Competition for construction jobs is fierce in Central Oregon. And now, struggling local companies are pushing Deschutes County officials to help them win more public contracts.

On two recent large public projects, some local bids came in millions of dollars higher than out-of-town companies.

But employees of local companies told the county commissioners they should look at public projects as a chance to save local jobs.

Commissioner Tammy Baney said local contractors “really need to sharpen their pencils” and look for ways to cut their costs.

“I think it’s important to put on the record we’re not talking about millions of dollars that are separating bids,” Baney said last week. “We’re talking about a couple hundred thousand to $500,000. … We’re not looking at wasting dollars, we’re keeping them in our area.”

Commissioner Dennis Luke said he likes some of the local companies’ ideas to give them a better chance of winning public contracts, but he will only support them if they are feasible and cost effective for the county.

Deschutes County Legal Counsel Mark Pilliod said the county could face lawsuits if officials explicitly target local companies during the bidding process. State law “establishes a policy statewide that low bid projects should be awarded to the lowest bidder, regardless of their primary business location,” Pilliod said.

But commissioners are nonetheless determined to look for ways to help local companies while staying within Oregon law, and one idea is to break projects into smaller, cheaper phases so they will not attract companies outside Central Oregon.

Todd Taylor, president and owner of the construction and excavation company Taylor Northwest, pitched the idea to commissioners of finding a way to increase the amount of government contracts awarded to local businesses. There aren’t any contracts being let, so every contract is important, Taylor said.

As evidence of how difficult it is to find local jobs right now, Taylor pointed to Deschutes County’s unemployment rate. The county had a seasonally adjusted unemployment rate of 14 percent in December, according to the Oregon Employment Department.

Taylor said he was prompted to ask commissioners for help because of two recent bids that went to companies from outside the area.

One was a contract to close off a 45-acre portion of the county’s Knott Landfill in east Bend and build a new cell to hold waste. The lowest bidder was Clarkston, Wash.-based M.A. DeAtley Construction, which bid about $5.4 million. Taylor Northwest had the fourth-lowest bid at about $6 million, according to a county document.

The other was a project to build a sewer interceptor, or trunk line, in southeast Bend, Taylor said. Johnny Cat Construction of Jacksonville, Ore., was the lowest bidder at $7.7 million; Taylor Northwest came in fourth again, at about $9.5 million, according to a city document.

The closest local bidder on both contracts was Jack Robinson and Sons Inc., which came in about $519,900 higher than the winning bid on the sewer project and about $347,522 higher on the landfill project, according to county documents.

Knowing the ground

Taylor said bids by his company and others might have come in higher than outside companies because locals have a better idea of how much it costs to excavate Central Oregon’s rocky ground, and other companies might underestimate this.

“I’ve done this for 23 years, and I think we’ve got a pretty good understanding of cost,” Taylor said. Taylor Northwest’s bid for the Bend sewer project included a 6.5 percent profit, which is less than the company’s typical overhead costs.

“I can’t get to those prices,” Taylor said of the winning bids. “We would lose money at those prices.”

Taylor began the discussion about public contracts and local companies with phone calls and a letter to the County Commission, but representatives of other companies quickly added their perspectives. A commission meeting Monday afternoon was filled with employees of Taylor Northwest, Jack Robinson and Sons Inc., and Knife River Corp.

Hap Taylor said the construction and excavation company he works for, Knife River Corp., employed 670 people two years ago. “Today, we have just over 100, and we’re going to be very lucky to get that employment up to 150 this summer, even when we get going,” said Taylor, who manages special projects for the company in Bend.

During the Monday meeting, Todd Taylor raised the idea of breaking large public projects into smaller phases, so they attract less attention from companies outside of Central Oregon. Taylor also suggested the county could include qualifications in a bid such as years of experience working with rock, which companies outside Central Oregon might be less likely to have. “There’s certainly a cost of working in Central Oregon in the basalt, when you’re drilling and blasting,” Taylor said.

Seeking balance

Luke said he wants to get the best value for taxpayers on projects, but he would not say whether it’s worth it for the county to pay more for a contract with a local company if it creates jobs.

“It’s a very tight rope we walk to get the best value for the taxpayers, and hopefully try to provide jobs to people who do pay taxes,” Luke said.

Commissioner Alan Unger said bidding processes that focus on specific qualifications of companies, rather than simply finding the lowest bid, might give local companies a better chance. Unger said he was concerned about the idea of explicitly considering companies’ locations in the bidding process.

“This is an intriguing but also scary area to go into,” Unger said. “These are multimillion- dollar contracts. Low bid has some certainty.”

Pilliod told the commissioners last week that if they clearly favor local contractors, the legal challenges they could face would result in “significant expense.”

The idea of breaking future projects into smaller phases might keep the county out of legal trouble while helping local companies, although it could also increase costs, Pilliod said. For example, oversight of multiple contracts could cost more.

Bend’s Public Works Director Paul Rheault said the city’s legal team “made it clear that under our current procurement rules, you cannot give local preference.”

The city has a great working relationship with local contractors, Rheault said. “But we have an obligation in Public Works to make sure we get the best deal for our dollars for rate payers.”