City businesses may gain South Portland bidding edge

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SOUTH PORTLAND — The City Council on Tuesday discussed amendments to the city’s purchasing rules that could favor local businesses when items and services go out to bid.

Councilors also unanimously voted for District 1 Councilor Claude Morgan as mayor in 2019.

Morgan, who is coming up on the second year of his third non-consecutive, three-year term on the council, held the position once before in 2007. 

“I’m honored to have been selected by my fellow councilors,” Morgan said Tuesday. “I’m looking forward to a good, productive year.”

South Portland’s mayor is responsible for steering council agendas, running meetings and representing the city at public events. 

Morgan’s formal inauguration, along with the inauguration of new councilors and School Board members, will be held Dec. 3. 

According to City Manager Scott Morelli, city staff are proposing changes to code governing the city’s purchasing rules by adding a local preference option into the ordinance; incorporating federal uniform guidance requirements into its ordinances; and changing the thresholds at which purchases must be placed out to bid and approved by Morelli and the council. 

Right now, local preference – which occurs when a local firm is favored over other firms for reasons unrelated to the purchase itself – only applies when a bid is tied.

According to Finance Director Greg L’Heureux, there are conflicting views on the economic benefits of local preference.

On one hand, he said, these policies are helpful in promoting local businesses. Others contend it could result in higher costs for goods and services because the city could end up paying a premium for local businesses and suppliers.

They also could discourage non-local businesses from bidding on projects, L’Heureux said, “to the extent they view the ordinance as creating an uneven playing field favoring local businesses,”

Still, councilors gave city staff their blessing to look into options of how to create incentives for city businesses to bid within the legal constraints of the City Charter and case law.

One example of an option that could be explored is where the local business bidder is given a credit that augments the local bidder’s actual bid for the purpose of bid comparison, such as a percentage preference – typically in the 1.5 to 5 percent range, but with a maximum dollar value.

L’Heureux said the city hasn’t updated purchasing threshold levels since 2011.

He said it makes sense to raise thresholds to align with cost-of-living adjustments. He said he’s also heard questions from councilors regarding whether they should be required to review and approve bids that have already been accepted through the operating and capital project budgets.

“There’s somewhat of a repetitive process,” L’Heureux said. “… This is one of the steps that might be considered to (streamline council meetings).”

The threshold for small purchases, which each department has the authority to make, is expenditures under $2,500. Staff recommends raising the level $3,000.

Informal bidding, which requires three bids without newspaper advertisement or formal requirements, go through two levels of approval. A department head can approve transactions between $1,000-$5,000 without additional approval. Under the recommendation, the range would increase to between $3,000-$8,000. 

If purchases are between $5,000-$15,000 they must be approved by Morelli. This would increase to $8,000-$20,000.

Formal bids, which required advertising, go through three levels of approval. Under the proposal, transactions between $15,000-$40,000 – which need to be previously approved in the budget and approved by Morelli – would be increased to $20,000 to $100,000. 

If the item was not previously approved in a budget, or if it does not receive a minimum of three bids, the council must approve it. 

Anything over $40,000 must be approved by the council, whether included in the budget or not. L’Heureux said this could increase to $100,000.

Councilors supported the increases, some saying they felt they could be raised even more.

“If we’re going to be making this move, I would propose we’d be thinking about future councilors and the next seven-year lapse … to catch up with the cost of living … (and be) more proactive than reactive,” Morgan said, suggesting the small purchase limit could be raised to $5,000, rather than $3,000, and the rest adjusted accordingly. 

Changes to the administration of federal grants require the city to amend its ordinance to reflect that utilizing federal Uniform Guidance methodology is required for federal grant awards; adding a new section outlining federal Uniform Guidance grant procurement methodologies and requirements; and modifying a conflict of interest policy to adhere to Uniform Guidance.

Morelli said he’d come back to the council with drafted federal and threshold changes, which will be increased even more on the lower end, in mid-December.

The new council will schedule another workshop to discuss local preference.

Jocelyn Van Saun can be reached at 781-3661, ext. 183 or jvansaun@theforecaster.net. Follow her on Twitter @JocelynVanSaun.

South Portland City Councilor Claude Morgan will serve as mayor in 2019. His formal inauguration will be held Dec. 3.

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