At its May 12, 2021 meeting, pursuant agenda item C2D, the City Commission referred an item to the Finance and Economic Resiliency Committee for a discussion on establishing a Miami Beach-based vendor preference.

On May 18, 2013, pursuant to Ordinance 2013-3800, the City Commission approved a preference to Miami Beach-based vendors. For invitations to bid (ITBs), the preference allowed Miami Beach-based vendors, who submitted a price within 5% of the lowest bidder, to match the lowest bid price. For request for proposals, the preference awarded Miami Beach-based vendors an additional five points on an evaluation system based on 0-100 points or 5% when the evaluation system was on another point total.

While well intended, the local preference did not seem to have a significant impact on the utilization of Miami Beach-based businesses because, with the exception of few industries, the ability of local vendors to supply the goods and services required by the City is very limited. Instead, the local preference did appear to have the unintended consequence of discouraging non-local vendors from participating in competitive solicitations issued by the City, especially in the field of construction. In fact, the Associated Builders and Contractors—Florida(ABC Florida), the local chapter of the national trade association for the construction industry, reached out to the City sometime after the local preference was adopted to express that many of its member companies were reporting a reluctance to participate in City issued competitive solicitations because of the time and effort required to respond and the likelihood that the solicitation would be awarded to a local vendor. The other concern expressed by bidders is that, based on the way the ordinance was written, local bidders did not have to submit the lowest bid to be awarded. A local bidder could purposely submit a higher bid and, later, simply match the price of the lowest bidder and receive an award. This process was deemed unfair and contrary to competition by some firms and was seen as a deterrent to competing for City business.

The concerns expressed by ABC Florida regarding the effect of local preference laws to limit competition are shared by other organizations, including the National Institute of State Procurement Officials (NASPO) and the National Institute of Governmental Procurement (NIGP). These organizations oppose local preferences laws because of the impediments they create to the cost-effective procurement of goods and services.

An interesting consequence of the local preference ordinance is that, after it was adopted, a number of companies sought a business address in the City to gain the preference without a establishing a real presence. Many had facilities and personnel elsewhere and the business address was minimally, if at all, staffed with the sole motive of claiming the vendor preference.

Based on the aforementioned concerns, at its April 23, 2014 meeting, via Ordinance 2014-3895, the City Commission repealed the preference for Miami Beach-based vendors.

A list of Miami Beach-based vendors with active business tax receipts (BTR) is included as Attachment A. The list excludes vendors in the following categories of goods or services not typically purchased by the City:

After reviewing the list of available Miami Beach-based vendors, it is the Administration’s position that, with few exceptions, the City does not have the industry base necessary to fully support the provision of many of the goods and services required to operate and provide City services. Further, there is a concern that a local preference applied across all industry sectors, regardless of whether or not there are sufficient firms in the City to promote competition and provide the services, will deter competition from other bidders. 

Based on the impact of the previous local preference legislation and tight current economic conditions, the Administration does not recommend the adoption of local preference legislation that would be applied across all industry sectors. Instead, the Administration recommends that, on a case-by-case basis, the City Commission may consider implementing local preference when it has been determined that a sufficient number of potential local bidders are available to compete on a given competitive solicitation.