Discussion of the Differences Public Works Law and Bid Law Presented by Mr. James Hall, Director County Audit Division Examiners of Public Accounts

DISCLAIMER This information was presented during the ACCA Legislative Conference training sessions on December 8, 2016. This presentation represents the audit position of the Department of Examiners of Public Accounts as of that date.

Objectives Legal Authority To what each applies Requirements and Exceptions Miscellaneous items Road Material Annual Bids

Legal Authority

Legal Authority – Bid Law Code 41-16-50 through 41-16-63 (Article 3) Applies to County Commissions, Municipalities, and others governed by Code of Alabama 1975, Section 41-16-50

Legal Authority – Public Works Code 39-1-1 et seq. Applies to any governmental board, commission, agency, body, authority, instrumentality, department, or subdivision of the state, its counties and municipalities.

To What It Applies…

To What It Applies…Bid Law 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

To What It Applies (cont.)… Applies to expenditures for repair parts and repair of heavy duty off-highway construction equipment exceeding $15,000 per incident of repair.

To What It Applies (cont.)… Applies to expenditures for the leasing of heavy duty off-highway construction equipment exceeding $5,000/month per piece of equipment or $15,000/month for all such equipment.

To What it Applies…Public Works 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 – Public Works $50,000

Legal Requirements

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

Length of Contract Terms – Bid Law 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

Length of Contract Terms-Public Works No term limits

Advertising Requirements-Bid Law Post notice on bulletin board outside purchasing department Can do more…but not required!

Advertising Requirements-Pubic Works 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

Sealed Bids and Documentation-Bid Law & Public Works Must be sealed when received 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

Items Exempt from Requirements – Bid Law Code of Alabama 41-16-51 provides for numerous exceptions to bidding requirements.

Items Exempt from Requirements (cont.) Purchases of dirt, sand, or gravel by a county governing body from in-county property owners. Material to be delivered by county employees using county equipment for projects conducted exclusively by county employees.

Professional Services-Public Works Architects, Engineering, Project Management Services - exempted from the bid process

Bid Lists – Bid Law & Public Works Sealed bids shall also be solicited by sending notice 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, the vendor may be removed from the bid listing.

Items to be considered when determining the lowest RESPONSIBLE bidder… Qualities of the goods proposed to be supplied Conformity with specifications Purposes for which required Terms of delivery Transportation charges Dates of delivery

Documentation of Results-Bid Law and Public Works To whom bid was awarded Reasons for not awarding to the lowest bidder Bid file shall be open for public inspection

Emergencies-Bid Law 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. No advertising required Must still follow other bid law requirements - per ruling by the State Supreme Court (General Electric Co vs. City of Mobile 1991)

Emergencies-Public Works No advertising required Must still follow other requirements - per Code 39-2-2(e)

Only One Bid Received-Bid Law & Public Works May accept bid or May reject the bid and negotiate the purchase or contract, provided the negotiated price is lower than the bid price.

Splitting of Contracts-Bid Law 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

Provisions for Mistakes by Vendors-Bid Law There are no provisions in the law for mathematical mistakes by vendors.

Provisions for Mistakes by Vendors-Public Works Law 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

Force Account-Public Works If County uses own labor and equipment, materials and supplies fall under regular bid law.

Road Materials

Questions? Facebook page – Alabama Department of Examiners of Public Accounts Twitter – Follow us @Examiners3 “Fraud Hotline” to report fraud, waste or abuse:                 1-844-56-FRAUD (1-844-563-7283)                 Report.fraud@examiners.alabama.gov