Study shows benefits of using local dealers

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State office supplies contracts in the US are coming under closer scrutiny following the widely-publicised Office Depot problems in Georgia, California and Nebraska and the campaign by independent dealer association NOPA for legislation to protect local businesses in federal contracts.

Even Office Depot has recently admitted that it is currently conducting a review of all 19 of its federal contracts with state purchasing officers.

 

The cause of independent office dealers also received another boost recently when a study carried out in Arizona concluded that three times as much money stays in the local economy with contracts serviced by local office suppliers compared to those handled by the national chains.

 

Wist Office Products, a large independent dealer in the southeast of the US, was at the sharp end of the stick a few years ago when the state of Arizona went down the single supplier route, offering the statewide office supplies contract to OfficeMax.

 

Wist took legal action at the time to get the contract overturned, arguing that it had been awarded in an "arbitrary and capricious manner", though it ultimately failed on a legal technicality, despite conducting an audit into the contract which led to OfficeMax refunding the state $40,000 for overcharging.

 

Now, with the help of Local First Arizona, an organisation that aims to promote local businesses against national chains, Wist has taken part in a study to evaluate the relative economic impacts of a local office dealer and the contract division of OfficeMax.

 

The study was carried out by Civic Economics, an economic analysis and strategic planning firm.

 

"It seemed to all of us here at Wist Office Products that local government could benefit our community by procuring products for a supplier headquartered here in the state," general manager Ian Wist told opi.net.

 

"However, we did not have a measurable way to do this. When the opportunity to work with Civic Economics came along it was exactly what we were looking for to quantify what we knew to be true."

 

Using OfficeMax financial reports and SEC filings, Civic Economics drew up an economic comparison with Wist according to four factors:

 

1. Labour costs, which directly inject money into the local economy through payments of wages and benefits to local residents;

 

2. Profits, which remain in the community in proportion to local ownership;

 

3. Procurement of local goods and services for resale and operations; and

 

4. Charitable giving, when local firms contribute a greater share of revenue to local causes.

 

The study concluded that of total revenue at Wist 33.4 percent is recycled into the local economy, while at Max Contract only 11.6 percent remains.

 

"The findings were just where we expected them to be," said Ian Wist.

 

Civic Economics also said that in this case OfficeMax, out of the three national chains, offered the best returns for the local economy because it maintained a distribution centre in Arizona. A comparison with Staples, it said, would have shown "nominal local economic activity associated with some portion of one day for a delivery driver and vehicle".

 

"It is my sincere hope that this information will help civic leaders to better understand how important it is to keep tax dollars local," commented Ian Wist.

 

Civic Economics said that purchasing officials, whether in the public or private sector, should not only focus on price and service considerations, but the overall economic impact of using local firms.

 

Now Local First Arizona is using the study to press state officials to implement legislation that favours local businesses. An amendment to the Arizona state procurement code has passed committee and is now before the state senate.

 

The full study can be viewed by clicking here.