Expanding the Scope of the Local Preference Ordinance
City Council Meeting – February 7, 2023
ITEMS STUDIED
City Council Request
2 City Council requested staff research the feasibility of updating the existing Local Preference Ordinance, established in 2009.
1. Strengthen the local
preference program
Increase the local preference
cap or percentage
2. Expand how local
preference is applied
Include Requests for Proposals
and nonprofit proposers
3. Refine reporting and
transparency
Share more information on
awardees, subcontracts, and
economic impact
RECOMMENDED ACTIONS
Summary of Recommendations
3 1.
Strengthen the local
preference program
2. Expand how local
preference is applied
Provide guidance on
applying local preference
to Requests for Proposals
(RFPs)
Apply local preference to
small dollar purchases,
which are less than
$25,000
3. Refine reporting and
transparency
Increase the cap on local
preference 5x to $50,000
Maintain 10% local
preference percentage
Grow vendor participation
and reduce barriers
through vendor outreach
Publish procurement
and contracting data
annually through the
Purchasing Division
Website
• Eligible businesses must have a valid City of Long Beach business license and seller’s permit with a place of business within Long Beach city limits.
• Preference applies to bids for the purchase of goods. • Bidder will have bid discounted by 10%, up to $10,000. • Bids awarded to the lowest responsible bidder
Exclusions: library media, public works of improvement, electronic data processing and telecommunications equipment, and some specific funding sources like Tidelands or grants.
Municipal Code Section 2.84.030
Reminder | Current Local Preference Ordinance
4 Vendor Name Bid 10% Preference Evaluated Value Contract Value Vendor A: Non-Local $95,000 $0 $95,000
Vendor B: Local $99,000 ($9,900) $89,100 $99,000
Vendor C: Local $150,000 ($10,000) $140,000
• Local vendors are bidding.
• When local vendors bid, they tend to win.
• Long Beach’s preference percentage is high compared to peer cities. • Long Beach’s preference cap is below peer cities.Safe room to increase 400% to $50,000. • Increasing the local preference percent would not have impacted past awards. • Either not responsive or too much to close the gap.
• Any change to the preference percentage would require an economic impact study to ensurethe percentage is only offsetting the increased cost of doing business in Long Beach, per City regulations. • Increased outreach is effective at growing the vendor pool. When additional outreach strategies were applied, response rates doubled.
Summary of Findings
Recommendation #1: Increase Local Preference Cap Fivefold 5 ✓Piloted new outreach strategies, including
direct phone calls and emails, social media
posts, and information sessions.
✓Our successes:
• Response rate doubled for RFPs and RFQs
• 41% increase for local bidders
• 35% increase for Minority Business Enterprises
• 42% increase for Woman Business Enterprises
✓Outreach strategies increase the participation
of small, local, and diverse businesses in the
City’s vendor pool.
Extreme Procurement Makeover Results: Vendor Outreach
6 ✓Purchasing and
Business Licensing
attended 10 virtual
events helping 600
vendors learn how
to do business with
the City.
✓Monthly webinar
hosted every third
Thursday
Reaching a Broader Audience in 2022
Long Beach Recovery Act Success
Staff attended community and business events
in each Council District and continues an
equity-informed outreach approach.
Summary of Findings: Impact of Preference Cap Increase
7 Current
Proposed
Vendor Name Bid Preference, $10k Cap Evaluated Value Contract Value Vendor A: Non-Local $460,000 $0 $460,000 $460,000
Vendor B: Local $500,000 ($10,000) $490,000
Vendor Name Bid Preference, $50k Cap Evaluated Value Contract Value Vendor A: Non-Local $460,000 $0 $460,000
Vendor B: Local $500,000 ($50,000) $450,000 $500,000
Example of increased preference cap:
▪ By expanding to RFPs, local businesses and nonprofits providing professional services can also benefit from the local preference program.
▪ Update utilization of RFP evaluation criteria.
➢ Include local preference in the evaluation of RFPs.
Recommendation #2: Apply to RFP's and small dollar purchases 8 ➢ Apply a 10% preference to small dollar purchases.
▪ Thousands of vendors do business with the City annually through purchases less than $25,000.
▪ Applying a 10% preference when sourcing small dollar purchases, will help include more local vendors.
➢ City Manager working to develop additional internal policies to encourage use of local vendors for small dollar purchases. ➢Launched Long Beach Buys, a new
e-procurement system.
• Improves vendor experience
• Allows for better analysis and reporting
of data
• Integrates with City systems.
➢Update Purchasing Division website
• Overall procurement data
• Participation of local, small, and diverse
business types.
➢Report sub-contracting data with Small
Business Enterprise Program
Publish procurement and contracting data annually via website.
Recommendation #3: Publicly reporting procurement data
9 RECOMMENDED ACTIONS
Summary of Recommendations
10 1.
Strengthen the local
preference program
2. Expand how local
preference is applied
Provide guidance on
applying local preference
to Requests for Proposals
Apply a 10% local
preference to quotes
sourced for purchases
less than $25,000
3. Refine reporting and
transparency
Increase the cap on local
preference to $50,000
Maintain 10% local
preference percentage
Grow vendor participation
and reduce barriers
through vendor outreach
Publish procurement
and contracting data
annually via the
Department of Financial
Management website
Expanding the Scope of the Local Preference Ordinance
City Council Meeting – February 7, 2023