In tough times, governments give local companies an edge
By Jacquelyn Weiner
As a negative economic outlook lingers, some government entities are giving local businesses greater preference in winning contracts.
Miami did it in July, raising the local preference margin from 10% to 15% for its sealed bids. The city also added a 5% local preference for certain requests for proposals, requests for letters of interest and requests for qualifications.
And the School Board of Miami-Dade County is to take a final vote on creating its own 5% local advantage Oct. 19.
Still, working with government is no piece of cake, those well-versed in the process say.
"It's really not for the faint of heart," said Phillip Procacci, CEO of Procacci Development Corp.
Mr. Procacci has 30 years of leasing and building properties for the federal government, he said.
This includes building and leasing space to federal agencies at Crossroads at Dolphin Commerce Center, 11410 NW 20th St. in Doral, and two other build-to-suit projects for federal agencies in Orlando and Fort Myers.
The company is also building for the federal government in Nashville, TN, to be complete by year's end, and in Tampa, to be complete by spring 2012.
Mr. Procacci described competitive bids for federal-government projects as a "vigorous and complicated process."
"It takes a lot of time… and patience to do business with the [General Services Administration] and the federal government," he said.
It also takes a team of employees working to respond to every detail of the solicitation, he said, including soil testing, land surveys, financing and other due diligence.
The highly involved process of federal bidding, demanding financial requirements and the competitive advantage of companies that have already done business with the government "makes it more difficult… for people to jump into it," Mr. Procacci said.
"It's a business that you become good at if you continue to do it," he said, "because you need to understand how to respond to these bids to become competitive."
Bidding for federal projects isn't cheap, either.
Costs to submit a bid can range from $20,000 to $50,000 in a federal request for proposals, he said.
The projects themselves can cost $6 million to $20 million and up he said, adding that Procacci Development worked on a $30 million-plus government project.
"These projects are expensive," he said, "and nobody wants to make a big mistake when you're putting out that kind of money."
In addition to solicitations, leasing government-owned space to the private sector also has unique requirements, said Jeremy Larkin, president of NAI Miami.
NAI Miami handles commercial leasing for the Miami Parking Authority. It was initially asked to market the City of Miami retail space at the Marlins stadium before commissioners gave the job to Terranova Corp.
In addition, Mr. Larkin said, he has worked on leases with the federal government, the City of Miami Gardens and the Village of Pinecrest.
"There's a lot more checks and balances and more scrutiny" when doing business with government, Mr. Larkin said.
For example, many leases must be put through a public solicitation and approved at a public meeting by a governing board.
Dealings must also be formal and recorded with government, he said, with a change in a contract requiring written notification and approval.
With the private sector, Mr. Larkin said, a quick phone call could OK such changes.
However, Mr. Larkin said he doesn't think government's processes and sometimes-lengthier timelines are usually a deterrent.
"There's really not any challenges," he said, in the government-leasing process. "Every system, every group has a procedure."
Tenants aren't typically in a rush to move in, Mr. Larkin said.
Mr. Larkin also said he tells interested tenants from the beginning what additional procedures leasing government space can involve.
"As long as they know that up front, it's not a big deal," he said.
Mr. Larkin added that doing business with corporations can have similar checks and balances to government, such as approval by a board of directors, although most corporations don't require board approval for transactions under a certain amount.
On the other hand, lobbyist and government-affairs lawyer Jorge Luis Lopez characterized dealings with government and the private sector as "night and day."
"In the private sector, you can cut to a deal very quickly," Mr. Lopez said. "In the public sector, there are a number of regulatory requirements things must go through before you even approach the government."
Mr. Lopez recently helped win an expansion of Miami-Dade County's urban development boundary for Homestead-Miami Speedway.
He's also working with the development team behind Airport City, a $500 million-plus, 40-acre project at the entrance to county-run Miami International Airport that's planned to include two hotels, a retail center and an office park.
While Mr. Lopez said Miami-Dade County's procurement has greatly improved as far as encouraging competition, the process and paperwork can be difficult for smaller firms to work through.
Certain barriers impede entry in procurement, he said, such as required certifications.
Mr. Lopez said he thinks the county could make responding to bids simpler by instituting a uniform procurement process.
Once certified by the county, he said, a company would be pre-qualified to compete for work with other area entities.
Mr. Lopez said the county hasn't "warmed up to the idea" yet, but the federal and state governments have set up a similar system.
"I'm confident technology could accommodate for that," Mr. Lopez said.
The time it takes to award a contract can also be a drag on area business, he said.
It can take six months to a year from the time an opportunity is previewed to the industry to when the contract is awarded, Mr. Lopez said. This can slow employment, he said, as some firms will hold off on hiring until they know if they've won a government contract.
"These are tough times and they require some speed," he said.
Still, in the midst of continuing economic difficulty, government contracts remains enticing.
"There's a lot of need to work with government," Mr. Lopez said. "It's stable."
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