What is a Preference Law

A preference law favors in-state vendors. Some states have this law. For example, Ohio will pay up to 5% more to an in-state bidder vs. an out-of-state bidder. Why? To keep the business in-state.

What if you’re a North Dakota bidder and want to bid in Ohio?

Then you’re at a disadvantage.

Preference laws restrict competition and discriminate against out-of-state bidders.

ND, and many other states, have reciprocal preference laws. ND doesn’t have a preference unless we get a bid from a vendor whose home state has a preference law. Then, we apply the same preference to that bidder.

• Preference given to ND vendors = preference given by the state of the nonresident bidder.
• Applies to goods and services.
• If the nonresident bidder’s state has a preference law, increase the nonresident bidder price by the same percentage.
• No ND preference unless the non-resident bidder’s state has a preference.

So, if the State Procurement Office receives bids from a North Dakota bidder, a South Dakota bidder, and an Ohio bidder, what happens?

1. We look up preference law on Oregon’s website. Oregon has a federal grant to maintain a website summarizing reciprocal preference laws for all states. This is a helpful resource for the SPO.
2. We find the up-to-date preference laws for the states represented by the bids:

• North Dakota: Reciprocal preference law applies to the Office of Management and Budget, any other state entity, and the governing body of any political subdivision when purchasing any goods, equipment, and contracting to build or repair any building, structure, road or other real property, and professional services (ref. N.D.C.C. § 44-08-01). Tie bid preference must be given to bids or proposals bids submitted by North Dakota vendors (ref. N.D.C.C. § 44-08-01.1). If a tie remains, preference must be given to approved vendors on the State Bidders List [ref. N.D.C.C. § 54-44.4-09(4)] and N.D.A.C. § 4-12-11-05 may apply].
• South Dakota: Preferences to certain resident businesses, qualified agencies and businesses using South Dakota supplies or services. In awarding a contract, if all things are equal including the price and the quality, a purchasing agency shall give preference to: 1) To a qualified agency if the other equal low bid or proposal was submitted by a business that was not a qualified agency; 2) To a resident business if the other equal low bid or proposal was submitted by a nonresident business; 3) To a resident manufacturer if the other equal low bid or proposal was submitted by a resident business that is not a manufacturer; 4) To a resident business whose principal place of business is located in the State of South Dakota, if the other equal low bid or proposal was submitted by a resident business whose principal place of business is not located in the State of South Dakota; or 5) To a nonresident business providing or utilizing supplies or services found in South Dakota, if the other equal low bid or proposal was submitted by a nonresident business not providing or utilizing supplies or services found in South Dakota. In computing price, the cost of transportation, if any, including delivery, shall be considered. Source: SL 2010, Ch 31,§ 28.
• Ohio: To qualify for the 5% preference, bidder must be an “Ohio” bidder; 1) offering product produced, raised, grown or manufactured in Ohio or 2) has significant Ohio economic presence - pays taxes, registered with Ohio Secretary of State and has 10 or more or 75% of workforce located in Ohio. See: OAC 123:5-1-06 (3) (d).

3. We determine if adjustments need to be made…

• North Dakota – No adjustment
• South Dakota – Reciprocal (No adjustment)
• Ohio – 5% (Add 5% to their bid price)

For more information about doing business with the State of North Dakota, please contact SPO.

State Procurement Office
600 E. Boulevard Avenue Dept. 012
Bismarck, ND 58505-0310

T: 701.328.2683
F: 701.328.1615

Email: infospo@nd.gov
Web: www.nd.gov/spo