Los Angeles' Local Preference Ordinance
9/10/2010
MAYOR ANTONIO VILLARAIGOSA, COUNCILMAN BERNARD PARKS AND COUNCILMAN PAUL KREKORIAN ANNOUNCE SUPPORT OF THE CITY OF LOS ANGELES’ LOCAL PREFERENCE ORDINANCE
LOS ANGELES - Mayor Antonio Villaraigosa, Councilman Paul Krekorian and Councilman Bernard Parks announced their support of the City of Los Angeles’ Local Preference Ordinance that will award local businesses seeking government contracts by assigning them greater value on their bids and proposals.
“Awarding government contracts to other cities represents a significant missed opportunity to stimulate the local economy and create jobs,” Mayor Villaraigosa said. “The Local Preference Ordinance represents one more example of how my Office of Economic and Business Policy isthinking creatively and strategically tojumpstart our economy and create a competitive operating environment for businesses to thrive.”
"For too long, the City of Los Angeles has awarded contracts to private companies without considering if any of those funds will filter back into the local economy," Councilmember and Chair of the Budget and FinanceCommittee Bernard C. Parks said. "This short-sighted practice of selecting the lowest qualified bid without considering where the bidding company is located or where their employees live is to the great detriment of the economic vitality of Los Angeles. I am so pleased to work with my colleagues on creating an ordinance that gives preference to those businesses that pay taxes to the city and hire residents of the city".
The Local Preference Ordinance will provide for local businesses an 8% preference in their bids and proposals for government contracts. It will give preferential treatment to businesses during the two processes that award procurement funding: low bid contracts and request for proposals.
In a low bid contract scenario, the local preference will lower the bid price. For example, if a local business submits a bid of $1 million, the local preference ordinance will take 8% of their bid. Therefore, for the purpose of selecting the winning bidder, the local business’ bid will be deemed to be $920,000.
In a Request for Proposal situation, a local business will be given additional evaluation points. For example, if a local business submits a proposal that generates 100 total evaluation points, they will be given 8% more. Therefore, for the purpose of a selecting the winning bidder for the RFP, the local business proposal will be deemed to be 108 evaluation points.
“Los Angeles spends more than $1 billion every year on purchasing goods and contracted services,” said Councilmember Paul Krekorian, vice-chair of the Jobs and Business Development Committee. “At a time of sky-high unemployment in this city, we cannot afford to send our taxpayers’ money to out-of-state businesses. The city should make its purchases in a way that helps local businesses create local jobs, and that’s what this ordinance will do.”
“This will help create jobs in Los Angeles," First Deputy and Chief Executive of Economic and Business Policy Mayor Austin Beutner said. “The Local Preference policy will help small businesses that are the backbone of the Los Angeles economy.”
To receive a local preference, a business must:
The City of Los Angeles presently spends approximately 84% of its procurement dollars with businesses that are located outside of Los Angeles. Therefore, of the $1.1 billion allocated for government contracts, only $180 million goes back to local businesses. In an analysis conducted by Professor Charles Swenson of the University of Southern California, it was concluded that the heightened economic activity and jobs created by a local preference policy would generate new revenue for the City that would offset any incremental increase in the cost of goods and services associated with awarding contracts to local businesses. Professor Swenson concluded that a local preference policy would generate approximately 10,000 new jobs with no cost to the City.
“I sincerely thank the Mayor for his leadership and we here at Armorcast appreciate the effort to level the playing field for local businesses and to direct focus onto the workers in our community where it belongs,” said Sydney Chase, Vice President of Business Development at Armorcast Products Company, a manufacturing company located in Los Angeles. “We are in full support of Councilman Paul Krekorian and his work on behalf of businesses in Los Angeles who are committed to remaining in our city.
Local Preference Policies are a commonly-used tool in various cities throughout the country to spur local economic development and job creation.
MAYOR ANTONIO VILLARAIGOSA, COUNCILMAN BERNARD PARKS AND COUNCILMAN PAUL KREKORIAN ANNOUNCE SUPPORT OF THE CITY OF LOS ANGELES’ LOCAL PREFERENCE ORDINANCE
LOS ANGELES - Mayor Antonio Villaraigosa, Councilman Paul Krekorian and Councilman Bernard Parks announced their support of the City of Los Angeles’ Local Preference Ordinance that will award local businesses seeking government contracts by assigning them greater value on their bids and proposals.
“Awarding government contracts to other cities represents a significant missed opportunity to stimulate the local economy and create jobs,” Mayor Villaraigosa said. “The Local Preference Ordinance represents one more example of how my Office of Economic and Business Policy isthinking creatively and strategically tojumpstart our economy and create a competitive operating environment for businesses to thrive.”
"For too long, the City of Los Angeles has awarded contracts to private companies without considering if any of those funds will filter back into the local economy," Councilmember and Chair of the Budget and FinanceCommittee Bernard C. Parks said. "This short-sighted practice of selecting the lowest qualified bid without considering where the bidding company is located or where their employees live is to the great detriment of the economic vitality of Los Angeles. I am so pleased to work with my colleagues on creating an ordinance that gives preference to those businesses that pay taxes to the city and hire residents of the city".
The Local Preference Ordinance will provide for local businesses an 8% preference in their bids and proposals for government contracts. It will give preferential treatment to businesses during the two processes that award procurement funding: low bid contracts and request for proposals.
In a low bid contract scenario, the local preference will lower the bid price. For example, if a local business submits a bid of $1 million, the local preference ordinance will take 8% of their bid. Therefore, for the purpose of selecting the winning bidder, the local business’ bid will be deemed to be $920,000.
In a Request for Proposal situation, a local business will be given additional evaluation points. For example, if a local business submits a proposal that generates 100 total evaluation points, they will be given 8% more. Therefore, for the purpose of a selecting the winning bidder for the RFP, the local business proposal will be deemed to be 108 evaluation points.
“Los Angeles spends more than $1 billion every year on purchasing goods and contracted services,” said Councilmember Paul Krekorian, vice-chair of the Jobs and Business Development Committee. “At a time of sky-high unemployment in this city, we cannot afford to send our taxpayers’ money to out-of-state businesses. The city should make its purchases in a way that helps local businesses create local jobs, and that’s what this ordinance will do.”
“This will help create jobs in Los Angeles," First Deputy and Chief Executive of Economic and Business Policy Mayor Austin Beutner said. “The Local Preference policy will help small businesses that are the backbone of the Los Angeles economy.”
To receive a local preference, a business must:
- Have filed and maintained a Business Tax Registration Certificate for the prior six (6) months;
- Occupy building space in the geographical area required by the City Charter as evidenced by either a lease or deed; and
- Have 50% full-time employees work in the geographical area required by the City Charter at least 60% of the time or have 50 full-time employees work in the geographical area required by the City Charter at least 60% of the time.
The City of Los Angeles presently spends approximately 84% of its procurement dollars with businesses that are located outside of Los Angeles. Therefore, of the $1.1 billion allocated for government contracts, only $180 million goes back to local businesses. In an analysis conducted by Professor Charles Swenson of the University of Southern California, it was concluded that the heightened economic activity and jobs created by a local preference policy would generate new revenue for the City that would offset any incremental increase in the cost of goods and services associated with awarding contracts to local businesses. Professor Swenson concluded that a local preference policy would generate approximately 10,000 new jobs with no cost to the City.
“I sincerely thank the Mayor for his leadership and we here at Armorcast appreciate the effort to level the playing field for local businesses and to direct focus onto the workers in our community where it belongs,” said Sydney Chase, Vice President of Business Development at Armorcast Products Company, a manufacturing company located in Los Angeles. “We are in full support of Councilman Paul Krekorian and his work on behalf of businesses in Los Angeles who are committed to remaining in our city.
Local Preference Policies are a commonly-used tool in various cities throughout the country to spur local economic development and job creation.