Competitive Bidding
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”.
Are there two competitive bidding statutes?
Yes. All Public Agencies must follow the Public Competitive Bidding Act at 61 O.S. Section 101 et seq. In addition, public trusts must follow this act PLUS the Public Trusts Bidding Law at 60 O.S. Section 176(h).
Public Trusts must follow both bidding statutes?
Yes.
What is the definition of a public agency in the Public Competitive Bidding Act?
Public agencies include cities, towns, public trusts and any department, agency, board, commission, committee or authority of any city, town or public trust.
What about charter provisions or local ordinances?
In addition to these state laws some municipalities have charter or local ordinances or policy requirements for bidding. These may require bidding requirements that are stricter than state law.
What are the general requirements of the Public Competitive Bidding Act?
All “public construction contracts” must be awarded to the lowest responsible bidder after solicitation for written bids. No work shall be commenced until a written contract is executed and proof of insurance has been provided by the contractor to the awarding public agency. 61 O.S. Section 103
What are the special procedures depending on the amount of the public construction contract?
A. Public construction contracts exceeding $50,000 shall be let upon sealed bids and in accordance with all procedures of the Public Competitive Bidding Act.
B. Such contracts less than $50,000 shall be let and awarded to the lowest responsible bidder by receipt of written bids; however, the statute allows an awarding public agency to adopt its own procedures for bid solicitation, award and management of contracts.
C. Public construction contracts for less than $2,500 for minor maintenance or minor repair work may be negotiated with a qualified contractor.
What are the key definitions in the Public Competitive Bidding Act?
A. "Public Construction Contracts" are defined as any contract exceeding $50,000 awarded by any public agency for the purpose of making any public improvements, constructing any public building or making repairs to or performing maintenance on any public building.
B. "Public Improvements" are defined as any beneficial or valuable change or addition, betterment, enhancement or amelioration of or upon any real property, or interest therein, belonging to a public agency, intended to enhance its value, beauty or utility or to adapt it to new or further purposes. The term DOES NOT include the direct purchase of materials, equipment or supplies by a public agency or any personal property as defined in 62 O.S. Section 430.1,
C. Numerous provisions are mandated for bid notices, advertising, awarding contracts, change orders, qualification of bidders, insurance and other matters.
D. The Act provides for waiving bidding requirements if an emergency exists, and for negotiating a contract if no timely bids are received. Advice and counsel of your municipal attorney should be sought to assure strict compliance with these provisions.
Is there a different bid amount for the Public Trust Bidding Law?
Yes. It has a lower bidding threshold of $25,000 as contrasted with the Public Competitive Bidding Act’s $50,000.
What are the general requirements for the Public Trust Bidding Law?
Public trusts must bid for all public contracts for construction, labor, equipment, material or repairs in excess of $25,000. The bid shall be awarded to the lowest and best competitive bid. 60 O.S. Section 176(h).
Must the public agency award the bid to the lowest bidder no matter what?
No. The "best" bid may or may not be the "lowest". There may be concrete, factual reasons that a higher bid is the best. This may include experience with the higher bidder, better materials or warranties and the like. Seek the advice of your municipal attorney in this matter.
Does the Public Trust Bidding Law allow special procedures in an emergency?
Yes. The Act allows the waiving of the bidding requirements in an emergency.
Which specific forms of government have special bidding requirements?
A. Special bidding requirements are at 11 O.S. Section 10-116(B) for the Council-Manager form and in 11 O.S. Section 11-116(B) for the Strong Mayor-Council Form of Government.
B. Both special statutes allow the council by ordinance to prescribe requirements and procedures for competitive bidding before the purchase or contract for supplies, materials or equipment is made. The council cannot exempt a particular contract, purchase or sale from the requirements of competitive bidding.