Bill Would Subject School Construction Projects to Competitive Bidding

rbrooks.jpgWisconsin statutes require certain local units of government (counties, cities, villages, and towns) to engage in competitive bidding when the estimated cost of a public works or construction project exceeds a specified dollar amount.  The use of the competitive bidding process for such projects by school boards, however, is a local decision.

Now, a newly-introduced bill—Assembly Bill 307, authored by state Rep. Robert Brooks (R-Saukville, pictured) and state Sen. Duey Stroebel (R-Saukville)—would mandate that all school boards must comply with state competitive bidding requirements where the estimated cost of a public works project  exceeds $75,000.

Under AB 307, school boards would be required to solicit sealed, competitive bids and award such public works contracts to the lowest responsible bidder. In addition, before entering into a contract for a project with an estimated cost greater than $5,000 but less than $75,000, a school board would have to give a Class I notice, under Chapter 985, Stats., of the proposed contract or contract with a person qualified as a bidder under the competitive bidding statute (Wis. Stats. section 66.0901).

Currently, with three exceptions (described below), there is no legal requirement that school contracts be awarded to the lowest bidder. Rather, a school board has considerable discretion to determine the best bid. A board need not grant the contract to the lowest bidder, so long as the award is reasonable and made in good faith.

The extent of the discretion granted to a governing body to establish a bidding process was discussed in a 1995 court of appeals decision, Power Systems Analysis v. City of Bloomer.  That court decision held that unless a statute specifically provides otherwise, governing bodies, including school boards, have the power to exercise discretion in the bidding process.  Having said that, the court went on to state that once such a process is created, the governing body has to follow that process until a future policy or procedure is adopted.  Such an adoption however, would not cancel out the present bids under the prior process.

Local board policy may state, for example, that the district will bid contracts over a specific dollar amount and may state how the bids are to be publicized.  If the board adopts such policy language, then the process for bids on those contracts is subject to the procedural requirements of the state bidding law (Wis. Stats. section 66.0901).   However, the district is not required by law to competitively bid projects or award contracts to the lowest responsible bidder under that statute.

Many school boards use the competitive bidding process as a matter of local policy.  And for certain purchases—energy savings contracts (under Wis. Stats. section 66.0133), employee health care insurance (under Wis. Stats. section 120.12(24)) and food service contracts (if the district participates in the National School Lunch Program)—bidding is statutorily required. Use of competitive bidding in all other areas, however, remains at the board’s discretion.

Counties, cities, villages, and towns must currently follow statutory competitive bidding requirements when the estimated cost of a public works project exceeds $25,000. (AB 307 would increase this threshold to $75,000.)  Current law also provides that counties, cities, villages, and towns may not avoid bid law requirements by serving as a general contractor and negotiating with subcontractors, public or private, to perform the public work.  Additionally, these local governmental units cannot evade statutory bid requirements by dividing a project into small segments that fall under the statutory thresholds.

If AB 307 becomes law, schools would also be subject to these restrictions.  The bill has been referred to the Assembly Local Government Committee chaired by Rep. Ed Brooks (R-Reedsburg).