Phoenix Leads Nation in Keeping Its Own Spending in Local Economy

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The Phoenix City government spent only $700 with Amazon in 2016, $0 in 2017

In a recent analysis conducted by the Institute for Local Self-Reliance (ILSR), the City of Phoenix was identified as a leading national example of what cities can do to keep their own spending in their local economy. The report, titled “Amazon’s Next Frontier: Your City’s Purchasing,” illustrates how the e-commerce giant Amazon has been quietly going after city spending across the country.

In a press release about the report, ILSR explains that “a national contract that Amazon secured last year to provide local governments with office and classroom supplies lacks standard safeguards to protect public dollars and public transparency, and puts cities and schools at risk of paying more and getting less.” The report takes a close look at how much money municipalities across the country are now spending with Amazon instead of locally headquartered businesses in their own communities.

According to the report, “Phoenix’s purchasing records show that the city spent just $700 with Amazon in 2016. That’s in part owing to a policy that prioritizes local businesses for small off-contract purchases. Another reason is that the city’s competitively bid contract for office supplies was won by a locally owned company, Wist Office Products. The contract has special features that the city negotiated, like desktop delivery.”

Below is a chart of some of the findings in how municipalities across the country have been spending a substantial portion of their budgets with Amazon:

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The report explains how the City of Phoenix has focused on prioritizing its spending with local businesses rather than Amazon:

Phoenix created the Local Small Business Enterprise (LSBE) program for “informal” procurements, defined as those below $100,000. Through the program, registered small and local businesses get the first opportunity to submit quotes for all purchases below that threshold; if fewer than three locally owned businesses submit a quote, vendors with a principal place of business in the state get the next opportunity.

Thanks to the program, the city’s spending with small, local businesses jumped from $50,000 in 2011 to $2.3 million in 2013.

“Our politicians are very dedicated to small businesses,” says Jim Campion, the deputy finance director in the city’s procurement division, citing Phoenix Mayor Greg Stanton and the city council in particular. “We’re one of the few cities that has a small business program for the informal process.”

In order to grow the city’s database of qualified Arizona vendors, Local First Arizona hosts “Doing Business with the City’ workshops twice each year, so business owners can come out and ask questions, speak directly to purchasing professionals, and get registered.

Every dollar that a city chooses to spend with Amazon is a dollar that they are actively choosing not to reinvest in their own city. As Amazon has continued to grow, the company has made it increasingly more difficult for small businesses to thrive by undermining competition and reducing economic opportunity and consumer choice. Amazon’s new agenda, which they have made very clear, is to monopolize the procurement of municipalities across the country. We applaud the City of Phoenix for putting policies in place that prioritize local businesses and strengthening our local economy.
— Thomas Barr, Executive Director of Local First Arizona

In another recent study conducted by Civic Economics, they found that the benefit to municipalities is far greater when they contract with local office suppliers rather than make those purchases from Amazon. The study found that in 2016 for office supply purchases made with Amazon, only 3.9% of what was spent remained in the local economy. That number was ten times greater at 32.9% when the same amount of money was spent with locally owned Wist Office Products.

What is not being considered when city staff choose to purchase through Amazon is the long term effects it will have on small businesses in their city, and their opportunity to produce jobs, tax revenue, and community pride. When city staff spends tens of thousands of dollars with Amazon in one fiscal year rather than with locally owned businesses, the city is not supporting local businesses and job creation.
— Thomas Barr, Executive Director of Local First Arizona

About Local First Arizona

Founded in 2003 by Executive Director Kimber Lanning, Local First Arizona (LFA) is a community and economic development organization working to passionately build a diverse, inclusive and prosperous Arizona economy by innovatively connecting people, locally owned businesses, and communities. LFA educates consumers about the interconnectedness of the economy, trains small businesses to be more effective and more competitive, helps larger Arizona businesses and institutions tell their story as champions of Arizona, and creates programs and events that make it fun and easy to discover local businesses and buy local. Visit www.localfirstaz.com for more information and a directory of more than 3,000 locally owned businesses.