State and local procurement preferences: A survey
| DOI | https://doi.org/10.1108/JOPP-09-03-04-2009-B003 |
| Published date | 01 March 2009 |
| Date | 01 March 2009 |
| Pages | 371-410 |
| Author | Yuhua Qiao,Khi V. Thai,Glenn Cummings |
| Subject Matter | Public policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public Finance/economics,Texation/public revenue |
JOURNAL OF PUBLIC PROCUREMENT, VOLUME 9, ISSUES 3 & 4, 371-410 2009
STATE AND LOCAL PROCUREMENT PREFERENCES:
A SURVEY
Yuhua Qiao, Khi V. Thai, and Glenn Cummings*
ABSTRACT. The use of public procurement as a vehicle for implementing
various socioeconomic preference policies has a long history. This article
reviews the current state of affairs of procurement preference programs with
regard to U.S. state and local governments and analyzes their impact on
both the recipients and on the public procurement process. Opportunities
for further research are noted, and the authors conclude that the ability to
navigate the difficult waters of socioeconomic preferences should be a core
competency of state and local public procurement officials.
INTRODUCTION
Public administration has long struggled with the twin goals of
equality and efficiency in American government (Okun, 1975).
Nowhere is this conflict more evident than in public procurement. In
this survey, we inventory the range of preference programs in U.S.
state and local government procurement, discuss patterns of
practices and trends, analyze their impact on both the recipients and
the public procurement process, and offer suggestions for further
research. Our primary focus is on preferences for specific types of
businesses as well as similar programs. We do not dwell on the
subject of general affirmative action policies, as these are frequently
tied in with other, existing federal requirements.
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* Yuhua Qiao, Ph.D., is an Associate Professor, Department of Political
Science, Missouri State University. Her research interest is in public
budgeting, public risk management, public procurement, and public policy in
China. Khi V. Thai, Ph.D., is a Professor, School of Public Administration,
Florida Atlantic University. His research interest is in public budgeting,
financial management, and public procurement. Glenn Cummings, MA,
FNIGP, is Acting Purchasing Director, City of Sunrise, Florida.
Copyright © 2009 by PrAcademics Press
372 QIAO, THAI & CUMMINGS
LITERATURE REVIEW
Government has always used its purchasing power as a tool to
achieve certain social and political purposes. Even before the
Revolutionary War, states and local governments used purchasing
power not to buy British goods as a boycott of Britain’s tax policy.
Contemporary governments have ex tended this usage in many more
forms and for a much wider range of purposes.
At the federal level, a policy favoring U.S. businesses existed
during the Civil War, a preference for small businesses goes back at
least to 1941, and a government contract for labor standards dates
as far back as 1917 (Nagle 1999), and by 1919 clauses mandating
payment of minimum wages were common in local government
contracts (Thomas, 1919). The Buy American Act was adopted by the
federal government in 1933, but its root could go back to 1844
legislature that required agencies to purchase domestically
(McCrudden, 2007). There was specific recognition of the
importance of socioeconomic programs for state and local
governments when the American Bar Association (1979) issued its
“Model Procurement Code” in 1979, as one of its twelve articles
concerning assistance to small and disadvantaged businesses.
Preference programs in public procurement have received
considerable attention in print and on-line writings. Studies and
analyses of these preferences have encompassed procurement
journals (Coggburn, 2003), public administration journals (most
recently Celec, Voich, Nosari, & Stith, 2003), law reviews (Brody,
1996), newspapers touting the availability of the programs
(Chandonnet, 2002), official government web sites (including that of
U.S. Small Business Administration [www.sba.gov]), and even
attorneys offering legal assistance on the subject (Gordan, 2001).
Research on social programs in state and local public
procurement is also found in the series of reports sponsored by the
National Association of State Procurement Officials’ (NASPO). The
reports devoted a few pages on preference treatments in public
procurement (The National Association of State Purchasing Officials,
1997; 1999; Short, 1992; The Council of State Governments, 1975).
STATE AND LOCAL PROCUREMENT PREFERENCES: A SURVEY 373
Forms of Preferences in American State and Local Governments
There are various domestic socioeconomic and political goals that
the preferential programs aim to achieve (McCrudden, 2007). Among
them are 1) protecting national (or local) industry against foreign
competition, 2) improving the competitiveness of certain industry
scope, and 3) attempting to achieve particular social policy goals.
The best example of protecting national (or local) industry is the “Buy
American Act” and the various geographic preferential policies that
will be discussed below. Small business preferences, the largest
procurement preferences program in the U.S., best illustrate how
public procurement is used to improve the competitiveness of certain
industry. Similar preferences are given to women and minority-owned
business. The wide range of specific social goals that governments try
to reach through public procurement includes the following: to
promote fair labor conditions and minimum wages, to remedy past
discriminations, to sustain economic development, and to protect the
environment. This section will review different types of preferential
programs used in U.S. state and local governments.
The sorts of preferences found in state and local government
procurement are varied. There are geographical “preference law” and
non-geographical one. According to Short (1992), there are five types
of geographical “preference law” in government procurement
legislation:
- The percentage preference law gives in-state or local bidders a
specific advantage over out-of-state or nonresident bidders in the
award of public contracts.
- The tie-bid preference law allows in-state or local bidders to win
the award if their bids are the same as those of nonresident
bidders. Nearly all the states and local governments have this
policy.
- State and local governments also have adopted “general, often
ambiguous, preference law which…ranges from tie-bid preference
to a relatively large percentage preference” and authorizes
administrators to extend “comparable” preference, “in the best
interests of the jurisdiction” or “as far as may be practicable”
(Short, 1992, p. 71). Due to its administrative ambiguousness, it
is difficult to document or assess this type of preference law.
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