‘Local first’ bill okayed

A legislation granting preference to local firms over government contracts has finally drawn support from the administration as acting Governor Jesus R. Sablan approved the proposal on the third attempt by the Legislature.

Offered by Sen. Juan P. Tenorio, Public Law 11-87 allows a sweeping overhaul of the existing bidding regulations in the Commonwealth to favor locally-based companies over their foreign competitors in what legislators consider a move to keep public funds within the island.

“The bill will help boost our local economy, especially during this time of economic downturn in the Commonwealth,” said Sablan in signing Senate Bill 11-140 into law last Friday.

The approval capped nearly four years of struggle by lawmakers to provide preferential treatment to local businesses that pay taxes to the government as opposed to foreign firms remitting income overseas.

A recent bill was vetoed last May by Gov. Pedro P. Tenorio because of some key provisions he said would pose serious legal implications if the Legislature failed to amend the proposal.

In June, the Senate changed some provisions to suit his objections, including requirements that a bidder must establish a local office, as well as granting of authority to the governor and the attorney general to be the arbitrator of whether a contractor meets the required ownership percentage.

Under the new law, any government agency seeking project contracts shall have the full determination on whether a potential contractor is involved in a joint venture or it meets the 51 percent local ownership requirement, subject only to AGO’s review.

Two sets of criteria will also be used to bid government contracts such as capital improvement projects, public works as well as procurement of goods and services, between those that are worth less than $5 million and those costing more.

If local bidders come up with offers not more than 15 percent higher than the amount bid of a foreign competitor, then they will be awarded the contract, according to PL 11-87.

“(G)overnment contracting policy should recognize and where appropriate seek to offset the competitive disadvantages local business may have as a result of being resident in the commonwealth and independent of megacorporations with a multinational rather than local character,” the law stated.

But the new law will be implemented only after the Department of Finance promulgates the new rules and regulations within six months during which no local preference shall be granted.

Lawmakers have underscored its multiplier effect on the local economy as the government stands to gain from taxes and other revenues being collected from locally-based contractors as opposed to foreign construction firms.

Business leaders, however, have viewed it as another protectionist policy, particularly after the Legislature pushed through with the controversial Managaha law, which provides advantage to locally-owned businesses on public lands development.