Tempe Evaluating Taxpayer Dollars Spent Toward Amazon

By Mariana Dale
Published: Wednesday, October 3, 2018 - 8:40am
Updated: Wednesday, January 2, 2019 - 11:32am

Amazon Phoenix warehouse aisles
Christina Estes/KJZZ
An Amazon warehouse in Phoenix.

Cities around the country and in Arizona spend taxpayer dollars on purchases from Amazon.

For example, Tempe spent $208,000 last year on things like technology and office supplies.

Recent reports have raised concerns on how this could negatively affect local businesses.

Tempe is evaluating what it buys from Amazon and a new contract that could net the city benefits like free shipping.

“Those are the aspects that we’re most interested in, but it also gives us information on the products that we do buy from Amazon in a good usable database,” said Tempe Deputy City Manager and  Chief Financial Officer Ken Jones.

The contract came from U.S. Communities, a purchasing cooperative that describes itself as made up of 90,000 government, education and nonprofit agencies, which brokered a deal with Amazon in 2017.

The City Council has asked for more information about the contract before considering it in an upcoming meeting.

“This is an opportunity for us to look at the things we’re spending on Amazon and say how can we better involve our local vendors in the competitive process of selling products to the city,” Jones said.

Tempe staff have a lot of leeway for purchases of less than $5,000, but because of limited budgets are incentivized to get the best price.

amazon spending chart
Sky Schaudt/KJZZ

Last year, Amazon spending accounted for .03 percent of Tempe’s budget — $208,000 of $683 million.

“If you’re a local vendor and you’re selling a product we’re buying on Amazon. It could be a large portion of the sales that you would expect,” Jones said.  “You don’t expect your local government to buy things from an outside vendor when they can walk down the street and get them from a local vendor.”

Jones told the City Council in August an analysis of city spending shows 89 percent of purchases are made in state. Within that, 82 percent in Maricopa County and more than a quarter are made in Tempe.

Jones said the contract wouldn’t mean the city would spend more money with Amazon and he’s not proposing Tempe use the contract to avoid getting competitive bids for large purchases.

Another safeguard proposed by Tempe staff is blocking the purchase of products that can be bought with existing contracts.

“We don’t want the convenience of Amazon to creep into our model of get the best price and target local vendors when possible,” Jones said.

Tempe will hold a public meeting about how local businesses can get more involved in city purchasing on Wednesday, Oct. 17 at 6 p.m. in the community room of the Tempe History Museum, 809 E. Southern Ave. 

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