‘Buy Michigan’ Bills Give Local Companies 2nd Chance At Winning State Contracts

Article courtesy MIRS News for SBAM’s Lansing Watchdog e-newsletter

If the least expensive bid a state agency receives is from out-of-state, Michigan-based companies would have extra time to resubmit a more competitive offer, under bipartisan legislation introduced in the Senate. 

“We really believe that it’s important that we give Michigan businesses and Michigan workers a leg up. The state spends billions of dollars a year on goods and services,” said Sen. Kristen McDonald Rivet (D-Bay City)on the “Buy Michigan” legislation she has introduced with Sen. John Damoose (R-Harbor Springs). “Coming out of the pandemic … as we are fighting our way out of inflation, we still have a lot of businesses that don’t have both feet on the ground.” 

According to a March 2023 presentation by the Michigan Department of Technology, Management and Budget (DTMB), the state department oversees 7,300 procurement contracts with $2.5 billion in annual spending. 

Damoose’s SB 316 and McDonald Rivet’s SB 317 are the latest iterations of legislation aiming to expand the presence of Michigan-headquartered vendors securing procurement contract awards from the state. 

While on Monday’s episode of the MIRS Monday Podcast, McDonald Rivet said anything the legislature can do to invest Michigan tax dollars right back into the state is “good for our economy and it’s good for our workforce.” 

She said she believes it’s possible to both ensure tax dollars are spent transparently and fairly on procurement contracts, and to offer Michigan-based companies a second chance to offer a new proposal after initially losing out on a bid.

“As far as I’m concerned, the definition really around what a ‘Michigan-based’ company means is something we can have a conversation about … we do have companies that are headquartered in other parts of the country, other parts of the world … but if they are employing Michigan workers, if they are producing product right here in Michigan, if they have a substantial amount of their assets here in Michigan – to me, that counts,” McDonald Rivet said. 

During the 2021-22 legislative term, then-Senate Minority Leader Jim Ananich, a Flint Democrat, and Rep. Graham Filler (R-St. Johns)introduced similar legislation delivering Michigan-based companies a seven-day window to resubmit a bid matching or beating the least expensive one that was presented by an out-of-state company. 

However, neither bill progressed beyond a committee referral in their respective chambers. 

The bills by Ananich and Filler were backed by the Michigan Chamber of Commerce, which stated in a September 2022 advocacy article that more than $16 billion was spent annually on the procurement of goods and services through the DTMB. 

When asked if a California-headquartered company that’s owned operations in Michigan for three years and has hired around 1,500 residents would qualify for the second-chance bidding window, Damoose said, “That’s sort of what we’re looking for.” 

“(If you) set up shop in Michigan, you might get a little leg up in getting Michigan contracts,” Damoose said, adding that the aforementioned example would be better than a company from Texas directing employees into Michigan for a temporary period of time. “We’re trying to build a viable economy here, that is vibrant and diversified, that is located here and the money stays here.” 

According to Deltek, a software and information solutions provider, the volume of bids and requests for proposals requested by the state, local and education market is forecasted to return to the pre-COVID-19 normal of 2019 by next year.

Additionally, SB 316 and SB 317 were introduced not too long after Gov. Gretchen Whitmer signed an executive directive requiring the DTMB to set a goal that 20% of all contract expenditures from state departments and agencies are awarded to Geographically Disadvantaged Business Enterprises starting in Fiscal Year 2024.