Bill Would Waive L.A. Transit Bid Law : Economy: The aim is to let commission award contracts to local companies, even if their offers are higher.

Hoping to kick-start the county transportation commission’s local-purchasing program, Assemblyman Richard Polanco (D-Los Angeles) said Friday that he will introduce legislation that would waive a state law requiring the commission to award contracts to the lowest bidders.

Polanco said his goal is to give the Los Angeles County Transportation Commission the authority to award more contracts to local companies, even if their prices are higher than than those of their out-of-town competitors.

The rationale for the plan is to compensate firms for the higher cost of doing business in Los Angeles. It is the essence of the commission’s proposed “Local Business Enterprise” program, which commission member Nick Patsaouras advanced last May. But unless Polanco’s bill passes, the commission will be restricted by a state law to use the lowest qualified bidders on all contracts valued at $50,000 or more.

Polanco’s bill also would let the the commission solicit proposals to build a new transportation center, where local engineers and assembly workers could learn to design and produce vehicles for the 21st Century--from driverless trains to non-polluting buses to electric cars.

“We can reindustrialize Los Angeles and become an exporter of transportation equipment to the rest of the world . . . and an exporter of clean-air buses to the rest of the country,” said Patsaouras.

Patsaouras and commission economic development consultant Travis A. Montgomery said they did not know how much the local-purchasing program might cost the commission, which is being squeezed by budget shortfalls and cost overruns.

The program would let the commission award contracts to Los Angeles County bidders even if their prices were 5% to 7.5% higher than an out-of-town competitor. For example, a company offering to spend more than half its money locally could win a contract even if its bid was $750,000 higher than that of a foreign competitor on a $10-million project.

“That may be the price we have to pay,” said Patsaouras, noting that the commission could recover some of the added costs through a sales-tax surcharge. Most of the money being spent by the commission comes from local sales taxes.

“We are going to put that money in the local community,” Montgomery added, “and we would rather do that than spend it in New York or Tokyo.”

Ironically, the definition of “local business” in the commission’s proposal is so broadly written that foreign-owned Sumitomo Corp. of America would qualify as a local company because it has had a permanent office in Los Angeles for more than six months.

The selection of Sumitomo to build Metro Green Line cars, even though its bid was about 4% higher than Idaho-based Morrison-Knudsen Corp., was the spark that ignited the current uproar over the commission’s support of local businesses.

In terms of jobs in Los Angeles, the difference between those two companies would be small. Morrison-Knudsen’s proposal offered to create 449 jobs in Southern California; Sumitomo proposed 370, for a difference of 79.

The difference is larger when all U.S. jobs are considered. Morrison-Knudsen, which has a major factory in Upstate New York, proposed to create 4,900 jobs nationwide. Sumitomo proposed 1,750 U.S. jobs overall.

Uncertainties aside, Polanco’s proposal is likely to be warmly received in Sacramento.

As Polanco was holding his press conference, along with Mayor Tom Bradley, the state Senate was voting to join the Assembly in urging the commission to junk its decision to hire Sumitomo, and suggesting that it find a way to contract with an American company.

The commission board has agreed to revisit key Green Line contracts at its meeting on Jan. 22.