Legislation Would Allow Award to Other Than Low Bidder

A bill under consideration in the Washington State Legislature would constitute a major shift in philosophy of public bidding by allowing award of a contract to any responsible bidder whose bid was within five percent of the lowest responsive bid.

There are two primary things that House Bill 2868, which applies only to school districts, would accomplish:

1. Award to Other Than the Low Bidder:  HB 2868 would, for both the purchase of "furniture, equipment or supplies" and for "every building, improvement, repair or other public works project" allow a contract to be awarded to any responsible bidder "submitting a bid within five percent of the lowest responsive bid."  In the bill, responsible bidder for purchases is defined in RCW 43.19.1911 (which currently only applies to state agencies), and responsible bidder for public works is defined in RCW 39.04.350.  The bill offers no guidelines as to how a school district would make the decision to award to other than the low bidder.  As long as the bid was within 5% of the lowest responsive bid, the school district could award the contract.  Public bidding has historically required public agencies to award to the responsible bidder with the lowest responsive bid.  While this bill would provide flexibility for school districts in awarding contracts, it is flexibility without controls that could open up districts to charges of favoritism and even potential fraud.
   
   
2. Bid Limit Increase to $100,000:  HB 2868 would also increase the bid limit for school districts for "building, improvement, repair or other public works projects" from the current threshold of $40,000 to $100,000, meaning that for any project less than $100,000, the school district could perform the work with its own forces without giving any public notice.  

2009 Bid Limit Legislation:  In 2009, the Legislature approved ESHB 1847 that increased the bid limits for a variety of different types of government agencies.  School districts were not included in that legislation.  Under ESHB 1847, there were different bid limit thresholds established for public works projects based on whether a single trade or multiple trades were involved in the project.  The highest bid limit under current law for any type of agency is for first class cities and for counties with a purchasing department and a population greater than 400,000.  The bid limit for these cities and counties for multiple trade projects is $90,000.

By comparison, HB 2868 would establish $100,000 as the bid limit for all school districts, without regard to whether the project was a single or multiple trade project.

Weighing the Pros and Cons:  Thus, HB 2868 would provide school districts with significant flexibility in the award of contracts and the highest bid threshold for any type of public agency in the State of Washington.  The Legislature should carefully evaluate whether all school districts, regardless of size, have the internal procedures and controls in place to appropriately utilize these tools, and whether these changes are in the public's best interests.

Public Hearing:  There will be a public hearing on HB 2868 on Friday, January 29, 2010 before the House Committee on State Government and Tribal Affairs.  The hearing is scheduled for 1:30 p.m.