Ahead of the 2028 LA Olympics, a push is underway to allocate up to $800 million in contracts to businesses based in the City of Los Angeles. The initiative aims to return the economic benefits of hosting the Olympics to the local community.
The Los Angeles Times reported on the 15th that the City of LA and the Olympic organizing committee (LA28) have tentatively agreed to allocate 5% to 20% of the total goods and services procurement budget to LA-based businesses.
The total value of contracts that LA28 will sign with external vendors for the Olympics is estimated at about $4.0 billion. The core of the plan is to allocate between 5% ($200 million) and a maximum of 20% ($800 million) of this amount to LA enterprises.
However, the specific amount has not yet been finalized. Both sides plan to determine the target amount through final negotiations. The agreement must be approved by LA28, the LA Mayor, and the City Council, and is expected to be finalized as early as this month.
If the agreement is finalized, it will be the first instance where a host city has secured a commitment to contract allocation for local businesses. In past Olympics, while goals were set to allocate contracts to companies in the host country, there were no precedents of limiting the scope strictly to the host city.
This agreement stemmed from concerns that the Olympic boom might not sufficiently benefit businesses within the City of LA.
LA28 previously set a goal to use 75% of the total procurement budget on Southern California businesses. However, it faced backlash for setting the target region across five counties, including LA, Orange, Ventura, Riverside, and San Bernardino.
LA Mayor Karen Bass and city council members argued that since the City of LA bears the financial burden of hosting the Olympics, priority should be given to businesses within the city limits.
In particular, during a city council hearing last April, continuous points were raised that local businesses should be given primary consideration in contracts, as the City of LA would bear financial responsibility if an Olympic deficit occurs.
On the other hand, LA28 countered that concentrating contracts on specific regional businesses could reduce bidding competition and increase costs. Their stance was that this could heighten the risk of an Olympic deficit and ultimately burden LA taxpayers.
Consequently, both sides compromised by setting a target for contract allocation to LA businesses without imposing a binding legal obligation that must be met. This allows the City of LA to secure local business participation goals while enabling LA28 to select vendors considering cost and competitiveness.
Previously, the Olympic hosting agreement signed in 2021 only contained the principle of supporting local small businesses’ participation in contracts, without specifying the exact allocation size.
Meanwhile, labor unions and civil society organizations maintain that expanding local business contracts alone is not enough. The ‘Fair Games Coalition,’ which includes labor unions and immigrant rights groups, is demanding the secured funding for the construction of 50,000 affordable housing units and a ban on Immigration and Customs Enforcement (ICE) personnel inside sports venues leveraging the Olympics.
