit margin. GE Johnson, the contractor for the public works facility, has a profit margin of 4 percent. That could become a disincentive to bid.
“It’s likely to chill the market for folks who are going to bid,” Birnie said. “The idea of regionalism is important to consider, too, as we consider the economy. If everyone adopts these policies, you have the potential to hurt local businesses’ ability to bid out of the region.”
Birnie cited an example out of Sarasota County in Florida, which has a local purchasing policy. Conversations with their county manager as well as local press surrounding the policy suggest that while purchasing locally looks good from a public relations policy, it doesn’t always deliver the intended results. Birnie shared an editorial from the St. Petersburg Times that stated, “local preference policies make good public relations and bad public policy.” The article suggested that “local preference policies interfere with free-market competition and cause the cost of government to rise.”
County commissioner Phil Chamberland relayed a conversation he had with a local contractor who recently lost three bids: one in Salida and one in Montrose due to local preference policies, and one in Crested Butte because he wasn’t the lowest bidder. To Chamberland, that suggested there would be instances in which a local preference policy would help and others where it would hurt.
“I typically fall on the side of free markets to be free, not trying to manipulate them all the time,” Chamberland said. “I think the evidence is pretty clear that it’s a damned if we do and damned if we don’t kind of thing… Let’s let free markets be free.”
Birnie reminded the group that under the current system, local contractors are awarded work. For the public works and county jail, Lacy Construction has a contract for almost $400,000 and Mountaineer Electric has a contract for almost $1 million. And according to Crosby, the Department of Public Works delivers requests for proposals directly or calls a list of past bidders. The department also goes through the yellow pages to identify potential contractors. To commissioner Paula Swenson, that suggested that the issue is not one of adding a more stringent local preference policy but better educating the public as to how contracting decisions are made.
“It spins back around to our PR issue with Gunnison County that we have holistically,” said commissioner Paula Swenson. “When we have big projects and big bids going out we always seem to miss a step or two in communication… It has been better on these two projects, … but we need to continue to be better.
“I think the line in the editorial says it all,” Swenson continued, referencing the notion that a local purchasing policy is good for PR and not for policy. The commissioners decided to leave the purchasing policy unchanged.
“If I am aware of the opportunity and make the decision concerning whether to bid or not to bid, what more can be asked really?” Chamberland said.
“At face value, all else being equal, a local bidder should have a bit of a leg up because they’re local, they don’t have to travel from out of town to get here,” said commissioner Hap Channell.