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Committee to focus on improving outside contracting process; members say government bid process should be easier, more equitable

Friday August 29, 2003

Media Release
For Immediate Release

For Information Contact:
Jennifer F. Brislin

502.574.4137

Patrick H. Neely
502.574.1351 

The Louisville Metro Council will begin scrutinizing how Metro Government works with the business community on contracting issues. The Contracts/Appointments Committee will set aside a substantial amount of each meeting studying how government can be more equitable and business-friendly.

“Since taking office, I have been in contact frequently with local business owners,” said Councilman Ken Fleming, R-District 7, who is vice-chairman of the Contracts Committee. “They have expressed frustration and concern about the process for obtaining a contract with local government. The council needs to address those concerns to make the contracting process more efficient and effective. Those improvements will make us better stewards of taxpayers’ money as well as help the local businesses.”

In upcoming meetings, starting in September, local business owners will be invited to speak about their experiences in dealing with local government. The committee will examine how the system can be revamped to make it more accessible to local business owners and ensure that the process is fair, streamlined and accountable.

“This is a cooperative effort between the council, business community and administration,” said Barbara Shanklin, D-District 2, and chairwoman of the committee. “It creates an opportunity for us to review our procedures, and make sure we are employing the best practices for awarding contracts.”

The committee also will review preferences that are awarded in the contracting process and the recommendations the Financial Merger Task Force made.

There are six preferences currently in existence: local vendor, minority vendor, affirmative action, recycling, health insurance and living wage.

The ordinances are difficult to administer, many requirements are not verifiable and some are no longer relevant, Fleming said.

“Outdated, ineffective or confusing preferences lead to greater bureaucracy and frustration among local business owners,” he said.

For example, before merger, the city and county had different local vendor ordinances with multiple levels of criteria to qualify as a local vendor. Historical information from the Louisville and Jefferson County Purchasing Department reveals that local vendor preference is not a determining factor in the vast majority of the purchases.

The ordinances are difficult to administer, many of the certification requirements cannot be verified and the process itself is weak. In 2001, this ordinance did not affect the awarding of 358 out of 360 bids.

An example of a preference that may need improvement instead of repeal is the one involving minority preferences.

Fleming, Shanklin and many other council members said they have received several calls from minority-owned businesses about their concerns with the current minority and affirmative action policies.

An example of a potential outdated ordinance is the one on recycling preference, which was in effect in the county before merger and now applies to the new Metro Government. The ordinance does not define a recycled product. Purchasing experience also has demonstrated that in many products, recycling will invalidate products warranties. For example, use of recycled oil and antifreeze invalidates car warranties. Many products, such as copy paper and toner cartridges, are now purchased with some portion of recycled content on a regular basis.

“This ordinances may have been appropriate initially when government was encouraging recycling efforts, but most of that is now common practice where appropriate,” Fleming said. “As a result, they merely add another layer of bureaucracy without producing real benefit. In 2001, this ordinance did not play a role in the awarding of the total 360 bids.”

The city also had a health insurance preference. However, the vendor criteria to qualify for the preference are not reasonably verifiable, and the ordinance has never been used in awarding a bid. In 2001, out of a total of 360 bids, this preference played no role.

The most recent preference instituted is the living wage certification, which passed earlier this year. It gives a 5 percent preference for businesses that pay their employees a minimum wage of $9 per hour.

Other issues that may be evaluated include: the need for contracting with the private sector, how government notifies businesses and communicates with them on the bidding process, the evaluation and decision-making process, post-award procedures and the qualification/certification process.

The committee will begin establishing the framework for the study at its next meeting on Sept. 4. It will begin hearing testimony later that month.

Sponsor(s)

Denise Bentley (D)  1
Rick Blackwell (D)  12
Kenneth C. Fleming (R)  7
Cheri Bryant Hamilton (D)  5
Doug Hawkins (R)  25
Kevin Kramer (R)  11
Barbara Shanklin (D)  2