Council considers giving local bidders preferential treatment

The city's debate over whether to give local bidders preference for city projects and equipment may soon come to a close.

The issue has been subject to much discussion at several city council meetings, particularly when a local bidder is not the low bidder, but is close. A bid request presented Tuesday night by Road and Bridge Department Supervisor Randy Call sparked discussion again, but this time there looks to be possible resolution.

Council members directed city staff members to draft an ordinance that would give local bidders preference if their bid is within a certain percent of the lowest bidder. That percent would be based on a sliding scale depending on the total cost of the project or equipment.

There's is no hint at this time as to whether the ordinance would pass, but council members wanted the opportunity to see a proposal in writing.

Call requested permission to waive the city's normal bid process on the purchase of a motor grader a piece of equipment that costs between $150,000 and $200,000.

Call asked that the council replace the existing 1986 CAT motor grader with another CAT motor grader, stating experience has shown CATs cost less per hour to maintain, have the best parts and service network of any equipment manufacturer in the industry, have the highest resale price of any comparable equipment and are the leader in the industry when it comes to warranties.

"These items equate to a least cost bottom line," Call said.

Call presented a list of ten governmental bodies and mines that have not purchased motor graders made by anyone other than CAT since 1995.

"It looks to me like you've presented a pretty strong argument," Councilor Tom Gilchrist said.

According to the city charter, the city must observe a formal bidding process for all expenditures over $500, there are exceptions, which include standardization the purchase of items that must be of a same brand to work with existing equipment or special circumstances.

"This would fall under special circumstances," City Attorney Sherman Romney said. "We have some flexibility under our ordinance and it's up to you as a city council to determine if this meets those special circumstances. I'm OK with it. If the council wants to go with it, I think we can justify it."

The council voted 4-1 to allow Call to waive the formal bidding process. Councilors Bill Johnston and Carl Chapman were not in attendance. Mayor Dave DeRose voted against it, though he said he wholeheartedly concurred with the supremacy of a CAT.

He brought up the need for the council to make a decision on whether to give preference to local bidders.

"Basically we've just given local preferential treatment for a motor grader," he said. "If we need a new policy, let's get to it. Each time we accept a bid outside of the community, we're saving virtually nothing because that money doesn't make it back into the community."

Several audience members supported the concept of local priority on bids.

"I think there should be a specific guideline the city sets up to give preference to local bidders. Two or three percentage points in most cases would make a difference," said Jerry Thompson, owner of Craig Ford.

According to City Manager Jim Ferree, the ordinance should state that its purpose is to encourage local business and industry, the logic being money paid under the contract would likely remain in the city and enhance the city tax base.

"It would be wise to spend the taxpayer money collected here with businesses located here," resident Saed Tayyara said.

There are downsides, though, Ferree said.

The first, and subject of much council discussion, is defining what's local. Does a business based in Steamboat Springs with several employees who are Craig residents qualify, Gilchrist asked.

"No. The local guy is the person who lives in Moffat County and pays Moffat County taxes," Thompson said.

Ferree believes another downside to giving preference to local bidders is that it discourages competition. Out-of-area bidders who routinely lose bids to local businesses may eventually stop bidding, he said.

"Then, the few remaining resident bidders lose some incentive to sharpen theiar pencils when developing bids," Ferree said. "You have to be careful because you are still talking about taxpayer dollars."

Three other Colorado communities have ordinances that give preference to local bidders: Rifle, Brighton and Idaho Springs.

"Let's see what these other communities are doing because they're doing it for a reason," DeRose said.

The ordinance must also be drafted in a way that takes into consideration that anytime state or federal grant funds are used to pay for a project or piece of equipment, the city must follow established competitive bidding procedures. There are no allowances for local preference.

Christina M. Currie can be reached at 824-7031 or by e-mail at ccurrie@craigdailypress.com.

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