Bill on local bidder first pushed again

A controversial bill giving preference to local bidders on government contracts that was earlier vetoed by Gov. Pedro P. Tenorio now heads back again to his office after the House of Representatives passed the measure yesterday.

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

While business leaders view the measure as protectionist, Senate Bill 11-140 seeks changes in the bidding regulations on government contracts to favor local firms over their foreign competitor, in a move to keep public money within the island.

This is the third attempt of the Legislature to pass similar legislation after Tenorio junked an initial bill last month over some provisions that could be more complicated, including establishment of local office as well as granting of authority to the governor and the attorney general as arbitrators.

Proponent Sen. Juan P. Tenorio has addressed the governor’s concerns under the new measure. He had earlier expressed dismay over the veto as the original bill was drafted by the governor’s legal counsel.

Under Senate Bill 11-140, any government agency seeking project contracts will 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 a review by the Attorney General.

This is the major change in the initial bill vetoed last month by the governor, who had praised its intention to give local businesses the chance to participate in bidding for government contracts as a way of retaining revenues within the CNMI.

According to Rep. Heinz Hofschneider, most of the public contracts have been awarded to off-island businesses that do not pay their taxes here, which could be a disadvantage as this also entails a 10 percent mobilization costs to the government.

“We simply mean (in the bill) that ‘okay, we invite competition, but first of all you become part of the community,” he said during the House session.

Likewise, Rep. Manuel A. Tenorio stressed its significance to the local construction industry which will be strengthened once they are given preference over their foreign counterparts.

“A lot of big companies will bid on big projects, but they just come and go,” he said.

“We will get more than what the government is paying for the contract because the money stays within the economy,” added Rep. Karl T. Reyes.

Under the proposed law, local firms will get utmost priority to bid for capital improvement projects and public works as well as procurement of goods and services of the CNMI government so long as their offers come up to not more than 15 percent higher than the amount bid of a foreign competitor.

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, according to the bill.

“(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.

Once the governor signs it into law, the Department of Finance shall set the rules and regulations six months before it becomes effective.