Whanganui District Council's buy local policy doing its job

Whanganui District Council general finance manager Mike Fermor says the current procurement policy is working. Photo/ Bevan Conley

A further look into the awarding of recent Whanganui District Council contracts has found increasing the buy local premium would not have changed the outcome of any tender process.

The council has a buy local premium which allows it to award contracts to local businesses, even if with a higher tender, as long as it is within 5 per cent (up to $100,000) or $5000 (over $10,000) of an out of town tender.

In May the council's strategy and finance committee voted to increase the premium to 5 per cent (up to $1 million) or $50,000 for contracts of more than $1m.

But the decision was reversed by full council in July.

At Tuesday's committee meeting finance general manager Mike Fermor said a deeper dig into recent council contracts has found the increase would not have affected the outcome.

"The evidence suggests we are supporting the local economy. The contracts are not being lost out of town due to small price differences."

About 80 per cent of council contracts are awarded to local suppliers.

"Council needs to decide what is the right balance between offering incentives to local suppliers and at the same time being cost effective."

Mr Fermor said a heavier buy local premium came with risks such as decreased competition for tenders and the potential for legal challenge.

He said that needed to be considered when deciding on the level of favour offered to local suppliers.

His report concluded that "with the majority of council's contracts being awarded to local suppliers it would suggest the procurement policy as it stands has achieved this fair balance".

Mayor Hamish McDouall said it was clear council was supporting local business and if the premium needed to be at the lower level to avoid risk that was okay.

"I know there is a lot of desire to support local businesses around this table and the ones who don't probably shouldn't be at this table.

"We are being leading edge by being one of the few, if not the only, council in New Zealand supporting local contractors."

But councillor Alan Taylor said the allowance for locals was a token.

"Five thousand dollars is just ridiculous. It's the policy you have when you don't want to have a policy. Drop the silly $5000 or come up with a decent amount."

Councillor Hadleigh Reid said having the policy sent a good message to the community.