North Myrtle Beach’s decision earlier this month to adopt a local vendor preference in its contracts will be a plus for residents of the city. Now it’s time for Horry County to follow suit.
The rules favoring local businesses are now in place in many areas across the Grand Strand. Georgetown County has had one for a number of years. Myrtle Beach and Conway have also instituted their own versions of such policies within the last couple of years.
In a nutshell, the rules give local businesses an edge in the bidding process that leads to government contracts. Governments rightly want to pay as little as possible for projects, making the winning bid usually the lowest one. Most local preference ordinances work by discounting the bids of local businesses by a set percentage or amount for the purpose of determining who wins the bid.
A real world example can help make sense of that language: If Myrtle Beach is looking to landscape a new city park and gets bids from an out-of-state company to do the work for $100,000 and from a Myrtle Beach company to do the same work for $101,000, the city will deduct $2,000 from the local bid solely for the purpose of ranking the bids, and the company based in Myrtle Beach will receive the contract.
More than a dozen counties and many S.C. cities already have such policies in place, although they can vary widely when it comes to specifics. Municipalities have used varying percentages and amounts in their calculations of local preferences, and not all end up costing municipalities more money. Conway – and the new North Myrtle Beach ordinance, enacted June 4 – merely give local companies the chance to match the lowest bid of an outside competitor, as long as their own bid was within 5 percent.
In the case of Myrtle Beach, the city has opted for a sliding scale approach based on businesses’ proximity to the city. Myrtle Beach businesses get the most help, any business based in Horry County also gets some preference and, finally, any business based in the nine-county North Eastern Strategic Alliance gets a smaller edge over businesses based farther away. It’s a more nuanced approach that seeks to not only promote local businesses, but also regional ones, and it could be a good model for others to follow.
It’s important to realize that local preference rules are not a new concept by any means. The federal government has long had a policy of buying American first, when it can. South Carolina gives S.C. companies a leg up when awarding contracts. And we see the idea prominently in the pricing of state colleges, which give state residents a discount over those from elsewhere.
The merits of such programs are fairly evident. By awarding contracts to local businesses, municipalities can help ensure the viability of those businesses, which in turn helps ensure the viability of the municipality. The tax dollars that pay for the project go to local employers and employees, who help return those dollars in the form of sales and property taxes that they pay as local residents. It’s a win-win.
Particularly given the recent economic downturn, such policies can be a good way to promote local economic development and prime the pump for future success. The city policies now in place can help in such efforts, but a change by the county, which has by far the biggest budget and payroll in the area, would make a much larger ripple in the pond.
As you might expect, reaction from contractors to such policies is mixed, depending on their location. A glance in the newspaper’s archives shows local businesses largely behind such rules, while those located out of the area are less enthusiastic.
Horry County considered the idea last year when it was proposed by the Myrtle Beach Regional Economic Development Corp. as a way to aid local business. At least some council members were in favor of the idea from the outset, but it never came to fruition. As more local cities and municipalities enact their own and more results are available (North Myrtle Beach, for one, has asked that staff report on the rule’s impact after a year), Horry County should reconsider its own ordinance. After going through some tough years, Horry County businesses could use some extra help to get them back on track.