LANSING – The House Committee on Education reported House Bill 5639, a bill to allow schools in Michigan to give a preference of up to ten percent of the value of the contract when bidding out construction or supply purchases, to the House floor. The legislation, sponsored by State Representative Dudley Spade (D-Tipton), passed the committee with wide bi-partisan support.
"A responsible government makes the best use of every dollar for the good of the citizens, but that doesn't always mean that the lowest bid is the most responsible option," Representative Spade said. "Keeping contracts and jobs in the area and in the state has an exponential effect on the economy. Local workers often live locally and spend the money they earn at local grocery stores, retailers, and restaurants. All of this goes to help our citizens, our businesses and our economy. It is important that we give our schools the power to consider these benefits when bids are close because the multiplier effect of awarding contracts locally can make good economic sense."
Developed in cooperation with local school officials, House Bill 5639 would specify that a public school, intermediate school district, or public school academy could, if they so chose, give a preference of up to 10% of the amount of the contract to a Michigan-based firm and still meet the requirement of having chosen the "lowest responsible bidder." Similar provisions are already in place at many levels of government directing purchasing toward certain business sectors such as local business, in-state businesses, and businesses owned by persons with disabilities or service disabled veterans. However, because of the "lowest responsible bidder" requirements that apply to schools, additional statute is required to empower them to legally make that choice.
Under current law, Michigan schools are required to bid out all contracts in excess of the bid threshold, a statutory figure that changes annually with the Consumer Price Index (CPI). For 2007-2008, that threshold is $20,102 for construction, renovation, and remodeling projects and $19,650 for supplies, materials, and equipment contracts.
While a school board may reject all offers and re-bid a particular contract multiple times before accepting one, a Michigan Attorney General Opinion requires that when they decide to accept a bid the school board is bound to choose the "lowest responsible bidder." While the provision that the bidder be "responsible" allows schools to consider the work history and reputation of the contractors so they may ensure that work is being conducted by a reputable firm, no leeway is given for choosing a local or in-state contractor, even when such a choice might be a more economically responsible decision for the community or state.
"I believe it is important for our schools to spend scarce funding wisely, but I also think our local businesses need every reasonable advantage they can get," Lenawee Intermediate School District (LISD) Superintendent Stephen Krusich said. "By allowing Michigan schools this discretion, House Bill 5639 gives our schools an additional tool to invest in and build our communities, especially now when so many businesses are struggling."