Montgomery County Executive Douglas M. Duncan (D) is looking to amend a County Council bill that would require 10 percent of certain county government contracts to be awarded to small businesses that draw at least half their employees from among county residents. It's modeled after a state bill that was passed by the General Assembly this year.
The county executive supports the concept of the bill, spokesman David Weaver said. But Duncan is talking to members of the council about dropping the local aspect of the set-aside and simply allotting a percentage of contracts for small and minority-owned businesses.
Duncan believes that if the bill passes as is, it could subject the county to protest lawsuits by losing bidders. Furthermore, it could provoke other jurisdictions to shun county businesses, Weaver said.
"These bills tend to have the opposite effect sponsors want to achieve. Other jurisdictions would retaliate against us," Weaver said. He cited the example of Pennsylvania, which he said penalizes companies from jurisdictions with similar local set-asides. "They actually lose points in the evaluation. We think the potential for that to happen here in the Washington region exists."
Duncan's criticisms are based in part on a recent opinion written by the county attorney, which pointed out that the courts have overturned a similar law passed in Camden, N.J.
The bill's backers said they don't necessarily agree with Duncan or the county attorney. They countered that while the Balkanization of the regional economy Duncan fears is possible, it is not likely.
"We're simply offering to the small businesses a little leg up, a chance to get a piece of the pie," said Joy E. Young, executive director of the Rockville Chamber of Commerce. "If Montgomery County wants to set aside some of its business for county businesses, I don't see in practice that everybody is going to pull their contracts or refuse to work with Montgomery County. It doesn't seem reasonable."
In 1999, the District set aside $735 million for an ongoing procurement program targeted at businesses headquartered in the District. The District government must purchase at least 50 percent of what is classified as "eligible goods and services" from local small businesses that meet certain criteria. Sharon Gang, a spokeswoman for Mayor Anthony A. Williams (D), said she is not aware of any backlash over the program from neighboring jurisdictions.
None of Virginia's counties have set-aside programs because state law does not allow it, said Alan Fogg, a spokesman for the Fairfax County Economic Development Authority.
Duncan and the Montgomery bill's supporters say they are committed to getting something passed by the end of the council's legislative session, despite their disagreements. A subcommittee hearing is scheduled for Nov. 15.
"We think there's a way to do this and to pass this bill," Weaver said.
The bill enjoys the support of several of the county's chambers of commerce and is especially popular with business owners such as Deborah Murphy, chief executive of Standard Supply Co., a contractor supply company in Gaithersburg.
Murphy's family founded the company in Rockville in 1947. "We're like Home Depot for contractors," she said.
Murphy said her firm used to bid for county work but never landed a contract. Then about eight years ago, Standard Supply was outbid by a Canadian company that was offering items such as fasteners for a couple of cents less.
"I went down to the economic development people and said: 'I'm not sure what you are trying to accomplish. You entice us to come down to procurement fairs and you say you want to help small minority- and women-owned businesses, but you do nothing but waste my time,' " Murphy said.
Now when she receives a county government solicitation, Murphy said, "I throw it out."
An even greater number of business owners never bid on county contracts because they never hear about the opportunity, Young said.
To ensure more businesses have a chance to apply, the bill also requires county departments to post planned purchases of goods or services worth up to $25,000 on a county Web site for five business days before signing a contract.
The point of posting purchases ahead of time is "transparency," said Tom Perez (Silver Spring), who co-sponsored the bill along with council President Steven A. Silverman (At-Large), Nancy Floreen (At-Large) and George L. Leventhal (At-Large). "We have to get away from the closed old boy network where people just call their friends."