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HomeMy WebLinkAbout06.b.2) Local Vendor Preference Policy�Vb.z) Central Contra Costa Sanitary District January 13, 2015 TO: ADMINISTRATION COMMITTEE VIA: ROGER S. BAILEY, GENERAL MANAGER FROM: DAVID HEATH, DIRECTOR OF ADMINISTRATION SUBJECT: LOCAL VENDOR PREFERENCE POLICY INFORMATION The Board has directed staff to evaluate options the District may have in creating a local vendor preference policy to support local businesses. The attached summary breaks down the various options of a local vendor preference policy based on research of other public agencies' policies. Also included is a table which lists various public organizations' respective attributes of their policies for comparative purposes. District Counsel, Kent Alm, will be present to discuss legal concerns and restrictions to keep in mind regarding a local preference policy. Staff is seeking Committee input and direction. f LOCAL PROCUREMENT PREFERENCE SUMMARY — RESEARCH FINDINGS OVERVIEW Local preference policies give local vendors an advantage in public contracting. Currently, the District includes and encourages local businesses to participate in solicitations whenever possible; however, the District does not have a policy in place to give any type of preference or advantage to local businesses. For the most part, the reasons many public sector entities adopt local preference policies is to stimulate the local economy, support the local business community and constituents, and possibly create new jobs and /or protect existing jobs. The general concerns of these policies tend to be related to the possibility of reducing competition if the non -local vendors decline to bid due to the preference, which in turn may potentially increase prices over time. The legal permissibility of certain approaches also can be a concern. Numerous cities and counties throughout the State of California have local preference policies. It appears to be less common in water and wastewater districts in the Bay Area to have this type of a policy. The information in this paper is based on researching other public entities and their local preference policies. The data includes some specifics of these other entities for comparative purposes. ELEMENTS TO BE CONSIDERED WHEN DESIGNING A POLICY 1. What type of local preference? Match /Percentage bids - when the local bidder's bid is within a certain percentage of that of the lowest bid by a non -local bidder; the local bidder may be awarded the bid; or the local bidder is given the opportunity to match the non -local bidder's price. (Most common) Tie -bids - when the bid of a local bidder is the same amount of that of a non - local bid; preference goes to the local bidder Absolute - requires jurisdiction to purchase certain commodities within designated area 2. How will a local preference be applied? • If the low bid is not a local vendor, any responsive local vendor who submitted a bid within x% of the lowest responsive bid shall have the option of submitting a new bid within x hours /days. The new bid must be in an amount Administration Committee Meeting 01/13/15 Local Vendor Preference Policy Information Page 1 of 6 less than or equal to the lowest responsive bid for award. (Contra Costa County's model, 5 %) In some jurisdictions, the bid preference percentage is applied to local bids only for the purpose of evaluating whether the local bidder is the lowest responsible bidder. When the local vendor is within x% of the low bidder, they will be awarded the contract, but at their original price, so the agency will pay a higher price. 3. What types of procurements will the local preference apply to (types and dollar ranges)? • Supplies, equipment, materials, non - professional service, professional services (consulting), construction. • Minimum dollar threshold / maximum dollar threshold considerations • Example: Contra Costa County's local preference policy applies only to supplies, equipment and materials that are over $25k. • Example: City of Concord's local preference policy applies to supplies, equipment, and services (except professional or consultant) with a $100k maximum limit. 4. How does a business qualify as a "local business ?" Virtually all jurisdictions require that the business have a place of business within the jurisdiction; some attach time limitations (i.e. that the business has been doing business in the jurisdiction for a certain period of time prior to seeking the preference). Most jurisdictions also require that the business have a business license issued by either the jurisdiction or, in the case of most counties, a jurisdiction within the county. Some jurisdictions also have requirements regarding employees (i.e. that a certain number of employees reside in the jurisdiction), and some jurisdictions also give local bid preferences to companies offering products made within the jurisdiction. Example: Contra Costa County Requirements: 1) Business which has its headquarters, distribution point or locally -owned franchise located in or having a street address within CCC for at least 6 months before the bid opportunity 2) Holds any required business license by a jurisdiction located in CCC, and 3) Employs at least one full -time or two part -time employees whose primary residence is located within CCC, or if the business has no employees, shall be at least 50% owned by one or more persons whose primary residence(s) is located within CCC. Some jurisdictions only give preference to local businesses if they qualify as a small business as well. Some jurisdictions give a percentage preference for local businesses and an additional percentage preference if they are small and emerging local businesses (Alameda County). Typically cities /counties use their city /county boundaries to determine locality. Since CCCSD boundaries are not confined to similar borders, a decision will need to be made on the boundaries that will be enforced to determine locality. Administration Committee Meeting 01/13/15 Local Vendor Preference Policy Information Page 2 of 6 ti r If the District were to include areas outside of the District (i.e. Concord, Clayton, parts of San Ramon, and parts of Martinez), it may be more challenging to establish the benefit to the District and the intention of the policy. 5. How does a business demonstrate that it is a local business? • Alameda County certifies businesses as small and /or local. • LA County requires that businesses be certified as small by the State. • Nevada County requires that businesses seeking a preference must submit materials demonstrating that they qualify with their bid documents. • Contra Costa County requires that vendors seeking a local bid preference submit a certification in writing along with their bid, and reserves the right to impose a penalty (ineligibility to transact business with the County for 3 -24 months) for any business falsely claiming to be local. 6. Measuring the impact of the policy • Identify any additional requirements /reports to measure success of program. Administration Committee Meeting 01/13/15 Local Vendor Preference Policy Information Page 3 of 6 LOCAL PREFERENCE POLICY BENCHMARKS Bay Area Cities and Counties Administration Committee Meeting 01/13/15 Local Vendor Preference Policy Information Page 4 of 6 Local Preference Agency % Notes Supplies, equipment, and services (except professional or consultant). 5% is for evaluation purposes, will pay the higher price if within 5 %. City of Concord 5% $100k max. Only commodities (supplies, material, equipment) > $25k. Local vendor within 5% of non -local low bidder may submit new bid within 48 hours (not including weekends and holidays). If the new bid is less than or equal to the low bid, award goes to the local vendor. No additional cost to the County with County of Contra Costa 5% this method. Goods, services, and professional services > $25k. Local Business - having fixed offices and having a street address within the County for at least six (6) months prior to the issue date of any RFP /Q being responded to; and which holds a valid business license issued by the County or a city within the County. Also applies to Alameda County products defined as products that are grown, mined, fabricated, manufactured, processed or produced within the County. Small Local and Emerging Business (SLEB) - A small business is defined by the United States Small Business Administration (SBA) as having no more than the number of employees or average annual gross receipts over the last 3 years required per SBA standards based on the small business's appropriate North American Industry Classification System (NAICS) code. An emerging business is defined by the County as having either annual gross receipts of less than one -half (1/2) that of a small business OR having less than one -half (1/2) the number of employees 5% Local, AND that has been in business less than five (5) County of Alameda 5% Small years. 10% preference: Must be small and local. Applies 10% to construction and professional service contracts 2% (slightly under $10 million. larger local 2% preference: May be slightly larger than small City and County of San Francisco businesses) businesses and must be local. Administration Committee Meeting 01/13/15 Local Vendor Preference Policy Information Page 4 of 6 Other California Public Acrencies Local Applies to supplies, materials, equipment, Preference nonprofessional services. 10% is applied and the Agency % local vendor has the opportunity to reduce their bid in an amount equal to the amount of the lowest responsible bid (non - local). Allow 5 business days City of Milpitas 10% for local to lower bid. Construction, commodities and service bids. 5 5% Local, Preference points for local participation on City of Oakland 5% Small professional services Other California Public Acrencies Administration Committee Meeting 01/13/15 Local Vendor Preference Policy Information Page 5 of 6 1 � Local Preference Agency % Notes Goods, Services, and Consultant Contracts. Goods and Services Contracts >$50k: 2% discount off the bid price for Small Local Business Enterprise or Emerging Local Business Enterprise prime contractors; or 2% discount off the bid price for prime contractors achieving the voluntary goal of 20% for SLBE or ELBE subcontractor participation set forth. Discount does not apply if an award to the discounted bidder would result in a total contract cost of $10k in excess of the low, non - discounted bidder. Consultant Contracts: For proposals ranking as qualified or acceptable, apply a maximum of 12 additional points for SLBE or ELBE participation (20% participation =5 points, 25% participation =10 points, City of San Diego 2% ELBE or ELBE as prime contractor =12 points. Must be local and must be certified by the federal Small Business Administration (SBA) or are registered as small on the federal System for Award Management (SAM) data base. Applies to goods and services. Preferene is for evaluation purposes but does not change the bid amount of the contract award. Preference not to exceed $50k for any one bid /proposal. They also have an ordinance establishing an 8% County of Los Angeles 8% preference for Disabled Veteran Business Enterprises. City of El Centro 10% Public Works Projects; Max discount $10k City of Lancaster Only goods and services under formal bid limit, N/A to o 5/o construction City of Redding 5% Only taxable goods - not services City of Santa Ana 7% small, local -- 1% if not small but only local City of Santa Cruz local w/1 employee within city limits, additional 4% for o 2/0 locally owned City of South Gate 5% City of Thousand Oaks 5% Administration Committee Meeting 01/13/15 Local Vendor Preference Policy Information Page 5 of 6 1 � ! County of Imperial 10% County of Inyo 8% County of Sacramento 5% Notes County of Santa Clara 5% does not apply to Public Works County of Tehama 5% South Tahoe Public Utility District 1.50% Water/Wastewater Agencies in Bav Area Administration Committee Meeting 01/13/15 Local Vendor Preference Policy Information Page 6 of 6 Local Preference Agency % Notes Union San None Dublin San Ramon None CCWD None Delta Diablo None West County San None — Contract Equity Program and Equal Employment Opportunity requires bidders to conduct outreach to all potential subcontractors to ensure that opportunities to participate in contracts are publicized as widely as possible. This is not a preference, but a requirement to bid. —5% SBE Preference (not to exceed $250k) for materials, supplies, general services, and construction contracts. None — Encouragement of local businesses' participation, but no EBMUD (see Notes) preference applied. Applies only to public works /construction services, construction materials supplies, construction equipment rental and /or trucking. Requirements are based not only on businesses' location, but they also must be small /micro as determined by a cap on average gross receipts from prior (3) years, as follows: Public Works /Construction Contractors (A & B license) $14 million $7 million SFPUC Specialty Construction Contractors $7 million $3.5 million Goods, Materials and Equipment Suppliers $7 million $3.5 million General Services $7 million $3.5 million Trucking $3.5 million $1.75 million Certification process ranges from 14 to 30 business days, which includes a site visit and interview employees /owner at 10% site. Administration Committee Meeting 01/13/15 Local Vendor Preference Policy Information Page 6 of 6