At first glance, the Santa Barbara County Board of Supervisors’ approval of a policy to increase bidding on government contracts seems like a good idea. It’s only when you start digging down that you begin to see potential problems.
The county has been operating with a policy preferential to local vendors bidding on tangible-goods purchases, giving locals a 6-percent advantage over outside bidders.
It works like this: If the outside vendor submits the lowest bid, but a local provider comes in with a higher bid, but within 6 percent of what the outside bidder offered, the sale goes to the local vendor.
That seems exclusionary, and in a way it is. But it is common practice with local governments in California and is designed to try to keep tax dollars here a home.
The board vote was not unanimous. First District Supervisor Das Williams and 4th District Supervisor Peter Adam, most often on opposite ends of votes, joined forces to vote against the policy change, but for different reasons.
Williams argued that now is not the time to change vendor policy, while Adam expressed the opinion that spending more just to keep a contract with a local vendor was not the wisest use of taxpayers’ dollars.
We agree with Adam’s interpretation of the issue, but disagree with what could be a potentially harmful policy for the local economy. We also aren’t convinced that tweaking the 6-percent-margin rule would necessarily attract more outside vendors.
But the biggest problem in reducing the home-field advantage for local vendors is that it could, and almost surely would mean that local tax dollars spent on government contracts that go to faraway businesses would mean the multiplier effect of local government spending would suffer. When the vendor is local, with local employees, those paycheck dollars are generally spent here at home.
One critic of the policy change made a valid point about a recent decision by the county to buy a piece of heavy equipment from a Ventura County seller, but when it was pointed out to county officials that the same equipment was available at a Santa Maria heavy-equipment dealer, the county went with the local dealer, which resulted in Santa Maria getting a $30,000 boost in sales tax.
Such purchases aren’t huge in comparison to what the county generally spends each year for tangible goods, but it does amount to more than $16 million in a fiscal year, which represents a significant sales-tax bundle.
Board members finally agreed to a temporary policy change, which essentially narrows the preference gap for outside vendors, but agreed to only a six-month trial run, during which staff will study the issue, track buying patterns, then report back to the board.
Another sticking point for board members is that the 6-percent preference apparently came out of a California Attorney General’s Office opinion from the late 1980s, so basically no one was entirely certain why the county has stayed with such a policy.
The main thing county staff needs to do is track the bidding process on each contract for the next six months to see if outside vendors are, in fact, interested in trying to do business with Santa Barbara County government, which has a statewide image of being extra-tough on just about everything.
If more outside vendors are drawn in, making the bid process more competitive, it could save local taxpayers a small bundle. On the other hand, the trial could also tell us whether the local economy takes a direct hit.