Discussion of the Alabama Competitive Bid Law – Boards of Education Presented by Mr. Mike Scroggins, Director County Audit Division Examiners of Public Accounts Legal Authority • Code 41-16-50 through 41-16-63 (Article 3) • Applies to County Commissions, County and City Boards of Education, Municipalities To What It Applies… • Applies to the expenditure of funds for labor, services and work involving $7,500 or more • Applies to the purchase or lease of materials, equipment, supplies or other personal property involving $7,500 or more Legal Requirement Requires a contractual agreement entered into by free and open competitive bidding, on sealed bids, to the lowest responsible bidder. Length of Contract Terms • Purchase or Service Contracts - limited to 3 years • Lease-Purchase Contracts for capital improvements, repairs to real property and other lease-purchase contracts - limited to 10 years Advertising Requirements • Post notice on bulletin board outside purchasing department • Can do more…but not required! Sealed Bids and Documentation • Must be sealed when received • Opened in public at the hour stated in the notice • All original bids and documents pertaining to the award of the contract shall be retained for a period of seven years from the date the bids are opened and shall be open to public inspection Bid Bonds/Cashier’s Check • Must be furnished for contracts exceeding $10,000, if bonding is available for the services, equipment or materials. • No guidance in Law as to amount of bond - 5% to 10% of contract recommended Performance Bonds • Bond for faithful performance of the contract may be required in an amount specified in the advertisement for bids • Bond should be a “responsible” sum with adequate surety • Not required! Items Exempt from Requirements • Utility Service (rates fixed by law, regulation, or ordinance) • Insurance Items Exempt from Requirements (cont.) • Professional Services: – Attorneys –Consultants – Physicians – Architects –Certified Public Accountants – Teachers –Public Accountants – Superintendents of –Others possessing a high Construction degree of professional skill – Artists where the personality of the – Appraisers individual plays a decisive part. – Engineers Items Exempt from Requirements (cont.) • Regular Civil Service • Manuscripts, Books, M employment contracts aps, Pamphlets, or • Fiscal or Financial Periodicals Advice or Services • Paying • Products made by Alabama Inst. For Deaf Agents/Trustees and Blind • Maps/Photographs from any federal agency Items Exempt from Requirements (cont.) • Computer hardware • Service or commodity which is only type for which there is only compatible with one vendor or supplier hardware already owned/Custom software • Product whose price is • Professional Services for regulated and the codification and established by state publication of the laws law and ordinances of the muni or county. Items Exempt from Requirements (cont.) • Security Related Services/Products – Which impact upon the security of persons, structures, facilities or infrastructures. Items Exempt from Requirements (cont.) • Individual school purchases from monies other than those raised by taxation or rec’d from state or county appropriations (i.e., fundraisers, donations) Local Schools • Local schools do not have to comply with the bid law when they are using funds other than those derived from taxation or appropriation from the Board (i.e., donations or fund raisers). New Legislation – NACO - Act No. 2006-279 • Amends Code of Alabama 1975, 41-16-51 • “(a) the competitive bidding requirements of this article shall not apply to: – (16) Subject to the limitations in this subdivision, purchases of goods made as part of the purchasing cooperative sponsored by the National Association of Counties, or its successor organization.” • U.S. Communities is the purchasing cooperative New Legislation – NACO - Act No. 2006-279 (Cont.) • “This subdivision shall not apply to goods for which a service or service contract, whether subject to competitive bidding under this contract or not, is necessary to utilize the goods.” New Legislation – NACO - Act No. 2006-279 (Cont.) • “Purchases may only be made if all of the following occur: – The goods being purchased are available as a result of a competitive bid process approved by the Alabama Department of Examiners of Public Accounts of each bid.” • On May 31, 2006, we communicated our approval of this competitive bidding process used by U. S. Communities. New Legislation – NACO - Act No. 2006-279 (Cont.) • “Purchases may only be made if all of the following occur (continued): – The goods are either not at the time available to counties on the state purchasing program or are available at a price equal to or less than that on the state purchasing program.” U.S. Communities Contracts Divided into Three Groups by ACCA Contract awarded by U.S. Communities and 1. No State contract for same item 2. Contract awarded by State – Same vendor has both contracts 3. Contract awarded by State – Different vendors for same items Item to Note • ACCA staff and the Examiners worked together so that Counties will not have to evaluate each product for every purchase Contract Categories • No problems with purchasing immediately for goods in Category 1 • Category 2 companies have agreed to sell at the lowest cost through U. S. Communities contract • Category 3 offered biggest challenges- includes mainly the following: – Office Depot contracts – GTSI contracts Contracts from Category 1 & 2 • Homeland Security-Hagemeyer NA • Park and Playground Equipment- Gametime; Landscape Structures; Little Tykes Commercial • Carpet and Flooring – Milliken Carpet • Physical Education Supplies – Sportime • Janitorial Supplies – ZEP Contracts from Category 1 & 2 (cont.) • Maintenance, Repair and Operating Supplies - Home Depot Supply/The Home Depot • School-related Furniture – Virco • Office Furniture – Haworth, Herman Miller, Steelcase and Knoll • Electrical and Data Communications (including light bulbs, etc) - Graybar New Legislation – NACO - Act No. 2006-279 (Cont.) • “Purchases may only be made if all of the following occur (continued): – The purchase is made through a participating Alabama vendor holding a valid Alabama business license, if such a vendor exists.” Resident Bidder Preferences • Resident Bidder – has a place of business within the local preference zone. • Deemed to be a Responsible bidder. • Bid is no more than 3 percent greater than the bid of the lowest responsible bidder. • In this instance, contract may be awarded to the resident bidder. Bid Lists • Sealed bids shall also be solicited by sending notice by mail to all vendors who have filed a request in writing that they be listed on the bid list for the particular items being bid. • If a vendor fails to respond to any solicitation after the receipt of three, the vendor may be removed from the bid listing. Items to be considered when determining the lowest bidder… • Qualities of the goods proposed to be supplied • Conformity with specifications • Purposes for which required • Terms of delivery • Transportation charges • Dates of delivery Rejection of a Bid Awarding authority may reject a bid when the price is deemed excessive or the quality of product is inferior. Documentation of Results • To whom bid was awarded • Reasons for not awarding to the lowest bidder • Bid file shall be open for public inspection Emergencies • Must affect public health, safety or convenience, be declared in writing by the awarding authority, and such action and reasons should be immediately made public by the awarding authority. • No advertising required • Must still follow other bid law requirements - per ruling by the State Supreme Court (General Electric Co vs. City of Mobile 1991) Only One Bid Received • May accept bid or • May reject the bid and negotiate the purchase or contract, provided the negotiated price is lower than the bid price. Splitting of Contracts • No purchase or contract in excess of $7,500 shall be divided into parts involving amounts of $7,500 or less for the purpose of avoiding the requirements of the competitive bid law Conflicts of Interest • No member or officer of an awarding authority shall be financially benefit, either directly or indirectly, in the purchase of or contract for any personal property or contractual service. • Misdemeanor and removal from office, if convicted Collusion Among Bidders • Any agreement or collusion among bidders or prospective bidders to bid a fixed price or to refrain from bidding shall render the bids of such bidders void and shall cause such bidders to be disqualified from submitting further bids to the awarding authority on future purchases. • Knowing participants can be guilty of up to a Class C felony. Advance Disclosure of Bid Any advance disclosure of the terms a bid submitted shall render the proceedings void and will require the item to be advertised and bid again. Assignment of Contracts • No contract awarded to the lowest responsible bidder shall be assignable by the successful bidder without written consent of the awarding authority • In no event shall a contract be assigned to an unsuccessful bidder whose bid was rejected due to not being a responsible bidder! Provisions for Mistakes by Vendors There are no provisions in the law for mathematical mistakes by vendors. Joint Purchasing • Governing bodies of two or more city or county boards of education may purchase jointly (Act 2006-621). • Each governing body must approve joint purchasing agreement and details by resolution. • A Joint Purchasing Agent may be designated. IT Joint Purchasing • Act 2003-392 – Effective 6/24/2003 • Provides for the joint purchasing of information technology (IT) by educational institutions. Educational Institutions – Who is included?: • Department of Youth • State Trade Schools Services • State Junior Colleges • Alabama Institute for • State Colleges the Deaf and Blind • Alabama School of Fine • State Universities Arts • City/County Boards • Alabama School of Math of Education and Science • District Boards of Education Information Technology – What is included?: • Equipment • Supplies and Other Tangible Personal Property • Software • Services • Any combination of above used to provide data processing, networking, or communication services. Qualified Vendors • Only companies or those companies whose affiliates, subdivisions, subsidiaries, or departments have ISO-9001 certification can bid on IT to be jointly purchased. • Ensures quality vendors. Joint Purchasing Agreement • An agreement in writing providing for the lease or purchase of information technology under a single contract. • May be entered into by any number or combinations of educational institutions. • Agreement must be executed by each of the participating institutions. Joint Purchasing Agreement • Agreement should address the categories of IT to be purchased or leased, the manner of advertising for bids and awarding the contract, the method of payment by each participating educational institution, and other matters. • A joint purchasing administrator may be designated. State Department of Education/Department of Postsecondary Education • Monitoring and Oversight Responsibilities • May purchase from joint IT contracts when purchases are necessary to maintain statewide application and compatibility with the consent of the Director of Finance. Competitive Bid Law Issues • May result in awards to multiple vendors for each one product line in order to meet specific requirements/compatibility. • All terms and conditions of Title 41, Chapter 16, Code of Alabama 1975 that are not expressly modified by this act shall apply to joint purchase agreements. Questions?