Changes to ‘local preference’ law awaits Teno’s nod

Legislators have cleared a measure seeking to expand scope of the law that gives preference to local bidders in government projects.

SB 12-83, offered by Senate President Paul A. Manglona, is an amendment to Public Law 11-87 which was approved by the Tenorio administration in 1998.

Under the proposed changes, a government agency shall give preference for award to a qualified bidder or proposer for any projects or services so long that the bid or proposal is not more than 15 percent higher than a foreign competing firm.

The measure also calls for reduction on the number of years of operation for any contractor on the island from five years to three to allow more firms to qualify in the program.

It now heads to the governor’s office for signing into law after both the Senate and the House voted overwhelmingly in favor of the bill last week.

The Legislature has initially restricted the local preference qualification to firms with five years of successive operation in the CNMI and only for projects or services amounting to less than $5 million.

According to lawmakers, the amendment is necessary to provide more businesses opportunities in the government for contractors who pay their taxes in the Commonwealth.

PL 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 is a move to keep public funds within the island.

This is viewed as a big boost to the local economy, especially during the prolonged crisis confronting the CNMI, according to government officials.

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

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.

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.