Local Preferences in Airport Contracting
By Jeff Wagner
Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C

Like most units of local government, airport operators are often pressured by local businesses to keep contracting “local,” thereby keeping money in the local economy and providing jobs for local residents. Mississippi law, like the laws of many other states, endorses this practice. Miss. Code Ann. §31-3-21 provides what is often referred to as a “reciprocal” preference for local contractors:

In the letting of public contracts preference shall be given to resident contractors, and a nonresident bidder domiciled in a state having laws granting preference to local contractors shall be awarded Mississippi public contracts only on the same basis as the nonresident bidder’s state awards contracts to Mississippi contractors bidding under similar circumstances; and resident contractors actually domiciled in Mississippi, be they corporate, individuals, or partnerships, are to be granted preference over nonresidents in awarding of contracts in the same manner and to the same extent as provided by the laws of the state of domicile of the nonresident.

That is, Mississippi law will give a preference to an in-state bidder to the extent that the domicile state of an out-of-state bidder would give preference to an in-state bidder over a bidder from Mississippi. Other states provide an in-state bidder a preference based on a percentage of the bid amount. For example, Arizona law requires award to an in-state bidder if the in-state bidder’s bid is not more than 5% more than an out-of-state bidder. Therefore, when bidding on a public works contract in Mississippi, a Mississippi contractor will have a 5% preference over an Arizona contractor since Arizona would provide a 5% preference to an Arizona contractor over a Mississippi contractor when bidding on an Arizona public works contract.

For airport operators, though, the issue is a little more complicated. The federal government prohibits the use of local preferences in awarding federally-funded contracts, such as those funded with grants under the Airports Improvement Program. Section 200.319(b) of the Uniform Administrative Requirements for Grants to State and Local Governments[1] provides:

The non-Federal entity must conduct procurements in a manner that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes expressly mandate or encourage geographic preference. Nothing in this section preempts state licensing laws. When contracting for architectural and engineering (A/E) services, geographic location may be a selection criterion provided its application leaves an appropriate number of qualified firms, given the nature and size of the project, to compete for the contract.

The prohibition on local preferences in federally-funded contracts is that no state or local government should be able to use federal funds, which are derived from all states, in a manner that is discriminatory to a resident of another state.

An airport operator in Mississippi may, therefore, only allow a preference to a local bidder under the following conditions: (1) the contract may not be funded, in whole or in part, with federal funds; and (2) the domicile state of an out-of-state bidder submitting what would otherwise be the lowest bid must provide a preference for its in-state contractors over a Mississippi bidder.

To help local governments with this second requirement on nonfederally-funded contracts, Miss. Code Ann. §31-3-21 requires that each out-of-state bidder include a copy of its state’s preference statute. Failure to do so is grounds for rejection of an out-of-state bidder’s bid.

[1] 2 CFR §200.319(b).

Jeff Wagner is a shareholder in the State Public Policy Group at Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C. in Jackson, Mississippi, and may be contacted at (601) 973-3610 or by email at [email protected] with any questions.