As we recently announced and explored in a Q&A with Jobs to Move America (JMA), new updates to the Office of Management and Budget’s Uniform Guidance allow localities and states greater flexibility in incorporating pro-worker and pro-equity standards and tools in their contracting involving federal grant dollars. JMA leads the Local Opportunities Coalition, which fought for and won many of the new updates (In the Public Interest is a member of the coalition). As JMA explains in our Q&A, “The updates to the Uniform Guidance are critical as billions in federal funds flow to cities and states from the Inflation Reduction Act (IRA), CHIPS & Science Act, and Infrastructure Investment and Jobs Act (IIJA). Local and state governments will now be able to attach policies to this funding to maximize benefits for communities, workers, and small businesses.” Local Opportunities Coalition put together a memo highlighting some of the most important updates to the guidance.

One such critical new requirement is that localities and states using federal dollars for contracting must perform a “cost-benefit or price analysis.”

At minimum, a cost analysis should compare the full costs associated with delivering a public good or service publicly versus privately. While this is necessary to comply with the new federal rules for federal pass-through funds, it’s also vital that localities and states have a robust cost analysis process for all their contracting, regardless of whether federal dollars are involved, to save public money, to ensure high-quality service delivery, and to determine, in the first place, whether contracting is the best option.

Given the importance of this type of analysis and the new requirement, ITPI has written an issue brief designed to provide frameworks for localities and states to create or improve their procurement cost analysis process. It will also provide advocates with an understanding of what these types of analyses should look like so they can intervene in proposed contracts to ensure procurement decisions meet the needs of their communities.

This brief also goes beyond the primary cost analysis to explore two other important components that should be considered:

• Gaining an understanding of why contracting is being considered in first place—what is the problem or issue to solve, and are there other, better ways to solve it without contracting; and
• The importance of performing a social, economic, and environmental impact analysis of a proposed contract to understand potential community-wide costs and benefits

To learn more, read the full brief, Procurement Cost Analyses and the Decision to Contract.