New directive may not put Michigan jobs first

This week Gov. Gretchen Whitmer issued another executive directive dictating what kinds of companies the state can do business with, and while she wants to boost Michigan jobs, using state contracts to do so could have unintended consequences.

This is Whitmer’s 15th directive this year. It “expands the list of factors used to determine whether a bid from a potential supplier would provide the best value to the state.”

“Value” must now include the economic impact on Michigan businesses and employees; the wages and benefits the company offers its workers; the company’s environmental and labor compliance; and the supplier’s commitment to disadvantaged areas.

Executive directives differ from executive orders in that they don’t carry the force of law and aren’t subject to legislative review. They are generally used to guide executive branch departments and agencies in implementing policy.

But this one has the potential to have a significant negative impact. For example, last year the state awarded 8,813 contracts for a value of $2.14 billion, according to the governor’s office.

Whitmer says that just 70% of these state contracts are awarded to businesses in Michigan, and that’s part of what she wants to change.

“Michigan is home to the hardest working people and best businesses in the world, and our state should work to ensure that more of our Michigan tax dollars support Michigan workers and businesses at every opportunity,” Whitmer said in a statement.

What’s most important, however, is ensuring Michigan’s taxpayers are getting as good a deal as possible.

Another consideration is that small businesses in the state could be harmed with this directive, given all the new criteria for winning contracts.

“Landing more contracts with Michigan-based businesses is a good goal, and it’s one that we get behind,” said Brian Calley, president of the Small Business Association of Michigan, in an email. “But expanding the opportunities for Michigan-based small businesses requires more simplicity in the procurement process. Our main concern with the directive centers on adding in additional complexities, factors, and compliance burdens which could inadvertently reduce the pool of small businesses winning contracts with the state.”

Calley, who was lieutenant governor under Gov. Rick Snyder, says Whitmer’s office reached out to his organization to discuss the directive.

The governor should continue working with business groups as the directive takes effect to gauge the impact — and whether the new rules add costs for taxpayers.

— The Detroit News

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