Council to consider preferential bidding ordinance that could cost local taxpayers more

Some council members have been seeking an ordinance to support local contractors as they bid for major projects within the City of Lemoore.

The council came to a consensus of sorts at their July 16 meeting that it will give local contractors a break when it comes to bidding on Lemoore projects, despite evidence that local contractors already receive a majority of the bids last year, and an ordinance requiring a local bidding preference wouldn’t have made any difference.

Council members had instructed city staff to determine if a 5 percent of 3 percent preference would have helped local bidders gain an advantage in local projects where state or local funding is not used.

Council members got a look at that staff report at their last meeting July 16 and reactions were mixed. It turns out that based on the 2012-13 list of projects that went out to bid, most of them were in fact already awarded to a local contractor, and if the ordinance were in effect during the same period of time, it wouldn’t have made any  difference.

Council members came to a consensus of sorts that a 5 percent preference for local bidders within the city limits and a 3 percent preference for those in the local zip code area was the right approach. What this means is that if a local contractor is within 5 percent of the lowest bid, he or she may earn the contract, instead of the low bidder, who isn’t local.

Administrative Analyst Lauren Apone, told council members at the July 16 gathering that she tabulated all the bids awarded in the past 12 months, which totaled $6,530,000. She went on to state if every single bid award had a local bidder that was 5 percent higher than the lowest bidder, and the city paid 5 percent higher than the lowest bid to award to that local contractor, this would have cost the city an additional $326,500. If the city had used the 3 percent figure, the cost to the city and taxpayers would have been $195,900. A 1 percent preference would have cost the city $65,300.

 Apone also suggested that if the City of Lemoore would have had an ordinance in place in the last 12 months, none of the bids would have been affected and the city wouldn’t have paid any additional money. It turns out at least one local bidder, Cen Cal Paving, won a majority of the city’s paving projects in the last 12 months.

“In reality it would have been zero if we had an ordinance in place last year. None of the bids would have been affected,” she said. “We had one low bidder (Cen Cal Paving) that won a majority of our bids to begin with,” she added.

Additionally the local bidders that bid on the other projects were more than 5 percent higher on their bids and would not have been eligible for the preference. The one local bid that was only 4 percent higher than the low bid on a project that was ineligible for the local bidding preference due to state or federal projects.

At least one council member, John Gordon, was not at all pleased with the analysis and suggested a larger sampling. “I wasn’t satisfied with the sample,” he said, citing the need for a larger sample. “We should expand this study so we get a better feel of what’s going on here.”

He also offered an alternative. “I would be fine with going with three or five percent and see what happens in a year,” he said.

Council members finally decided on a pair of bidding approaches. Any bid under $250,000 in which a local bidder is within five percent (within the city limits) or three percent (within the Lemoore zip code area) that bidder may get the contract, and the city would make up the difference. Any contract over $250,000 if a local bidder is again within the parameters, it can match the bid, the difference would have to come out of their own pockets, not the city’s.

Mayor Billy Siegel seemed to disregard the staff report findings and suggested that local contractors can’t compete with their larger out-of-town counterparts due to certain overhead costs such as fuel and travel. He said that five percent can make all the difference to a local bidder.

“They (locals) don’t get as many jobs because they’re not able to compete in Lemoore, Hanford, San Francisco, they’re a local bidder,” he said. “And that’s how they compete by charging that little five percent more is what they need to charge because that saves them on fuel … and travel. It saves them on things but they have to pay a higher cost on getting the product here because this isn’t a major hub for delivery.

“There is a cost of doing business locally that is incurred by our local businesses,” he added. “That’s what we’re trying to give back to them because they spend the money here.

“That five percent is the difference.”