Disclaimer. Legal Authority. Purchasing Solutions/Bid Law Update 4/30/2015. Code of Alabama 1975, Section 16-13B- 1, et seq.
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1 Purchasing Solutions/Bid Law Update Presented by: Matt Richards, CPA Assistant Director, County Audit Division Department of Examiners of Public Accounts State of Alabama Disclaimer This information was presented to the Alabama Association of School Business Officials (AASBO) 46 th Annual Conference on May 7, This presentation represents the audit position of the Department of Examiners of Public Accounts as of that date. Legal Authority Code of Alabama 1975, Section 16-13B- 1, et seq. 1
2 Code of Alabama 1975, Section 16-13B-1, et seq. Applies to the following agencies: county boards of education city boards of education any combination of city and county boards of education Code of Alabama 1975, Section 16-13B-1(a) Except for public works contracts under Title 39: all expenditures for labor, services, work, or for the purchase of materials, equipment, supplies, or other personal property involving $15,000 or more or the lease of materials, equipment, supplies, or other personal property where the lessee will pay a total amount of $15,000 or more Code of Alabama 1975, Section 16-13B-1(a) Requires that a contractual agreement be entered into by free and open competitive bidding, on sealed bids, to the lowest responsible bidder. 2
3 Exemptions Utilities (regulated by law, regulation or ordinance) Purchase of Insurance Professional Services (Attorneys, Physicians, Architects, Engineers, etc.) Civil Service Employment Contracts Fiscal/Financial Advice or Services Exemptions, continued: Products made or manufactured by the blind/visually impaired under the supervision of the Alabama Institute for Deaf and Blind Maps/Photographs from a Federal Agency Manuscripts, Books, Maps, Pamphlets, or Periodicals Paying Agents/Trustees related to debt issues Exemptions, continued: Existing contracts up for renewal for sanitation or solid waste collection, recycling, and disposal between municipalities or counties, or both, and those providing the service computer and word processing hardware (hardware is the only type that is compatible with hardware already owned) and custom software 3
4 Exemptions, continued: Contractual services and purchases of commodities for which there is only one vendor or supplier (sole source) Exemptions, continued: Contractual services and purchases of products related to, or having an impact upon, security plans, procedures, assessments, measures, or systems, or the security or safety of persons, structures, facilities, or infrastructures Exemptions, continued: Purchases of goods made as a part of the purchasing cooperative sponsored by the National Association of Counties(NACo) Or any other competitive bid nationwide cooperative purchasing program, or other national or regional governmental cooperative purchasing program. (added per Act Number ) 4
5 Purchasing Cooperatives, continued: Shall not apply to goods for which a service or service contract is necessary to utilize the goods. Purchases may only be made if all of the following occur: Purchasing Cooperatives, continued: The goods purchased are available as a result of a competitive bid process approved by the Examiners. 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 vendor exits. 5
6 Purchasing Cooperatives, continued: As law is currently written, cooperatives may only be used to purchase goods. Services may not be purchased using cooperatives. Unless there is a blanket approval on the Examiners website, each Board must submit a request for us to review a specific cooperative. Each Board which would like to utilize one not already approved must submit a request to the Chief Examiner stating which cooperative it is wanting to use, along with the specific items to be purchased. If a vendor gives you a letter from the Examiners to a specific governmental entity for a non-blanket approved cooperative, you still need to get your own letter from the Examiners. Exemptions, continued: Purchases of unprocessed agricultural products as defined in the Code of Alabama 1975, Section (b) and the food is purchased with a cost of $100,000 or less. (added per Act Number ) Exemptions, continued: Any purchases of products where the price of the products is already regulated and established by state law Purchases made by individual schools of the county or municipal public school systems from moneys other than those raised by taxation or received through appropriations from state or county sources 6
7 Code of Alabama 1975, Section 16-13B-1(c) Joint Purchasing Agreements Applies to the purchase of labor, services, work, or the purchase or lease of materials, equipment, supplies or other personal property Agreement must be entered into by the official actions of the contracting agencies adopted by each of the participating governing bodies Joint Purchasing Agreements These agreements may be entered into between any combination of the governing bodies of two or more BOEs, counties, municipalities or instrumentalities. Code of Alabama 1975, Section 16-13B-1(c) Joint Purchasing Agreements Agreement should set forth the following: What is being purchased Manner for bid advertisement Manner for contract award Payment method by each of the participating contracting agencies Other matters deemed necessary 7
8 Code of Alabama 1975, Section 16-13B-1(c) Joint Purchasing Agreements Agencies may designate Joint Purchasing or Bidding Agent Each agency s share of purchases under the agreement shall be appropriated and paid in the same manner as other agencies expenses Code of Alabama 1975, Section 16-13B-4(a) Advertisement/Notice/Solicitation of Bids Post notice on a bulletin board outside the purchasing office Send notice to vendors, who have requested in writing to be included in a solicitation for bid item; Vendors may be removed from listing after three non-responses. Code of Alabama 1975, Section 16-13B-3 Emergencies The awarding authority must declare in writing the nature of the danger to public health, safety or convenience. Contracts may be let to the extent necessary to meet the emergency without public advertisement. The action and reasons must be immediately made known to the public. Only eliminates advertisement provisions 8
9 Code of Alabama 1975, Section 16-13B-4(b) Sealed Bids Except for bids submitted by a reverse auction procedure, all bids must be sealed when received and must be opened in public at the hour stated in the notice. Code of Alabama 1975, Section 16-13B-4(c) Reverse Auctions Only allowed if Item to be purchased is either not at the time available on the state purchasing program OR Lowest reverse auction price for the item is equal to or less than the price available on the state purchasing program Procedures developed by the Department of Examiners available on website ( Code of Alabama 1975, Section 16-13B-7(a) Awards to lowest responsible bidder should consider the following: Quality Conformity to specifications Purpose/Use Terms of Delivery Transportation/Freight Charges Dates of Delivery 9
10 Code of Alabama 1975, Section 16-13B-7(b) Preference is to be given to commodities produced in AL or sold by AL persons, firms, or corporations if no sacrifice or loss in price or quality. Applies to personal property or contractual services Code of Alabama 1975, Section 16-13B-1(b) Local Preference Zone Legal boundaries or jurisdiction of the awarding authority Boundaries of the county in which the awarding authority is located CBSA (Core Based Statistical Area) in which the awarding authority is located Code of Alabama 1975, Section 16-13B-1(b) Local Preference Zone Must be established prior to the advertising of bids for an item of personal property If no action is taken, local preference zone is deemed to be the same as the legal boundaries or jurisdiction of the awarding authority 10
11 Code of Alabama 1975, Section 16-13B-1(b) Local Preference Zone Bid received from a responsible bidder, having a place of business within the local preference zone Bid is no more than 3 percent greater than the bid of the lowest responsible bidder Awarding authority may contract with the resident responsible bidder. Code of Alabama 1975, Section 16-13B-7(c) Life Cycle Costing May be considered in the determination of the lowest responsible bidder Applies to personal property Total cost of ownership over the expected life of item can be reasonably ascertained from industry recognized/accepted sources Bid invitation must state that life cycle costing may be used and the industry recognized/accepted sources must be identified Procedures established by Department of Examiners available on website ( Code of Alabama 1975, Section 16-13B-7(d) Awarding Authority may reject any bid if: Price is deemed excessive OR Quality of product is inferior. 11
12 Code of Alabama 1975, Section 16-13B-1(b) Only one bid received: Bid may be rejected and the purchase/contract may be negotiated Negotiated price must be lower than the bid price Code of Alabama 1975, Section 16-13B-8(f) Length of contracts Personal property/contractual services -3yrs Lease-purchase contracts for capital improvements and repairs to real property, and all other lease-purchase contracts 10yrs Code of Alabama 1975, Section 16-13B-7(a) Post-award of contract Bidder defaults Provides written notice to awarding authority that they will no longer comply with the contract terms Awarding authority documents that the bidder has defaulted under the terms of the contract Awarding Authority may terminate the award and make award to the second lowest responsible bidder for the remainder of the award period without rebidding if: Under same terms and conditions of the original award AND Same or lower price than the bid originally submitted by the second lowest responsible bidder. 12
13 Code of Alabama 1975, Section 16-13B-4(d) Bid File Retention All original bids and all documents pertaining to the award are to be retained for at least 7 years and are to be open to public inspection Code of Alabama 1975, Section 16-13B-7(e) Documentation of Bid Awarded Record should reflect the successful bid Record should contain reasons the contract was not awarded to the lowest bidder Open to public inspection Code of Alabama 1975, Section 16-13B-1(d) Bid Bond May be required Requirement must be included in the written bid specifications Bid bond requirement must apply to all bidders Bonding must be available for the services, equipment, or materials 13
14 Code of Alabama 1975, Section 16-13B-8 Faithful performance bond May be required In a responsible amount Amount should be specified in the bid advertisement Discussion of the Public Works Law Legal Authority Code et seq. Applies to any governmental board, commission, agency, body, authority, instrumentality, department, or subdivision of the state, its counties and municipalities. 14
15 Legal Authority Applies to any construction, repair, renovation, or maintenance of public buildings, structures, sewers, waterworks, roads, bridges, docks, underpasses, and viaducts as well as any other improvement to be constructed, repaired, renovated, or maintained on public property and to be paid, in whole or part, with public funds or with financing to be retired with public funds in the form of lease payments or otherwise. Expenditure Threshold $50,000 Advertising Requirements Advertise in a newspaper of general circulation in the county - once each week for three consecutive weeks Additional requirement for contracts over $500,000 - once in 3 newspapers of general circulation throughout the state 15
16 Bid Lists All vendors who have requested to bid Bid Bonds/Cashier s Check Must be drawn on an Alabama bank or surety company. At least 5% of bid, not to exceed $10,000 Performance Bonds A Bond (from an Alabama surety co) equal to of 100% of the Contract must be furnished within 15 days of the contract being presented to the bidder for signature 16
17 Payment Bond A bond equal to 50% of the contract plus reasonable estimate of attorney s fees Only One Bid Received May negotiate downward Length of Contract Terms No term limits 17
18 Provision for In County Vendors No provision Provisions for Mistakes by Vendors Clerical or calculation errors - low bidder must provide written notice of withdrawals within 3 days County has 10 days after receipt to reach decision Withdrawing bidder cannot work on project in any way Project Completion Contractor must give notice of project completion by advertising 4 successive weeks in a newspaper of general circulation published in the county 18
19 Provisions for Retainage No more than 5% of estimated work done and value of materials shall be retained up to 50% of work completed No additional retainage withheld after 50% of work completed Provisions for Retainage Cont. Retainage held until project completion and acceptance Professional Services Architects, Engineering, Project Management Services - exempted from the bid process 19
20 Emergencies No advertising required Must still follow other requirements - per Code (e) Sole Source Satisfaction of State Building Commission Recommended by Architect or Engineer Maintain documentation for public inspection Force Account If Agency uses own labor and equipment, materials and supplies fall under regular bid law. 20
21 Questions? 21
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