City Attorneys Conference
March 22, 2007
Applying Locally Established Contract Bidding Policies
· Overview:
o State bidding laws establish mandatory procedures for state and local governments. Bid thresholds in G.S. 143-129 (the formal bidding statute) and G.S. 143-131 (the informal bidding statute) have increased and pending legislation would increase them again. Many local governments have chosen to maintain lower bid limits under local policies.
o Several aspects of the bidding process are triggered by the statutory bid thresholds. When a local government uses procedures under locally established thresholds it is sometimes unclear whether the statutory procedures apply.
· Case Problems:
1. When the legislature increased the formal bidding threshold to $300,000 in 2001, the board adopted a resolution stating that would continue to solicit formal bids at the $100,000 level. That’s all the resolution said. The city is now soliciting bids on a building renovation project. The estimated cost of the entire project is $258,000. After advertisement, the solicitation has produced 2 sealed bids. Consider the following questions:
a. Are three bids required, or may the city open bids and award a contract?
b. Are performance and payment bonds required for this project?
c. Are the bidders required to submit affidavits of minority participation on the project?
d. Is the city obligated to document its efforts to solicit minority contractors for this project?
2. Continuing with the facts above, assume that the city’s specifications require a bid bond to be submitted with the bid. At the bid opening, the consulting engineer noted that the apparent low bidder had failed to submit a bid bond. The bidder has pointed out that the statute only required bid bonds for contracts in the formal bid range ($300,000 or above). Recognizing that the requirement was locally imposed, the manager would like to know if the bid bond requirement can be waived and the bid awarded to the apparent low bidder. What is your response?
3. When the legislature increased the minimum threshold for informal bidding threshold to $30,000 in 2005, the city continued its practice of soliciting informal bids for contracts estimated to cost $5,000 or more. The city is in the process of receiving quotes for a new law enforcement vehicle estimated to cost $22,000. A vendor has requested a copy of quotes received prior to submitting his own. Is the city legally obligated to provide these copies?
4. When the legislature increased the formal bidding threshold for purchase contracts to $90,000 in 2001, the city continued its practice of advertising for sealed bids for purchase contracts estimated to cost $50,000 or more. The purchasing manager has requested approval to “piggyback” off a contract recently awarded by another town for the purchase of a new street sweeper, estimated to cost $67,000. May the city use the piggybacking exception for this purchase? If not, what procedures, if any, should be undertaken for this purchase?
· Advice:
o Local policies should be explicit about whether they do or do not intend to incorporate the state procedures that apply at the statutory dollar threshold.
o Local policies should provide flexibility so that local bidding requirements that exceed minimum state requirements may be waived in circumstances deemed to be in the best interest of the unit. Policies should be specific about who is authorized to waive local procedures.
o While local policies may be waived, the waiver cannot be made in such a way that it provides an unfair advantage during a bid process.
o Note that local policies can be more restrictive than, but cannot conflict with, state law. Since the exception to the public records law is in the informal bidding statute, bids received using informal bidding under a local policy that is lower than the statutory threshold for informal bidding are not protected from disclosure prior to award.
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