The City of Grand Rapids has implemented a bid-discount policy for certified employee-owned business (EOBs).
EOBs under the policy receive a bid discount of up to 2% on city contracts—1% for being headquartered in Michigan and another 1% if they are headquartered in Kent County.
The policy tilts the playing field against non-employee-owned competitors by letting EOBs submit higher bids and still win on evaluated price, with taxpayers eating the cost.
For instance, if a regular company bids $100,000 and an EOB bids $101,000 but qualifies for the 2% discount, the EOB bid is evaluated by city officials as $98,980. The EOB can win the contract even though its real bid is higher, and if it wins, the city still pays the EOB the full $101,000.
EOBs receive their eligible status when they are certified as employee-owned by a third party, such as Certified Employee-Owned or the National Center for Employee Ownership. This process is assisted by the city’s Office of Equity and Engagement (OEE), an office that validates certifications and tracks privileged business categories such as minority- and women-owned businesses.
The OEE’s stated goal is to promote equity-based hiring initiatives and shift budgets and policies to favor preferred identity groups under the banner of good governance.
On its website, it commits itself to advancing “policy and systemic change” in order to foster “liberation.”
City Manager Mark Washington promulgated the new bid discount policy via an administrative guideline update last fall. Soon after that, the City Commission approved the overarching framework to support the new policy.
The OEE fosters liberation under the city’s Equal Business Opportunity (EBO) policy framework, which grants certified employee-owned firms the bid discounts related to city contracts for goods, services, professional work, and construction.
The stated purpose of the EBO is “to enhance the growth and development of small businesses and provide access and equal opportunity in the performance and administration of the City’s procurement process.”
The new bid policy, which was launched at the end of last year, made Grand Rapids reportedly the first city in the country to offer such incentives. The city has framed it as a part of a larger effort to “promote fairness and equity in city contracting.”
Write to jacob@grherald.com.