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NO BIDDING PROCESS HERE AT ANASAZI...????
There are 10 Outside Contractors that Anasazi Hires yearly at a cost of $700,000 yet competitive bids have never been required here
At most HOAs, bidding out work is an on-the-fly type process. It's not uniform, and sometimes the process works better than at other times. Why does that matter? Because when your bidding process doesn't work well, your HOA is probably losing money.
Instead of an unplanned process, your board should have guidelines covering when it will request bids for work and how the bids will be solicited and reviewed. Here, we show you how.
Check Your Documents, State Laws
Your state or your governing documents may have provisions covering when your HOA must request bids on projects. Be sure to include any such requirements in your bidding guidelines. "In Florida, the laws generally require condominium associations to obtain bids if the project will cost more than 5 percent of the annual budget," says Lisa A. Magill, a shareholder and association attorney at Becker & Poliakoff PA in Fort Lauderdale, Fla. "That threshold is 10 percent for homeowners associations." Of course, she adds, those provisions shouldn't discourage your board from obtaining bids for services excluded from the statute or below the threshold.
Start by including in your guidelines a timeline for how often you'll bid out work. "I ask my association clients: 'Does your association rebid the work of existing vendors?'" explains James R. McCormick Jr., a partner at Peters & Freedman LLP in Encinitas, Calif., who represents associations. "We have some associations that do that every three or four years. That helps to ensure you're getting the best value and price. And if you have a vender with whom you're very happy, keep that vendor, but also keep it on its toes by asking it to submit a bid as part of a review process every few years."
Also address the required qualifications of potential bidders. "I typically recommend at least three bids," explains Kristen L. Rosenbeck, a partner at the Mulcahy Law Firm PC in Phoenix, which represents associations.
"I also want to see licensed and bonded contractors to make sure the HOA's contractors are qualified."
Also include guidance on how you'll deal with potential conflicts, which may be governed by your state's law.
"In Arizona, there's a statute stating that if there's a conflict between the bidder and someone on the board, it has to be disclosed and discussed before the vote is taken," says Rosenbeck.
"Board members must disclose that there are conflicts. The conflicted board member can vote, but I recommend he recuse himself from the vote."
Abbate concurs.
"Common sense dictates that the board avoids the appearance of impropriety whenever a prospective contractor has a family or financial tie with a board member," he says. "In that case, of course, the board member should abstain from the decision to hire the contractor, and soliciting bids will help establish that the remaining board members made their decision on the basis of legitimate considerations, as opposed to self-interest."
"If your HOA manager is selecting which vendors are permitted to bid, be sure to ask whether there's any relationship—legal, financial, or otherwise—between the manager or management company and the vendors," advises Magill.
"Sometimes management companies have made arrangements for special pricing or services from vendors since they have tremendous buying power.
In other cases, a manager may solicit bids from poor-quality vendors to make the vendor with whom the manager has an advantageous relationship stand out from the competition."
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