Study Indicates Procurement From Local Supplier Provides Greater Economic Benefit to Community

A recently released Civic Economics study commissioned by Local First Arizona reveals that public procurement from a local supplier generates "dramatically greater local economic activity" than procurement from a chain business. Previous Civic Economics studies examining the economic impact of locally owned independent versus chain stores have found similar results. The LFA study, "Procurement Matters: The Economic Impact of Local Suppliers," compared the local economic impact of Wist Office Products, a local supplier and LFA member, with Office Max Contract, a division of Office Max, after the state of Arizona dropped Wist from its stable of office suppliers.

"We had been ... looking for the right study with Civic Economics for three or four years," said Kimber Lanning, LFA's executive director. Then, last year, Lanning heard that the state had dropped Wist. "Wist had part of the state contract; they had 100 percent full-time employees with benefits.... It's a family-run business, against Office Max." When Lanning broached the idea of studying Wist's economic impact against Office Max, "Dan [Houston] of Civic Economics loved the idea. It's a perfect way to look at things," she explained.

LFA Board member Cindy Dach of Changing Hands Bookstore in Tempe, Arizona, told BTW, "I think to be able to do a study showing the importance of states and cities choosing local suppliers lets [officials] know that they can make an impact in their own city in an easy way. The study conveys the economic impact of the choices we make."

Although funding for the study was provided by Wist Office Products, Civics Economics determined the scope of work and set broad requirements for the data to be provided by Wist. Additionally, under the terms of the contract, Wist had no right to reject the study or refuse payment based on findings.

Notably, the study found that "of total revenue at Wist, 33.4 percent remains in the local economy. Of total revenue at Office Max Contract, only 11.6 percent remains."

Calling Wist Office Products "a solid example of the true local supplier," the study further noted that "the company maintains all operations in the Phoenix area, including warehouse, distribution, and administration. All Wist employees reside in the region. All Wist property resides locally. All Wist owners reside in the region. And all Wist charitable contributions are made in the region."

Civic Economics stated that the study findings provide a "strong economic rationale for reevaluating procurement policies and screening bidders with an eye toward enhancing the local or regional economy at no additional cost to the purchaser."

Lanning stressed, that upon receiving the study, it was important that LFA not allow the results to turn into a negative media story. Instead, the group has used the results to help support legislation, Arizona SB 1233, which would ensure the state uses local suppliers as long as the price and product is of similar value.

"Right now, [Arizona's] procurement process doesn't have to weigh local business," Lanning said, adding that Arizona is currently only one of three states that does not have legislation similar to SB 1233. For LFA, it's crucial that legislators are educated on the local economic impact that locally owned businesses offer. "You may be saving five cents today [by buying from a chain], but you're exporting wealth, and shortchanging your fire departments and schools," concluded Lanning. --David Grogan