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A question of preference: Laws give governments option to hire local companies

Monday, March 26, 2012

After the dust settled and the contracts were awarded to build the Justin Sollohub Justice Center, one local contractor lost out.

But how much weight governments can give to local preference can be hard for the awarding authorities to define.

Aaron Acker, president and co-owner of Anniston-based Acker Electric Company, said if his bid had been chosen, money paid to his company would have stayed here and benefited the entire community.

That’s one reason the members of the Public Building Authority, which is building both the justice center and a new Department of Human Resources building for the city, have said they would like to ensure as much of the projects as possible are done by local companies and workers.

“My contention all along has been that we’re spending Anniston taxpayer dollars … and it only makes sense to me to give preference to somebody who is an Anniston business so that that money stays here in our economy,” said Jim Miller, chairman of the authority.

Miller noted that economists say employees’ money spent from their paychecks recirculates several times in a local economy.

“Money that’s spent with a contractor out of town, like we’re going to do in this case, it’s a net out-pull of money and that never comes back,” Miller said.

Acker Electric, whose $933,183 bid was 1.8 percent higher than Birmingham-based M & A Electric Company’s $916,017 bid, was passed over in favor of the savings.

“My question was, what does that mean?” Acker said. “How close does a bid have to be before they would (give local preference)?”

Acker Electric has been in business for 54 years and the property on which its headquarters sits was annexed into Anniston in 1987. The vast majority of its employees, 92 percent, live in Calhoun County, Acker said.

“We’re as local as local can be,” Acker said.

In this case, authority members were unsure how much preference they could give. They were worried about the repercussions of not taking the lowest bid — hard feelings, fewer options on the next project or possible lawsuits, said Miller. He and one other member wanted to accept the local bid, but the rest weren’t comfortable with that option, Miller said. They eventually voted together just to keep the bid awards unanimous, he said.

Jacqueline Brown, one of the members who wanted to accept the low bid, said she felt the members needed to follow the guidelines laid out in the request for bids.

“It was stipulated … that the lowest bidders from reputable companies would be chosen,” Brown said. “And so that’s how I based my argument, on plain fairness.”

She was worried that doing anything else would discourage bidders from trying for a project in Anniston again. But she pointed out that two of the largest bids were awarded to local companies who were the lowest bidders. McWhorter and Company’s $6,699,400 bid and Hale Building Company’s $1,249,000 bid won them about three quarters of $11.9 million in construction bids that were awarded.

Local preference is an issue that has been raised before. Back in 2006, councilmen Ben Little and Herbert Palmore received flak after voting to accept an out-of-city bid for two trucks over a city car dealer. Sunny King Ford submitted a bid for $32,500 for the trucks, while Gadsden-based Ronnie Watkins Ford bid of $32,423. The award, which ended in a 2-to-2 tie, was eventually brought up for another vote with the full council and was awarded to Sunny King, said Patty King, president of Sunny King Automotive Group.

King also said the tie vote was an anomaly. The city has been very supportive of Sunny King Automotive over the years, she said.

Earlon McWhorter, a general contractor who has done work with the city, also said he has found the city supportive of his local business.

“Bids are bids, and sometimes it’s difficult to accept the low bid,” McWhorter said. “But if you ask for them, you have the legal obligation sometimes to go ahead and accept them.”

A local preference clause in the state’s competitive bid law does allow a city to accept the higher bid of a local business if it is no more than 3 percent more than the lowest bid.

It allows a city’s administration to consider more than price when weighing bids. For instance, local businesses supply local jobs, which means the dollars paid to a local business tend to have a larger effect on the community than just the cost.

The 3 percent rule would have applied to the trucks. It would not have applied, however, to the new justice center.

According to Tracy Roberts, deputy general counsel for the Alabama League of Municipalities, only goods and services fall under that clause. Any construction or improvements to municipal buildings are subject to a public works bid law that does not include that clause.

Bill Caton, Birmingham and west section manager with Alabama Associated General Contractors, agreed.

“There’s no local preference in construction,” Caton said. “It’s all competitively bid.”

But, Miller said, the authority could still have gone with the local bid, because it’s not subject to the public works bid law. According to an Alabama attorney general opinion from 1999 about a Coosa County municipal public building authority that constructed and then leased a jail and sheriff’s office to the county, a municipal authority doesn’t have to competitively bid the project, but it can.

“While competitive bidding is not required for the construction and equipment of this building, the county can always use the competitive bid process to ensure that it gets the best price,” the opinion reads.

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Keywords: Justin Sollohub Justice Center, laws, contractor,

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