Thursday, 26 September 2013

Police Car Purchase Argument in Stockton

Why all the complaining about the City of Stockton’s purchase of 48 new police cars from Tracy Ford instead of Big Valley Ford in Stockton?  (See here and here).

Tracy Ford underbid Stockton Ford by $10,333 for the 48 cars, so the City will buy from the Tracy dealership.  The purchase is criticized, because $10,446 according to Scott Smith's blog or "about $12,000" according to city staff of the sales tax revenue goes to the City of Tracy instead of the City of Stockton.

Thus, if you take into account the sales tax transfer, buying from Tracy cost Stockton a few hundred dollars more instead of $10,000 less.  It also has local upset that a $1.4 million went out of the City, although 90%+ of the money on a special order manufactured car is going directly to Ford Motor Company whether it is purchased in Stockton or Tracy.

The thing that concerns me with this episode is that some people interpret it as if the City’s local buy ordinance is too loose by allowing bidders within the County, not just within the City.  Presumably, they think it should be further tightened to either exclude bidders from outside the City limit or provide some other preference to local bidders. 

The logic here seems to assume that the bids the City would receive would be the same if the rules were changed to favor bidders from within the City.  I doubt it. 

Big Valley Ford is the only Ford dealership in the City, and my guess is they would have bid even higher if their were no competition within the County.  Heck, the City might have gotten even lower bids than this if they wouldn’t have limited the bids to inside the County.

Although it looks like Stockton has “shot itself in the foot” and unnecessarily lost a few hundred dollars, I think living with a few situations like this is inevitable if you are going to have competitive bids.  If Stockton tries to tighten up its local bid ordinance to prevent this apparent loss in revenue, it could wind up paying a lot more for everything it buys, not just cars. 

I like to buy local, and I appreciate the community spirit that motivates local bid preferences.  But you could argue that community spirit should motivate local businesses to give their police force a good deal.  The movement of cities in this direction can be a self-defeating zero sum game if it becomes too strict and every city in the region follows the same strategy. 

About the Author

Ethan Jacob

Author & Editor

I am Ethan Jacob Executive Director of the Center for Business and Policy Research at the University of the Pacific, where I have a joint faculty appointment in the Eberhardt School of Business and the Public Policy Program in the McGeorge School of Law..

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