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Plowing Through Red Tape: When You Need to Know about Preference Practices By Katherine Leupold The state of Ohio requires that its printing, with few exceptions, be done within the state. Last year the state of West Virginia applied its reciprocal law and determined it would no longer use an Ohio printer to print its magazine, West Virginia. A West Virginia printer was awarded the contract at a nearly 20 percent additional cost to taxpayers. You should know that it is just business as usual if you want to sell to state agencies, not a modern-day version of the Hatfields and the McCoys. West Virginia's and Ohio's rules are part of complex buying practices enacted by states, counties, municipalities and other jurisdictions to stimulate the local economy. Ohio's residency law for printers is one type of in-state preference law enacted by states. Several states have percentage preference laws for printing and commodities that favor residents. These preference laws either lower an in-state vendor's bid by a designated percent or raise the cost of an out-of-state vendor's bid by that amount. State purchasing officials in West Virginia, for example, will pick an in-state vendor even if that vendor's price is 2 percent higher than an out-of-state vendor's. West Virginia awards less than 5 percent of its contracts each year based on the 2 percent preference rule, however, according to David Tincher, assistant director of purchasing for the state. The definition of an in-state vendor varies widely. In Ohio, where print purchasing preferences are determined by a section in the state code, not the state's "Buy Ohio" preference program, a vendor must have forms printed at a plant within the state. All vendors completing an invitation to bid are required to list all subcontractors and their addresses, according to Robert F. Schleppi, Ohio's printing administrator. Forms distributors then would be required to list the name of their manufacturing plant. The law also requires that subcontractors pay employees the prevailing wage. The state reserves the right to conduct a plant tour to check on skill levels of employees within a plant and to verify that the plant is located within the state, says Schleppi. Other states, such as West Virginia, have preference policies that allow independent distributors located in the state to use an out-of-state manufacturing plant. Some states give preference to in-state vendors in the case of a tie only, and Florida does not buy printing from distributors at all, according to a spokesman, who would not send FORM magazine a copy of the state's statutes detailing the rule. "In-state" preference programs, known as "buy local" programs in counties and other areas, are enacted for the same reasons as "Buy America" programs. Politicians find it beneficial to tell constituents that the laws will keep jobs and tax money within their region. But often taxpayers end up paying a premium for the product when an in-state vendor gets the bid. For this reason and others, many purchasing agents and organizations oppose any type of preference law and the resulting conflict with the free market system. Closely related to percentage preference rules are reciprocal rules, a "do unto others as they do unto you" provision. Although Pennsylvania does not have a percentage preference rule, it follows a reciprocal law. If a Pennsylvania vendor bids against one from West Virginia, which has a 2 percent preference rule, for example, the Pennsylvania vendor's bid would be lowered 2 percent. If you decide to sell to your state or local government, learn the preference rules in your area as well as surrounding areas, since they will affect how your bid will be treated. In addition to the percentage preference rules, reciprocal laws and prevailing wage rules mentioned above, some states and other jurisdictions may have rules governing purchasing from the state's prison inmates, small businesses, minority businesses, those with investments in South Africa, those in economically depressed areas and those that produce goods from recycled material. Katherine Leupold is assistant editor of FORM magazine. What to Find Out Does the jurisdiction have a percentage preference rule? What is the percent of preference? To which commodities does it apply? What is the definition of an in-state vendor? What type of proof is required? As an in-state distributor, can you have a product printed by an out-of-state manufacturer? Are there any special programs/exceptions to these rules that govern the purchasing of printing? Does the state have a reciprocal rule? Is residency ever used to break a tie between in-state and out-of-state vendors? Where can you get written information about the above regulations? Some states have pamphlets and can provide statutes governing purchasing. As a vendor, will you be required to claim residency in your bid, or will states enforce their policies? What other preference rules does the state follow? Back to Preference Rules