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Villaraigosa signs law giving L.A. firms a bidding advantage

October 19, 2011 |  6:12 pm

Los Angeles Mayor Antonio Villaraigosa signs into law Wednesday a measure requiring that departments under his control give local businesses preferential treatment in awarding contracts. Credit: John Hoeffel / Los Angeles Times

The independently run Los Angeles city departments that spend hundreds of millions a year on contracts are likely to adopt an initiative to give local businesses a significant advantage in bidding.

Mayor Antonio Villaraigosa signed a law Wednesday creating a local business preference program that applies to about a third of the city’s contracting, but excludes six agencies, including the Department of Water and Power, because they are controlled by their own boards.

The Department of Water and Power, which spent more than $874 million on contracts in the last fiscal year on everything from "paper clips to pumps," could be the first of the six to institute the program.

Noting that the department has long sought ways to spend its money in L.A., Ron Nichols, the general manager, said, "I am confident there will be a very, very warm welcome."

Villaraigosa asked the heads of the six boards Friday to consider adopting the ordinance as soon as possible. "I expect that they’ll receive this as warmly and graciously as Ron has," Villaraigosa said at a ceremony at City Hall, surrounded by Nichols, three council members and two businesswomen.

"With so many people out of work, we’ve got to use every tool at our disposal to create jobs," he said. "Now, the local preference ordinance uses our own purchasing power to put people back to work."

The law, which the City Council passed last week, gives businesses located in the county an edge in bidding. The amount submitted by a local company would be reduced by 8% when bids are ranked, although the company would still be paid the full amount. For example, a local company's bid of $1 million would be ranked as though it were $920,000. It applies to contracts worth $150,000 or more.

Villaraigosa noted that the city chose to use 8%, which is higher than some similar ordinances. "We want to be aggressive about creating jobs, while at the same time being fiscally responsible," he said.

The mayor’s office has not determined how much money the city spends on contracts -- information the city has never collected -- but has concluded that it exceeds $2.4 billion.

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-- John Hoeffel at Los Angeles City Hall

Photo: Los Angeles Mayor Antonio Villaraigosa signs into law a measure requiring that departments under his control give local businesses preferential treatment in awarding contracts.

Credit: John Hoeffel / Los Angeles Times

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