Competitive Bid Law

1. Competitive Bid Law General Competitive Bidding Public Works Bidding

2. Purposes of Competitive Bidding Prevent Favoritism Secure Goods or Services at the Lowest Prices Encourage Free Competition Protect Taxpayer (Public) Money

3. Process Does the bid law apply? Request bids Allow time for preparation and filing Open and total bids Award contract to lowest responsible bidder Performance of the contract

4. Alabama Code Provisions Competitive Bid Law 41-16-50 through 41-16-63 Public Works Bid Law Section 39-1-1 through 39-1-2 Section 39-2-1 through 39-2-14

5. General Competitive Bid Law

6. When Does the Law Apply? Contracts for $7,500 or more Goods or labor Purchase or lease (inc. lease/purchase) Used or new equipment Special rule for heavy-duty equipment (�41-16-52)

7. Bid Law Does NOT Apply To: Contracts Between Public Agencies Sales of Public Property State Bids Emergency Purchases

8. What Entities Are Covered? Municipalities School Boards Utility Boards Public Library Boards Most Public Agencies But: There are exceptions Check the statute!!!

9. What Contracts? Questions to ask: Is there an exception? (�41-16-51) Is contract for $7,500 or more? Look at total expenditures required by the contract!!!

10. Process Does the bid law apply? YES Request bids

11. Advertising Requirements Newspaper notice is not required! Post notice on bulletin board Mail notice to those who have filed a written request for notice of the solicitation of this type bid (removed after 3 no-bids) Other notice as board determines Length of advertising must be reasonable for the project

12. Division of Contracts Forbidden No division of a purchase just to avoid bidding requirements May legitimately divide a contract if project justifies it and purpose is not to avoid bid law

13. Joint Purchasing Ordinance (or Resolution as the case may be) by each entity Contents: Items or services to be purchased Manner of advertising and awarding of contracts Method of splitting the costs of the contract Other matters determined by the entities May designate a joint purchasing agent

14. Process Does the bid law apply? YES Request bids Allow time for preparation and filing Open and total bids

15. Time for Preparation Varies based on circumstances Does bid require bidder to prepare? Does bidder have to contact subcontractors? Is this an emergency? May need to allow bidders time to prepare a set of specifications Must be reasonable

16. Bid Opening Bids must be sealed - no faxed bids Opening must be public Bids are tabulated & presented to council at next meeting

17. Bonding Requirements All contracts over $10,000 must have a bid bond Board determines the amount of bond Should protect the board against a change that would cause substantial loss Must be executed before bid can be considered Can submit irrevocable letter of credit instead

18. Who is the Low Bidder? Lowest unit price of an article Warranty may only be considered for determining if bidder is responsible May depend on specifications (alternative bids, etc.)

19. What is a Responsible Bidder? Have you had problems with this bidder in the past? (Documentation?) Do you know of others who have had problems? (Documentation?) Can they deliver promised products on time? Has bidder qualified to do business in Alabama? Does bid meet specifications?

20. Rejection of Bids Reason for rejecting low bid and accepting another must be stated on successful award & left open to public inspection Can reject if price is excessive or quality is inferior

21. Process Does the bid law apply? Yes Request bids Allow time for preparation and filing Open and total bids Award contract to lowest responsible bidder

22. Awarding Bid Local Preference Other Preferences Conflicts of Interest Limit on Term of Service Contracts Procedure for One or Fewer Bids Resolution Necessary

23. Penalties Collusive Bids Contract Void Advance Disclosure of a Bid Statute of Limitations

24. Process Does the bid law apply? Request bids Allow time for preparation and filing Open and total bids Award contract to lowest responsible bidder Contract Performance

25. Contract Performance Retainage Records Maintenance Performance Bonds Contracts Not Assignable Without Permission

26. Quantum Meruit No recovery on contract Applies where board receives an unjust enrichment Allows payment for work done or materials provided where mistake was small or inadvertent

27. Public Works Bidding 39-1-1 through 39-1-2 39-2-1 through 39-2-14

28. What is a Public Work Project? Construction, repair, renovation, or maintenance of public facilities financed in whole or in part with public funds with financing that is retired with public funds Examples Buildings, structures, sewers, waterworks, roads, bridges, docks, underpasses, and viaducts

29. Process Does the bid law apply? Request bids Allow time for preparation and filing Open and total bids Award contract to lowest responsible and responsive bidder Contract Performance

30. Public Works Bidding DOES THE LAW APPLY?

31. When Does the Law Apply? All public works projects involving an �awarding authority� for Contracts for $50,000 or more

32. Exceptions Use of public employees Contracts with other public agencies Sales of property Contracts for program management in support of public works that do not involve construction, etc., Use of Convict Labor Projects under $50,000

33. Advertising Requirements Split advertising requirements Under $500,000 Newspaper published in the municipality, or Post on bulletin board Send notice to all interested persons (may remove after 3 no bids) Over $500,000 Three newspapers of general circulation throughout the state

34. Advertisement Must: Describe the improvement State that plans and specs are on file in an office of the awarding authority State procedures for obtaining plans and specs State when and where bids will be received and opened State whether prequalification is necessary and how to obtain prequalification information

35. Sole Source Bidding No sole source venders unless: Documentation to State Building Commission product or service is indispensable no viable alternatives and product or service is the only one that fulfills the function Architect or engineer has recommended All info is documented and available for inspection at time of advertising

36. Emergencies Must be declared in writing by the awarding authority Must set forth the nature of the danger to the public health, safety or convenience Can be let only to extent necessary to meet the emergency Actions taken and reasons must be made public upon request

37. General Information Open bids at time and place specified No splitting bids to avoid bidding requirements Penalties: Contracts in violation are void Class C felony - Minimum - One year and a day, Max - 10 years Fine up to $5,000 or double gain to defendant or loss to the victim

38. Bid Documents Must have adequate number on hand for prime contractors May charge a deposit

39. Bid Guarantees With bid, bidder must: File with bid a cashier�s check drawn on an Alabama bank, or A bid bond executed by a surety company qualified in Alabama Amount is not less than 5% of estimated project cost or bid Capped at $10,000 This is the maximum guarantee required!

40. Prequalification Must be written, and Published Relate to the contract purpose Relate to quality of product or service Relate to responsibility and ability of the bidder Permit reasonable competition Publication may run with bid request, if it meets above requirements

41. Prequalification (cont.) Awarding authority has right to determine if contractor meets prequalification criteria Any prequalified bidder is deemed responsible, unless revoked by: Written notice Hearing Good faith showing by authority Revocation within 10 days of notice Awarding Authority retains right to judge responsibility of bidders

42. Return of Guarantees All but lowest three bidders must be returned immediately after bids are checked and tabulated Lowest three are returned once contract bonds and the contract is executed

43. Contract Award Awarded to lowest responsible AND responsive bidder Responsible bidder: Competent, experience and financially able to perform contract Responsive bidder: Submits a bid that complies with terms and conditions of bid invitation

44. Notification of Award At earliest possible date, notify successful bidder in writing by: telegram confirmed fax or letter If winner refuses to sign contract or provide bond or insurance, award goes to second lowest bidder, then third.

45. If One or Fewer Bids: Advertise for and seek other competitive bids negotiate for the work through the receipt of informal bids (provided that work is done for price lower than that bid)

46. If Negotiation is Used: Allow the Department of Examiners of Public Accounts to review: The plans and specs, an itemized estimate of costs, and all informal bids, and On completion of the project, the final costs, including any and all changes made to the original plans and specs

47. Award of Bid Successful bidder must (when required): Enter into written contract on form included in the proposals, plans and specs Give performance bond and payment bond Provide evidence of insurance either within time set out in the bid or, if bid is silent, within 15 days of receiving the contract Board may grant 5 extra days for return of contact

48. Bond Approval Within 20 days of receiving the contract and other materials from the bidder, the awarding authority must approve the bonds approve the evidence of insurance, and execute the contract Contractor may agree in writing to an extension of time

49. Proceed Order Within 15 days of the final execution of the contract, the board must issue a proceed order Parties may agree, in writing, to an extension of time for the issuance of the proceed order

50. Guarantees If Contractor Fails to Act: The board shall retain from the proposal guarantee the difference between the amount of the contract as awarded and the amount of the proposal of the next lowest bidder. If only one bid, the full guarantee may be retained as liquidated damages

51. Guarantees If the board fails to execute the contract and issue a proceed order, contractor may withdraw the bid without forfeiture of the guarantees

52. Mistakes If low bidder discovers a mistake, bidder may, without penalty: Give written notice to the board within 3 days of the bid opening, and Provide clear and convincing evidence of mistake due to calculation, or clerical error, inadvertent omission, or typo

53. Mistakes (cont.) Board must permit withdrawal without forfeiture Board must decide within 10 days of receiving the evidence, or at the next regular meeting Mistake of law, judgment or opinion is NOT a valid ground to withdraw bid

54. Mistakes (cont.) If bidder withdraws due to mistake, the bidder is prohibited from: Performing any work on the project, either as a subcontractor or other capacity Bidding on the same project if it is re-advertised for bids

55. Bidder�s Requirements Before beginning work, the bidder must: Execute a performance bond equal to 100% of the contract price Execute a second bond of at least 50% of the contract price, promising to pay all subcontractors and for payment of attorneys fees to enforce the bond

56. General Provisions After Award No contract may be assigned without written consent of the awarding authority and no assignment may be made to an unsuccessful bidder who was not responsible or responsive.

57. Partial Payments Unless otherwise provided in the specs, the board must begin making partial payments: at the end of each calendar month, or as soon thereafter as practicable Material and work covered by partial payments becomes the property of the board.

58. Partial Payments (cont.) Authority may retain from partial payments: No more than 5 % of the estimated work done, and the value of materials stored on site, or suitable stored and insured off-site Once 50% of the job is completed, no further retainage shall be withheld Retainage held until job is finished and accepted

59. Retainage Money belonging to the contractor which has been retained by the awarding authority conditioned on final completion and acceptance of all work in connection with a project or projects by the contractor

60. Nonresident Contractors To obtain retainage, a nonresident contractor must satisfy the board that all taxes due and payable to the state and all political subdivisions have been paid.

61. Escrow Account or Security May be used in lieu of retainage Board has the right to decide which is used Escrow account has conditions Contractor may deposit securities and withdraw retainage, subject to conditions

62. Completion of Contract Upon completion and acceptance of work, but not until 10 days after the advertisement of the completion as required, the contractor must give the board: An executed and certified voucher for payment; A release, if required, of all claims and liens against the board, other than contractor liens; Proof of advertisement

63. Completion of Contract (cont.) Board shall, before execution of final contracts and bonds: Certify that contract complies with bidding requirements Certificate constitutes a presumption that the bid law was followed. Can only be overcome by clear and convincing evidence that certificate is false and that the contractor knew it was false

64. Advertising Completion Contracts of $50,000 or more - contractor must give notice of contract completion: Advertise in a newspaper in general circulation published within the city where work has been done. For 4 successive weeks No final settlement until 30 days following completion of notice Proof of publication is by affidavit of publisher and a printed copy of notice.

65. Advertising Completion (cont.) If no newspaper, post at courthouse for 30 days Proved by probate judge, sheriff, and contractor Public works contracts below $50,000 � Board advertises: Once in a newspaper of general circulation in the county and Posts final completion on bulletin board for one week Authority requires contractor to certify under oath that all bills have been paid

66. False Certification Willful or fraudulent issuance of certification is a felony Punishment: Fine between $5,000 and $50,000, or Jury may sentence violators to prison for one to three years

67. Enforcement To recover paid public funds, action may be brought by: Attorney General Any interested citizen Must be clear and convincing evidence of a knowing violation before the execution of the contract Statute of limitations is three years of contract settlement

68. Enforcement (cont.) To enjoin the contract, action may be brought by Attorney General Any interested citizen An unsuccessful bidder Bidder who wins may recover reasonable bid preparation costs Statute of limitations is 45 days of contract award

69. Quantum Meruit No quantum meruit for work done or materials furnished pursuant to a contract in violation of the public works bid law