[Excerpt] The recession that began in December 2007 has prompted increased interest among some Members of Congress and their constituents in legal authorities that could require or allow federal agencies to prefer contractors in one state or locality over those in other states or localities. Federal spending on procurement contracts has remained high, reaching $523.9 billion in FY2009, at a time when many other businesses have scaled back their purchases of goods and services. However, this spending has historically been localized in three to five states, which receive nearly half of all federal procurement dollars, prompting concerns about whether other states receive their “fair share.” Such concerns may be overstated, given that many contracts must be performed in or near Washington, DC, and shifting the place of performance of existing contracts from one state to another would generally not decrease overall unemployment. Nonetheless, geographic distribution of federal spending and federal funding is often a concern during economic downturns.
This report discusses constitutional and other legal issues related to the creation and implementation of location-based preferences in federal contracting, as well as summarizes key authorities requiring or allowing federal agencies to “favor” contractors located in specific places. The report does not address federal preferences for domestic products or provisions of federal law that could, depending upon their implementation, effectively prefer local contractors, such as project labor agreements.