Avoiding the Bid Law Pitfalls

by Brian Harris

During my 25 years auditing governments across the great State of Alabama, one of the most common themes in my audit findings involved noncompliance with applicable state purchasing laws. Compliance with the State of Alabama’s Competitive Bid Law and Public Works Law can be difficult. Even the most well-meaning, experienced purchasing director can become victim to the many Bid Law pitfalls.

Currently, the threshold for bidding under the Public Works Law and Competitive Bid Law is $50,000 and $15,000 respectively. Even though these two laws are distinctly codified in the Code of Alabama 1975, confusion often arises when deciding which law to follow. For example, the purchase of lights for a ballfield, as part of a construction contract for that ballfield, is covered by the Public Works Law; however, the purchase of those same lights, to be installed at that same ballfield but separate from a construction contract, would often be covered under the Competitive Bid Law.

Sometimes contracts involving no exchange of public funds can trigger bid law compliance issues. For example, if a government wants to enter into a contract with a vendor whereby the vendor provides a scoreboard for a sports park in exchange for an exclusive vending contract at that sports park, the contract should be bid in accordance with the State’s Competitive Bid Law.

Even in the case of emergencies, the Competitive Bid Law and Public Works Law must be followed.  Governments often believe if an emergency has been declared, the requirements of the bid laws are set aside. That’s not entirely true. If the awarding authority declares an emergency, the emergency clause of the Competitive Bid Law and Public Works Law only allows the awarding authority to forego advertising. Competitive letting of the contract and receiving and opening sealed bids is still required.

Did you know that an amendment to a sealed bid written on the outside of the envelope containing the bid could be considered and accepted by the awarding authority, but a bid received via fax or telephone cannot? In one matter in particular, the Alabama Attorney General opined that a government was permitted to consider a vendor’s notation on the outside of his sealed bid, which stated “deduct $10,000 from the base bid” provided this notation was made prior to opening any bid. The Attorney General has also opined on numerous occasions that a telephone or fax bid is not a sealed bid and thus, could not be considered.

Nearly every year, the Alabama State Legislature amends the Competitive Bid Law and the Public Works Law.  Before 1977, the Competitive Bid law bid threshold was $500. From 1977 to 1989, the threshold was $2,000. From 1989 to 1994, the threshold was $5,000. From 1994 to 2008 the threshold was $7,500.  In 2008, the threshold was raised to $15,000, but only for local governments and the two-year colleges.  Not until 2012 was the threshold raised to $15,000 for state agencies and universities. The Competitive Bid Law was amended several years ago to allow municipalities the opportunity to purchase goods and services through Purchasing Cooperatives, but only if those cooperatives were first approved by the Alabama Department of Examiners of Public Accounts and only for certain items meeting certain criteria.

After reading this, do you feel you know less than you did before? Confused? Fear not. The Alabama Supreme Court has stated, “The single most important requirement of the Competitive Bid Law is the good faith of the officials charged in executing the requirements of the law.” The foundation of a good faith effort is knowledge. That’s where we come in. Feel free to call or email me with questions so we can provide you the knowledge you need to avoid the Bid Law Pitfalls.

For more information contact Brian Harris at bharris@bmss.com or call  334.521.1490.