Contracts and Purchasing

1. Contracts and Purchasing AASBO Certificate Program April 18 & 20, 2011 David Smith

2. Contracts and Purchasing Disclaimer: The opinions expressed in this presentation are those of David Smith and are not meant to be a legal interpretation of the law. The material included in this presentation is dated as of April 2011 and is subject to change. Official interpretation of particular questions or situations should be obtained through the board’s legal council, the Alabama Attorney General’s office or the Examiners of Public Accounts.

3. Contracts and Purchasing • Competitive Bid Law • Public Works Law • Request For Proposals ( RFP) • Public Contracts

4. Competitive Bid Law – Legal Authority for Boards • Code of Alabama 1975, Section 16-13B-1 through 16-13B-11 • Applies to both County and City Boards of Education

7. To What It Applies… • Applies to the expenditure of funds for labor, services and work involving $15,000 or more • Applies to the purchase or lease of materials, equipment, supplies or other personal property involving $15,000 or more

8. Legal Requirement Requires a contractual agreement entered into by free and open competitive bidding, on sealed bids, to the lowest responsible bidder.

9. Joint Purchasing16-13-B-1 • Governing bodies of two or more boards (or county commission/municipality) may purchase jointly. • Each governing body must approve joint purchasing agreement and details by resolution. • A Joint Purchasing Agent may be designated.

10. 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

11. Advertising Requirements • Post notice on bulletin board outside purchasing department • Can do more…but not required!

12. 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 solicitations, the vendor may be removed from the bid listing.

13. Sealed Bids and Documentation • Must be sealed when received (except under reverse auction procedures) • 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

14. Bid Bonds/Cashier’s Check • Bid bonds are no longer required – optional 16-13B-1(d)

16. Items Exempt from Requirements • Utility Service (rates fixed by law, regulation, or ordinance) • Insurance

17. Items Exempt from Requirements (cont.) • Consultants • Certified Public Accountants • Public Accountants • Others possessing a high degree of professional skill where the personality of the individual plays a decisive part. • Professional Services: • Attorneys • Physicians • Architects • Teachers • Superintendents of Construction • Artists • Appraisers • Engineers

18. Items Exempt from Requirements (cont.) • Regular Civil Service employment contracts • Fiscal or Financial Advice or Services • Products made by Alabama Inst. For Deaf and Blind • Maps/Photographs from any federal agency • Manuscripts, Books, Maps, Pamphlets, or Periodicals • Paying Agents/ Trustees • Existing contracts for renewal of sanitation or solid waste collection, recycling, or disposal and those providing the service

19. Items Exempt from Requirements (cont.) • Security Related Services/Products - contractual services and purchases of products related to, or having an impact upon, security plans, procedures, measures, or systems, or the security or safety of persons, structures, facilities, or infrastructures. • Purchases of goods made as a part of any purchasing cooperative sponsored by the National Association of Counties. • Act 2006-279 • U.S. Communities is the purchasing cooperative

20. NACO – Purchasing Cooperative (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, Examiners communicated their approval of this competitive bidding process used by U. S. Communities. • The goods are either not at the time available to local boards of education on the state purchasing program or are available at a price equal to or less than that on the state purchasing program. • The purchase is made through a participating Alabama vendor holding an Alabama business license if such a vendor exists.

23. Items Exempt from Requirements (cont.) • Individual school purchases from monies other than those raised by taxation or received from state or county appropriations (i.e., fundraisers, donations) • May have board policy that requires bids • Legislative Monies– Bid law does apply

24. Bid Lists • Sealed bids or bids to be submitted by a reverse auction procedure shall also be solicited by sending notice by mail or other electronic means to all persons, firms, or corporations who have filed a request in writing that they be listed for solicitation on bids for the particular items that are set forth in the request. • If a vendor whose name is listed fails to respond to any solicitation for bids after the receipt of three solicitations, the listing may be cancelled.

25. 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

26. Rejection of a Bid • Awarding authority may reject a bid when the price is deemed excessive or the quality of product is inferior. • Must document. If applicable, should announce budget.

27. Documentation of Results • To whom bid was awarded • Reasons for not awarding to the lowest bidder • Request legal council assistance • Bid file shall be open for public inspection Document-Document-Document

28. Emergencies • Section 16-13B-3 • 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. • Contracts may be let to the extent necessary to meet the emergency without public advertisement.

29. 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.

30. Splitting of Contracts • No purchase or contract in excess of $15,000 shall be divided into parts involving amounts of $15,000 or less for the purpose of avoiding the requirements of the competitive bid law

31. 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.

32. Procedures for Reverse Auction and Life-Cycle Costs

33. Legal Authority16-13-B-4 • Act Number 2008-379, Acts of Alabama • Effective July 1, 2008 (January 1, 2009 for Reverse Auction Procedures and Life Cycle Costing)

34. Reverse Auctions Beginning January 1, 2009, the awarding authority may make purchases or contracts through a reverse auction procedure.

35. Examiners Shall Establish Procedures • No later than November 30, 2008, the Department of Examiners of Public Accounts shall establish procedures for the use of reverse auction and life cycle costs, which shall be distributed to all contracting agencies and shall be used in conducting any audits of the purchasing agency. • Procedures posted on Examiners website at www.examiners.state.al.us

37. Definition of Reverse Auction A reverse auction is a purchasing process in which offerors (suppliers) submit bids in competition to sell services or supplies in an open environment via the internet; the auction is an invitation-only, timed event.

38. Methods of Handling Reverse Auctions • Acquire necessary software to conduct the auction on an “in-house” basis • Contract with a commercial auction host to conduct the auction as an agent • Participate through a regional, state, or national purchasing cooperative

39. Bidding Process • A real-time bidding process, usually lasting less than one hour and taking place at a previously scheduled time and Internet location, in which multiple anonymous suppliers submit bids to provide the designated goods or services. • A bidding process usually lasting less than two weeks and taking place during a previously scheduled period and at a previously scheduled Internet location in which multiple anonymous suppliers submit bids to provide the designated goods or services.

40. Use of Reverse Auction Allowed if.. • The item to be purchased at a reverse auction is either not at the time available on the state purchasing program under the same terms and conditions, OR, • If available, the lowest price offered in the reverse auction is equal to or less than the price for which the item is available on the state purchasing program under the same terms and conditions

41. Solicitation of Bids • Advertised in any manner and for any length of time as may be determined • Notice must be sent by mail or other electronic means to all persons, firms, or corporations who have filed a request in writing that they be listed for solicitation on bids for the particular items that are set forth in the request; may be removed from listing after three non-responses • Notification shall include the scheduled time and internet location

42. Bid Specifications • Clear and concise bid specifications must be developed • Brand name or equal specification used for the purpose of describing the base standard of quality, performance and characteristics – not to limit or restrict competition

43. Pre-Screening of Bidders • Bidders may be pre-screened at the option of the awarding authority – ensures only responsible parties submit bids • Pre-screening must be documented in bid file • Prospective bidders should submit a notification of intent to bid in a sealed envelope noting the bid number on the outer envelope to the awarding authority/agent within an appropriate time frame as specified by the awarding authority

44. Reverse Auction Process • Contact person should be designated to answer questions from suppliers regarding the reverse auction process • Online instructions should be provided to bidders • Bidders will be notified of the start of the reverse auction through an electronic notification • Auction will conclude at the previously scheduled stop time • Awarding authority is responsible for providing a secure location and/or website to the reverse auction

45. Record of Auction • An event record of the auction should be maintained by the awarding authority that will include the prices offered by the bidders; should be part of the contract documents/public record at the conclusion of the event • Event record must disclose the beginning and ending times of the auctions • Bid documents must be retained 7 years in accordance with the Alabama Competitive Bid Law

46. Price Submittals • Bidders may submit multiple prices during the event • The lowest price offered will become the price portion of the bid response

47. Award of Contract • Contracts will be awarded to the lowest responsible bidder as provided by the Alabama Competitive Bid Law

48. Tie Bids • In the event that multiple bidders submit identical prices for the same goods or services, the bid received first will be considered to be the lowest. • Any other identical bids received later will be considered in the order received.

49. Public Viewing of Auction Event • The public may attend the internet auction event which will be conducted such that the names of the bidders will not be disclosed until after the completion of the auction, at which time the event record will be available to the public

50. Life Cycle Cost Analysis “A method for evaluating all relevant costs over the time of a project, product, or measure.”