The State of Michigan provides a wide range of essential services to the public. From health care to education to support for Michigan businesses, the state plays a key role in ensuring public safety, welfare, and economic growth. In its role as a service provider, the state depends on external contractors to assist with their delivery. The process of identifying, evaluating, and selecting external contractors is known as state procurement or state contracting.

One of the primary goals of state contracting is selecting the best service provider at the most reasonable cost point — reassuring taxpayers that their dollars are being spent wisely while simultaneously delivering high-quality services. But it’s not just about fiscal responsibility. State contracting also serves as a significant economic driver, particularly for local businesses. It stimulates local economies through job creation, stable revenue streams, and increased economic opportunities. As Gov. Gretchen Whitmer aptly stated in Executive Directive 2023-1, “State contracting is ... an important economic engine for businesses of all sizes.”¹ By participating in state contracting, Michigan-based businesses can tap into these benefits and contribute to the state’s overall economic growth.

STATE CONTRACTING AUTHORITY AND LOCAL BUSINESS PREFERENCES

The Department of Technology, Management and Budget (DTMB) is the key authority overseeing Michigan’s procurement activities. It has the legal authority to make all discretionary decisions concerning the solicitation, award, amendment, cancellation, and appeal of state contracts.² However, this authority is not absolute. The statutory framework that grants this authority also includes provisions to ensure equity and competition in the contracting and bidding process.³ Furthermore, the statute includes special provisions that offer Michigan-based businesses preferential consideration in the contracting process — often referred to as in-state preferences.⁴ Taken together, these statutory provisions ensure that state contracting overseen by the DTMB is fiscally responsible and supports and creates economic opportunities in Michigan.

Providing advantages to Michigan-based businesses in awarding state contracts has been a high priority for Gov. Whitmer and state legislators. As mentioned previously, the preference for in-state businesses is not just a suggestion, but an obligation under a statutory law that has existed since 1984.⁵ Additionally, Michigan legislators continue to seek ways to provide advantages for state businesses as evidenced by legislation introduced in 2023.⁶ Referred to as the Buy Michigan bills, this legislation would “give Michigan businesses an additional window of time to resubmit a lower bid for a state contract if the initial lowest bid came from an out-of-state company.”⁷ While the legislation has not made its way out of committee, it demonstrates a bipartisan interest in supporting local businesses and economies through increased access to government contracts for in-state businesses.

Since taking office, expanding state contracting prospects for Michigan businesses has been a critical focus of Gov. Whitmer’s strategic agenda. In 2019, Whitmer issued Executive Directive 2019-08 to further expand contracting opportunities for in-state businesses.⁸ The directive aims to boost economic activity in lowincome communities and underutilized business zones by requiring the DTMB to adopt policies that increase contracts with geographically disadvantaged business enterprises (GDBEs).⁹ The directive defines GDBEs as businesses certified by the federal Small Business Administration as HUBZone businesses¹⁰ or located in Internal Revenue Service Opportunity Zones.¹¹ This program has been successful and, on average, the DTMB has awarded 11% of its annual expenditures to GDBEs over the last three years.¹²

GUIDANCE FOR BUSINESSES INTERESTED IN STATE CONTRACTING

Navigating the state contracting process can be daunting and discouraging for busy entrepreneurs focused on running their businesses. This is particularly true for those seeking to qualify under one of the aforementioned preference programs where businesses must meet specific criteria and provide documentation demonstrating that they meet these criteria.

One helpful starting point for business owners interested in pursuing state procurement opportunities is the DTMB’s Let’s Do Business web page¹³, which is intended to be a one-stop shop for vendors interested in bidding on state contracts. The website is designed as a vendor toolkit and provides instructional content from the initial step of registering a business to researching active contract opportunities.

Some vendors may feel comfortable working their way through the state’s online system without assistance. However, others may appreciate (and need) the advice and counsel of government contracting experts such as the Michigan Alliance of APEX Accelerators (MIAPEX).¹⁴ The MIAPEX staff provides a wide range of services including individualized business counseling, identification of bid opportunities, and support in drafting proposals. Additionally, it can assist with registrations and certifications at both the state and federal levels, which is particularly helpful for businesses seeking to qualify for preferences. Preregistration preparation is a crucial step in qualifying for preferences and the MIAPEX staff can guide business owners through this important process.

There are ten MIAPEX offices throughout Michigan that serve various geographic regions of the state.¹⁵ Most of the services provided by MIAPEX are free or low-cost, making them an affordable option for in-state businesses seeking to enter the government contracting marketplace. Additionally, the MIAPEX staff regularly partners with the DTMB to offer informational seminars and other events related to government contracting.

One last source that deserves mention is the Michigan Procurement Policy Manual.¹⁶ Chapter 1 of the manual provides short summaries of Michigan laws, executive directives, and policies impacting state procurement activities with links to source documents. The simplified descriptions of the various statutory provisions are particularly helpful for navigating and understanding the intricate provisions of the Management and Budget Act.

CONCLUSION

State contracting plays an essential role in supporting Michigan’s economy. In fact, at any one time, the DTMB manages more than 800 multi-year contracts valued at more than $105 billion¹⁷ — contracts that provide jobs, steady revenue streams, and increased economic growth within the state. Entering the state contracting marketplace may require time and patience. Still, it can provide lucrative opportunities; fortunately, low-cost services such as MIAPEX are available to guide businesses through this complex process.¹⁸