Editorial: State contracts should put taxpayers first

The Detroit News

Gov. Gretchen Whitmer hit the ground running, issuing a flurry of executive directives in her first week as governor. Many of these rules are about setting the tone for her administration, and rightly focus on ethics and transparency. But others may not serve the best interests of taxpayers. 

Gubernatorial directives apply to Michigan’s executive branch departments and agencies and allow the governor to set policy and ensure laws are being followed. They differ from executive orders in that they don’t have the force of law. 

Gov. Gretchen Whitmer signs an executive directive Friday, Jan. 4, 2018, requiring the state to set up rules that would award more state contracts to small businesses in "geographically-disadvantaged" communities.

“State government must be open, transparent and accountable to Michigan taxpayers,” Whitmer said in a statement.

We agree. That’s why one of her decrees caught our attention.

In a directive Friday, Whitmer announced the state must do more to buy from small businesses in disadvantaged areas and increase contracts with them.

The governor’s intentions may be good. But when it comes to the operation of state government, any policy that deviates from the commitment to getting the most bang for taxpayer dollars is misguided. 

This strategy was tried during the Granholm years without success. The state should have learned from its past errors.

“Our elected officials should use the contracting process to find the public the best deal at the best price instead of trying to use it to serve other social functions,” says James Hohman, fiscal policy director at the Mackinac Center.

Hohman says it’s nothing new for the state to add social aims into government contracts, and that’s helped create a complicated set of rules and regulations for businesses when bidding on and fulfilling state projects. 

By the 2022-23 fiscal year, Whitmer wants contracts with so-called disadvantaged businesses to make up 3 percent or more of annual state expenditures. She’s tasked the Department of Technology, Management and Budget to adopt policies that increase purchasing from and contracts with these challenged businesses for a range of products and services.

Former Lt. Gov. Brian Calley, who recently took a job as president of the Small Business Association of Michigan, is cautiously optimistic about the directive but says the details will be important. 

“Clearly, the state has a strong interest in making sure that all communities have a vibrant and growing economy,” Calley said in an email. “Supporting small businesses is a great way to accomplish that. At the same time, the state of Michigan is a major purchaser of goods and services.”

After eight years of helping put sound fiscal measures in place, Calley surely can see red flags in such policies. 

The state already has programs to help spur economic development. Using government contracts — on the taxpayer's dime — to do so is the wrong approach.