Council approves bill that prioritizes local businesses for contract awards

Local businesses will get priority for county contracts

They can be chosen even if they are not the low bidder

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Local businesses will be getting a leg up on contracts with Montgomery County government, thanks to legislation that prioritizes them for contract awards.

Nine months after the bill was introduced in September, the County Council unanimously approved it on Tuesday in hopes of increasing the number of local businesses that are awarded contracts.

The legislation provides a 10% price preference in bid and proposal evaluations from local businesses for county contracts. A qualified bidder in the county could win a competitive bid even if its bid is up to 10% higher than another qualified bidder based outside the county.

The county will pay up to $200,000 extra on a contract to give it to a local business.

The effective date for the new local preference will be Aug. 1.

A business must be in the county to qualify. If it has locations outside the county, more than 50% of the business’s total number of employees or more than 50% of its gross sales must be from the county-based location.

In a June 18 memo to the council, Bob Drummer, a senior legislative attorney for the council, wrote that the county attorney’s office had legal concerns about the local preference.

The memo recommended that the legislative record “clearly identify a significant governmental purpose to be served by the legislation and explain how the proposed program is closely related to that significant purpose.”

One of the concerns raised by county officials included potentially discouraging nonlocal businesses to bid for contracts and less competition, which could mean higher bids.

Another issue was a potential violation of the Privileges and Immunities Clause in the U.S. Constitution, which concerns discrimination against residents of another state on the basis of their state citizenship.

But county officials determined that it might not violate the clause if the legislation shows a substantial reason for the discrimination against a business that’s not in the county.

Substantial reasoning would also be needed to justify a local preference law that discriminates against other Maryland businesses outside the county, as protected under the Maryland Declaration of Rights.

An analysis of the bill also found that it could hurt at least 63% of certified minority- and women-owned businesses registered as vendors with the county.

Council Member Nancy Navarro, who spearheaded the legislation, said the bill received widespread support from minority businesses and local chambers of commerce. Although there are legal concerns about the bill, Navarro said, the council was briefed on the pros and cons and still supported the bill.

“We weighed all of that against our very public and very strong commitment to ensuring that we would be covering all bases when it came to economic development,” she said.

Ash Shetty, the county’s procurement director, said employees would work quickly to make sure the law was effective starting Aug. 1.

“The local business community is suffering and the quicker we can enact this law, the sooner they can benefit from it and potentially have that edge in the county contracts that will make a difference,” he said.

Council Vice President Tom Hucker said he was concerned about interpreting local businesses as excluding those with a large number of employees elsewhere but the company is headquartered in the county, such as Marriott.

“There’s many contractors — construction and other ones — who might get a large contract in another county,” he said, “and have a great number of employees working temporarily in another area and they could see themselves as not qualifying as a local business during the [term] of that contract.”

He said the issue needed to be addressed, but he didn’t want it to hold up the bill.

Council Member Andrew Friedson said the legal issues were addressed substantially with legal advice.

“I think that if we didn’t [address] things that gave concerns to our lawyers, no business would bid on a contract and no contracts would be able to be moved forward and bid upon,” he said. “We move forward and we take the risk because we value what the underlying goal of the interest is.”

Briana Adhikusuma can be reached at briana.adhikusuma@bethesdamagazine.com.

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