franczek.com Copyright © 2011, Franczek Radelet P.C. All Rights Reserved. Disclaimer: Attorney Advertising. This presentation is a publication of Franczek Radelet P.C. This presentation is intended for general informational purposes only and should not be construed as legal advice. Avoid Surprises: Comply with Purchasing Mandates – Part I Illinois Association of School Business Officials 60 th Annual Conference May 19, 2010 Respicio F. VazquezScott R. Metcalf

franczek.com 2 Overview of the Law: Bidding of Contracts  105 ILCS 5/ –All contracts over $25,000 or lower amount as established by board policy –Awarded to the lowest responsible bidder –After due advertisement & public bid opening

franczek.com 3 Overview of the Law – Criminal Statutes  Disclosing information  Interfering with bid submission  Kickbacks  Change Orders  Stringing bids

franczek.com 4 Overview of the Law: Posting and Reporting of Contracts  105 ILCS 5/ –Requires school districts to post on their websites contracts over $25,000 and all collective bargaining agreements –Requires all school districts to report these contracts in the Annual Statement of Affairs

franczek.com 5 Hypothetical #1 - Bidding A School District with two schools has construction projects to be completed over the summer at each school. Each project is estimated to cost $45,000.  Is the School District required to bid the project?  The School District decides to bid the projects. It awards the contract to Clueless Contractors for a price of $110,000. In the middle of the project Clueless Contractors realizes that additional work costing $15,000 that was not contemplated in the original contract is necessary. Can the School District have Clueless take on that work as part of the original contract or should it be bid?  If the contract sum is $600,000, and the change order is for $55,000, is bidding of the change order required?

franczek.com 6 Hypothetical #2 – The RFP A School District wishes to install new athletic fields. Through recommendations, it understands that Tip Top Turf is the best turf on the market, although there are other competitors.  Can the School District prepare a bid document that requires the contractor to use Tip Top Turf?  The School District prepares its bid documents. The bid documents contain the award tabulation below. Is this permissible? –The award shall be determined based on the following weighted scale: 20% Referrals 20% Past work for the School District 20% Proximity of company to School District 20% Quality of product 20% Price

franczek.com 7 Hypothetical #3 – Answering Questions A School District puts out a bid that includes the following language: There will be a pre-bid conference at the School District’s administrative offices on February 15, 2011 for the purpose of answering any questions that bidders may have regarding the specifications. At the pre-bid conference, one bidder stands up and says that the request does not give anyone enough time to properly prepare a bid. Several other bidders chime in that they need more time to prepare their bids too. One bidder doesn’t say anything. All but one of the bidders then asks that the deadline be extended by 2 weeks.  Can the deadline be extended?  Who has to be notified - only those at the pre-bid conference or everyone who picked up a bid package?

franczek.com 8 Hypothetical #4 – Awarding Contracts The School District accepts bids for reinstalling and maintaining the boilers in the junior high school. Once the bids are opened and tabulated, the lowest bidder for the project comes in at $416,000. The next lowest bidder comes in at $420,000. The Board decides to award the contract to the second lowest bidder because the second lowest bidder is a local firm that can respond more quickly if anything goes wrong with the boilers.  Can the lowest bidder win a lawsuit against the School District for not awarding it the contract?  If so, what is the School District’s potential liability?

franczek.com 9 Hypothetical #5 – Awarding Contracts The School District solicits bids for custodial services. The lowest bidder is also the current contractor. Unfortunately, the School District is very dissatisfied with the current contractor’s work and doesn’t want to sign another contract with that company.  Can the School District award the contract to the second lowest bidder?  If so, what evidence will the School District need to support its decision to award the contract to the second lowest bidder?

franczek.com 10 Hypothetical #6 – Awarding Contracts The School District solicits bids for transportation services. The lowest bidder is also the bidder the District finds most responsible. Unfortunately, the lowest responsible bidder included a bid bond of only 5% of the contract amount instead of the 10% bid bond that was required.  Can the District accept the bid anyway?  What if the bidder had submitted a bid bond for the correct amount, but forgot to include the biographies of its executive officers as required by the RFP?  If the contract is for special education transportation services, can the contract be awarded to a contractor that did not include the 10% bid bond?

franczek.com 11 Hypothetical #7 – Awarding Contracts For a construction bid, a school district has included its form contract that it intends to use for the project. The contract includes a criminal background check requirement that a number of bidders have complained about.  Can the District remove the criminal background check requirement?

franczek.com 12 Hypothetical #8 – Posting & Reporting The School District is preparing to solicit bids for transportation services. The business manager knows that the annual report to ISBE must contain information on the value of contracts awarded to minority, woman, and disabled person owned businesses.  Should this information be requested from all bidders?

franczek.com 13 Hypothetical #9 – Posting & Reporting The boundaries of the School District are the same as the municipal boundaries. The bus company that serves the School District has a garage in the City where it stores and services its buses. The bus company’s mailing address and main office though are in another municipality 20 miles away.  Should the bus company be identified as a local business in the District’s annual report?

franczek.com 14 Hypothetical #10 – Posting & Reporting Two students from the School District have been placed in residential education facilities. One was placed in the facility by a court, and the District didn’t know about the placement until it started receiving invoices from the facility. The other student was placed in the facility with the knowledge of the District pursuant to the terms of the standard form agreement provided by ISBE. Both placements result in the District paying invoices for the educational services provided to the students.  Which of these placements results in a “contract”?

franczek.com 15 Questions & Comments Respicio F. Vazquez Scott R. Metcalf