Whitmer directive prioritizes contracts that put 'Michigan Jobs First'
A new executive directive from Gov. Gretchen Whitmer would prioritize state contractors based on location, pay and “environmental track record” in an effort to ensure state contracts go to companies that “are good stewards of the state.”
The “Michigan Jobs First” directive would add factors such as labor and environmental histories, pay, benefits and placement in economically-disadvantaged zones to existing factors such as quality, price, experience, timeliness and market share.
Last year, the state signed 8,813 contracts totaling about $2.14 billion.
Noting that roughly 70% of state contracts are awarded to Michigan businesses, Whitmer said the directive should increase the number of state tax dollars that go toward Michigan workers.
"Those are contracts that could be used to grow business right here in Michigan," Whitmer said of the roughly 30% that benefit out-of-state businesses. "Our goal is to bring that number down and put Michiganders and Michigan jobs first.”
The directive is one of a few from the governor that dictate guidelines for state purchasing. In January, Whitmer signed a directive that would require the state Department of Technology, Management and Budget to adopt policies that would increase purchases from “geographically disadvantaged” businesses.
Earlier this month, Whitmer proposed and the State Administrative Board approved a plan to change the procurement threshold requiring additional approval for state contracts from $500,000 to $250,000, a reversal of an increase put in place last year under the administration of Republican former Gov. Rick Sndyer.
Under Monday’s directive, which Whitmer signed at Lecom Utility Contractors in Roseville, the Department of Technology Management and Budget would be required to consider a company’s wages and benefits, compliance with labor and environmental rules, and “the overall economic impact of the potential supplier’s bid on Michigan business and workers.”
The directive requires the department to prepare an annual report on the implementation of the mandate.
“We’re gonna ensure that Michigan businesses are given full preference when they are entitled to such, and when we award these contracts," Whitmer said.
“That’s how we boost our economy, and make it stronger and make it work for the people who call this great state home.”
One of the key components in implementing the directive will be the annual review to ensure the policy doesn't have negative effects on state contracts or Michigan businesses, said Rich Studley, president and CEO of the Michigan Chamber of Commerce.
"That provision would seem to be a good indicator that the governor wants the departments that are involved in carrying out this directive to have good metrics," Studley said. "Sometimes in state government, the law that we deal with most often is the law of unintended consequences.”
The directive leaves some factors open-ended regarding the policy's implementation, such as how long of a business history the department would consider and what types of environmental or labor law offenses would bar a business from a state contract.
"At what point is something that happened decades ago still a valid consideration in a process like this?" Studley said.
Whitmer’s initiative is not the only one taking a closer look at contractors throughout the state.
In April, Attorney General Dana Nessel announced a new unit that would examine payroll fraud at Michigan businesses, particularly the misclassification of employees as self-employed independent contractors to avoid paying overtime, health benefits or worker’s compensation.
Earlier this month, Nessel’s office said it had received about 100 complaints regarding payroll fraud and attorneys were “gearing up” for possible civil or criminal charges related to its investigation. Most of the complaints stemmed from the hospitality, trucking and construction industries.
Payroll fraud and equal pay violations were listed in Whitmer's Monday directive as some of the items the initiative is meant to target, but its not clear how much overlap there will be between Nessel's payroll fraud unit and the Department of Technology, Management and Budget's review of potential contractors.
Nessel's office on Monday said it looked "forward to working with the Governor’s office on this important initiative."