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Oklahoma Municipal League

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Inquiry Blog and FAQ

Competitive Bidding: Contracting With a Service Provider

Posted on March 1, 2016 at 6:35 AM

A common question received by OML concerns contracting with a service provider such as a trash hauler. Must this be bid if it is greater than the bidding statutes bid requirements?

A: Well, it depends.

Q: Depends on what?

A: Principally on whether it is the municipality or the public trust awarding the contract.

If it is the municipality that is contracting with the trash hauler

Public Competitive Bidding Act (61 O.S. 101 and following) does not apply since it only applies to “public improvements” which are defined as a “beneficial or valuable change or addition, betterment, enhancement or amelioration of or upon any real property . . . “

If it is the public trust that is contracting with the trash hauler

There is a split among municipal attorneys about whether the public trusts bidding statutes applies. It requires competitive bidding for “construction, labor, equipment, material or repairs . . . “ The minority opinion is that the word “labor” can be broadly interpreted to include all types of service contracts and even professional services such as engineers, attorneys etc. Other city/town attorneys do not read it this expansively. 

Q: You mean attorneys disagree with each other?

A: Sure. You know, ask two attorneys – get three opinions!

Q: What if it is an emergency – like a trash hauler suddenly going out-of-business?

A: Well, it depends.

Q: Here we go again!

A: Sad, but true. It depends on whether the facts fit the definition of “emergency”.

Under the Public Trusts Bidding Statute (60 O.S. Section 176(h))

The term used in the law is an “immediate emergency” which is a factual situation where the “trustee or the trustees find that an immediate outlay of trust funds in an amount exceeding $25,000 is necessary in order to avoid loss of life, substantial damage to property, or damage to the public peace or safety.” This is a factual determination and, unfortunately, there is no clear, bright line on this issue. The city or town should take no action without getting the okay of their municipal attorney.

In addition, if it is an “immediate emergency” under the law, the statute requires that a finding of an emergency “shall be entered in the journal of the trust proceedings”.

If you have any questions or comments to share, please contact kelly@oml.org or post a comment below.

Categories: Competitive Bidding