Bill favors locals in projects

The CNMI Legislature has taken the initial step to change bidding regulations on government contracts to favor local firms in what could be another hasty move that will shut the door for foreign investments in the Northern Marianas.

Senators have overwhelmingly passed a proposed legislation seeking to establish a local preference to bidders on CNMI agency contracts in what they claimed as “competitive disadvantages” facing companies based on the island.

The bill, approved without floor deliberation, came on the heels of controversy sparked by a recently signed law giving preference to corporations or individuals of NMI descent over foreign investors on a piece of land historically significant to the indigenous people, including the Managaha island.

Under Senate Bill 11-90, local firms will be given priority to bid for capital improvement projects, public works as well as procurement of goods and services of the CNMI government.

They will only be required to come up with offers not more than 15 percent higher than the amount bid of any foreign firm or contractor deemed disqualified based on a set of criteria.

For instance, if a foreign company bids $5 million for a certain government project, a local bidder must not offer above $5.75 million to win the contract.

According to findings of the legislature, the existing law requiring that a company should be at least 75 percent owned by U.S. citizens before it can bid for any government contract is “without force and effect” and may be open to constitutional challenge.

The measure, proposed by Sen. Juan P. Tenorio, also noted that the current bidding procedure for government contracts fails to consider whether the bidder is a local business paying its taxes to the commonwealth.

It said the public funds paid to local businesses benefit the NMI economy through tax and expenditures by resident workers of the company.

“Income remains in the economy and circulates with a multiplier effect instead of being remitted overseas. Local businesses also contribute to the community and support the government in ways that nonresident firms do not,” the bill pointed out.

By giving local preference on public contracts, the island government is also helping indigenous-owned businesses cope up with the costs of maintaining their operations here.

“(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,” it said.

While the proposed amendment, which heads to the House of Representatives for action, covers government contracts, the provisions appear similar to the Managaha law earlier vetoed by Gov. Pedro P. Tenorio because of its impact on foreign investments.

It provides that locally-owned businesses stand a better chance of gaining concessionaire rights on the tourist site so long as their offers fall within 20 percent of the highest bid.