Public Contracts

Plain English Breakdown

The official source material does not provide information on what happens if no bids are submitted during the local bidding period.

Tennessee Businesses First Act

This act requires Tennessee's local governments with centralized purchasing and a full-time agent to provide a 30-day period where only local businesses can bid on contracts over $25,000; for others, the requirement applies to contracts over $50,000.

What This Bill Does

• Requires local governments with centralized purchasing and a full-time purchasing agent to provide a 30-day period during which only local businesses may bid on any contract exceeding $25,000.
• For local governments without centralized purchasing or a full-time purchasing agent, the same requirement applies but for contracts over $50,000.
• Allows local governments to tentatively award contracts to the lowest responsible and responsive local bidder during the bidding period if there are multiple bids from local businesses.
• Requires local governments to open procurement to all bidders after the 30-day period if only one local business bid or no bids were submitted.
• Clarifies that out-of-county businesses cannot qualify as local businesses by creating a shell office, temporarily relocating, or using a front company in the county.

Who It Names or Affects

• Local governments in Tennessee
• Businesses bidding on contracts with local governments

Terms To Know

local business

A for-profit or nonprofit business that has a physical office in the county, employs residents of the county, and is registered to do business in Tennessee.

qualified to execute the contract

The local government's determination that a business meets licensing, bonding, insurance requirements, financial capacity, technical ability, experience, and has no suspension from public contracting or satisfactory past performance.

Limits and Unknowns

• It is unclear how this act will impact contracts funded by federal dollars beyond requiring local participation to the maximum extent permitted.
• The effectiveness of promoting local economic development through procurement policies remains uncertain.

Official Summary Text

For
local government contracts procured on or after July 1, 2026
, this bill requires
a local government
w
ith centralized purchasing and a full-time purchasing agent
to
provide a
30
-day local bidding period during which only local businesses may bid for any contract exceeding $25,000
. For a local government w
ithout centralized purchasing or a full-time purchasing agent
, such local government

must
provide a
30
-day local bidding period during which only local businesses may bid for any contract exceeding $50,000.
As used in this bill, a "local business"
means a business, either for-profit or nonprofit, that
meets all of the following criteria:



Has a physical office in the county in which
the
local government has made a request for bids on a contract for at least 12 months prior to bidding on the contract
.


Employs residents of such county
.


Is registered to do business in this state
.

AWARDING A CONTRACT

If, during the local bidding period
as described above
, two or more local businesses submit bids,
then this bill authorizes
the local government
to
tentatively award the contract to the lowest responsible and responsive local bidder upon a written determination that the bidder is qualified to execute the contract and that the bid is fair and reasonable in price and quality.
Further, if,
during the local bidding period
as described above
, only one local business submits a bid, the local government is not r
equired to award the contract at that time and
must
open the procurement to bids
from any responsive bidder after the local bidding period
. The local business that submitted a bid during the local bidding period remains eligible for award and must be evaluated on the same terms and conditions as all other bidders qualified to execute the contract.
As used in this paragraph,
"
q
ualified to execute the contract" means a determination by the local government that the local business
meets all of the following
criteria:



Is properly licensed, bonded, and insured as required by law
.


Demonstrates the financial capacity, technical ability, and experience necessary to perform the contract
.


Has not been suspended by another governmental entity from public contracting
.


Has a satisfactory record of integrity, compliance, and past performance, if applicable.

OUT-OF-COUNTY BIDDERS

If an out-of-county bidder submits a bid after the local bidding period that is lower than the local bid, then
this bill authorizes
a local business that was tentatively awarded the contract under
this bill
, if any,
to
submit a bid, within 10 days of the award, to match the out-of-county bidder's bid, and the local government
must
award the contract to the local business upon matching the bid.
Further, a
n out-of-county bidder
does
not qualify as a local business by
(i) c
reating a shell office in the count
y
,
(
ii
)
t
emporarily relocating to the county
,
or
(iii
)
u
sing a front company located in the county.

COMPLIANCE WITH FEDERAL AND CONSTITUTIONAL LAW

This bill clarifies that a
local government
must
apply
the
requirements of this bill
in a manner consistent with
federal
grant requirements
, f
ederal procurement law
,
and
i
nterstate commerce protections.

Contracts funded by federal dollars must follow federal rules but must include local participation to the maximum extent permitted.

ANNUAL REPORT

This bill requires

e
ach local government
to
annually report to the department of labor and workforce development
t
he percentage of contracts awarded to local businesses
, the
total dollars retained in-county
,
and
j
ob
creation impacts.

Current Bill Text

SENATE BILL 2672
By Akbari

HOUSE BILL 2344
By Harris
HB2344
012317
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 9 and
Title 12, relative to bidding preferences.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. This act is known and may be cited as the "Tennessee Businesses First
Act."
SECTION 2. Tennessee Code Annotated, Title 12, Chapter 4, Part 8, is amended by
adding the following as a new section:
(a) The general assembly finds that:
(1) County and municipal governments, including local education
agencies (LEAs), spend billions of public dollars each year on goods and
services;
(2) A growing share of those dollars are awarded to out-of-state or non-
local companies that do not employ local residents, pay local taxes, or reinvest in
the community;
(3) Local contracting keeps tax dollars circulating in the local economy,
strengthens small businesses, and increases job creation; and
(4) This state has a compelling interest in promoting local economic
development and community stability through its procurement policies.
(b) As used in this section:
(1) "Local business" means a business, either for-profit or nonprofit, that:
(A) Has a physical office in the county in which a local
government has made a request for bids on a contract for at least twelve
(12) months prior to bidding on the contract;

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(B) Employs residents of such county; and
(C) Is registered to do business in this state;
(2) "Local government" means a county, municipality, metropolitan
government, or local education agency;
(3) "Out-of-county bidder" means a business that is not a local business;
and
(4) "Qualified to execute the contract" means a determination by the local
government that the local business:
(A) Is properly licensed, bonded, and insured as required by law;
(B) Demonstrates the financial capacity, technical ability, and
experience necessary to perform the contract;
(C) Has not been suspended by another governmental entity from
public contracting; and
(D) Has a satisfactory record of integrity, compliance, and past
performance, if applicable.
(c) Notwithstanding another law, a local government:
(1) With centralized purchasing and a full-time purchasing agent shall
provide a thirty-day local bidding period during which only local businesses may
bid for any contract exceeding twenty-five thousand dollars ($25,000); and
(2) Without centralized purchasing or a full-time purchasing agent shall
provide a thirty-day local bidding period during which only local businesses may
bid for any contract exceeding fifty thousand dollars ($50,000).
(d)
(1) If, during the local bidding period under subsection (c), two (2) or
more local businesses submit bids, the local government may tentatively award

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the contract to the lowest responsible and responsive local bidder upon a written
determination that the bidder is qualified to execute the contract and that the bid
is fair and reasonable in price and quality.
(2) If, during the local bidding period under subsection (c), only one (1)
local business submits a bid, the local government is not required to award the
contract at that time and shall open the procurement to bids pursuant to
subsection (e). The local business that submitted a bid during the local bidding
period remains eligible for award and must be evaluated on the same terms and
conditions as all other bidders qualified to execute the contract.
(e) After the local bidding period, the local government shall accept bids from
any responsive bidder.
(f) If an out-of-county bidder submits a bid after the local bidding period under
subsection (c) that is lower than the local bid, then a local business that was tentatively
awarded the contract under subsection (d), if any, may submit a bid, within ten (10) days
of the award, to match the out-of-county bidder's bid, and the local government shall
award the contract to the local business upon matching the bid.
(g)
(1) A local government shall apply this section in a manner consistent
with:
(A) Federal grant requirements;
(B) Federal procurement law; and
(C) Interstate commerce protections.
(2) Contracts funded by federal dollars must follow federal rules but must
include local participation to the maximum extent permitted.
(h) An out-of-county bidder shall not qualify as a local business by:

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(1) Creating a shell office in the county;
(2) Temporarily relocating to the county; or
(3) Using a front company located in the county.
(i) Each local government shall annually report to the department of labor and
workforce development:
(1) The percentage of contracts awarded to local businesses;
(2) The total dollars retained in-county; and
(3) Job creation impacts.
SECTION 3. If any provision of this act or its application to any person or circumstance
is held invalid, then the invalidity does not affect other provisions or applications of the act that
can be given effect without the invalid provision or application, and to that end, the provisions of
this act are severable.
SECTION 4. This act takes effect July 1, 2026, the public welfare requiring it, and
applies to local government contracts procured on or after July 1, 2026.