The Regional Economic Development Corp., responding to pressure from area businesses, is about to roll out a “Think Local” campaign to help companies land more government contracts.
Adopted by the city and El Paso County governments, the program will begin in January.
The “Think Local” resolution encourages governments as well as businesses and consumers to buy, contract and hire locally whenever possible.
“We researched it and saw that some other communities have ‘buy local’ resolutions that have resulted in real growth,” said EDC President Mike Kazmierski. “The money goes to local employees, those wages are taxed locally, and if the funds are spent locally, it will send additional tax revenue back to the city.”
Kazmierski cited positive statistics from other comparably sized cities that have implemented similar programs. One study claims that a 10-percent shift into local spending in Grand Rapids, Mich., would result in 1,600 jobs with a payroll of $53 million.
In addition to the obvious benefit of boosting the circulation of money into local companies, the campaign is designed to assist these companies in completing requests for proposal when applying for contracts, in part by creating a more responsive environment.
It also encourages the city to be proactive in notifying companies of business opportunities, and in providing feedback to companies on why they may have lost a contract.
The most direct item in the campaign stipulates that in the event of a tie between a local and non-local company, the contract will be awarded to the local company if all other factors, including price, quality, terms and delivery are equal.
According to Colorado Springs procurement services manager Curt DeCapite, the city has not encountered a tie scenario since adopting its version of the resolution earlier this year.
In drafting the campaign, Kazmierski said the EDC tried to improve upon ordinances already in place in other cities.
“Some communities give local companies a 5 percent advantage,” he said. “We’re not comfortable doing that. We’re just trying to encourage some common sense practices. Our goal is not to start a trade war between counties or to build barriers between communities.”
He also said the initiative is not restricted to discretionary purchases, but should serve as a broad measure that touches on all aspects of economic growth.
“Thinking local is different from buying local. It takes into account all of the different variables that contribute to the wealth of a community,” Kazmierski said. “Take a look at hiring. There is a ton of talent in this town, so why bring someone in from the outside when you can hire someone locally?”
Another key component of the EDC initiative is that it does not discriminate against national retailers that operate locally.
“Many of these buy local campaigns have been hijacked by this kind of anti-Wal-Mart sentiment,” he said. “We’re trying to encourage any entity that does business here. Wal-Mart pays employees and pays taxes that contribute to wealth in the area and supports the general health of the business community.”
The EDC is working with a public relations firm to raise the profile of the initiative, and a marketing campaign is expected to roll-out early next year. The EDC will also work with the city, chamber of commerce and local businesses to track spending and contracts as they are allocated by the city.
Not everyone believes the city is truly committed to this initiative.
Earlier this year, DSoft Technology managing partner David Hollenbach sent an email to Colorado Springs finance director Terri Velasquez and other community leaders about the difficulty local companies face in competing for city work.
“Do you know how difficult it is to win a contract for the City of Colorado Springs?” Hollenbach asked in the email. “Springs procurement is notoriously difficult to work with. I’ve spoken to other vendors who just won’t do business with the city or county — (it’s) just too hard for a small company to provide what they ask for in a proposal.”
Hollenbach pointed out that development of the city’s website, the state’s tourism website, and the airport website were all outsourced to out-of-state companies.
“That kind of makes me mad and it should raise all citizens’ eyebrows,” he said in the email. “That was also done by the Springs procurement department for expediency. Sure it had a well-written justification, but so what? Is it right to ask local citizens for a tax increase but then do these sorts of things … for convenience?”
Hollenbach sent his email in April, and the Think Local resolution was adopted in May. But even today Hollenbach remains skeptical of the city’s intent to follow-through.
“Until you put something into the local procurement laws that provides a preference for local companies, it’s just lip service,” he said this week.
According to statistics provided by the city’s contracting office, 48 percent of contacts awarded in 2010 have gone to local companies (totaling $47.3 million), and 60 percent of contracts have stayed in-state (an additional $11.9 million). In addition, 37 percent of the city’s purchase orders were allocated locally (totaling $6.5 million), while 73 percent stayed in-state (an additional $5.9 million).
In an e-mail response to Hollenbach, Velasquez said the tough contracting environment and some unusual circumstances may have skewed local spending numbers this year. She cited a $42 million project that was awarded to a Castle Rock firm when no local firms submitted offers on the project, and a $12 million contract awarded to a company that is not locally headquartered but has a large presence in the Springs.
Despite the criticism over past performance, the city and the EDC say they are committed to all aspects of local wealth-creation going forward.
“Thinking locally is a philosophy we’ve always had, but now it’s in writing,” DeCapite said. “We’re making a much greater effort to keep things local this year.”
El Paso County Commissioner Amy Lathen said she has already seen progress on this front.
“I just received a voicemail from a local small-business owner who is trying to navigate the process of bidding for janitorial services in our new building,” she said. “I sent his message directly to our procurement director so that she can make sure he has all the information he needs. This is exactly the type of thing that we’re talking about in the Think Local Initiative.”