competitive bids

four residents who were on the finance committee, now dismissed by the Board, did get open competitive bids for our landscaping. We received about 6 bids. The lowest bid was about $ 30,000 lower than our existing landscaper. Yet the BOD is not moving or doing anything about it. My question is, if any one knows, would the D&O policy cover the Board if they ignore this $ 30,000 savings. I believe most all policies exclude intentional acts. Wouldn't this be an intentional act on the part of the Board, to ignore this savings? After all they now know that they can save the owners here $ 30,000 per year on our landscaping costs. To be negligent is one thing, to act in a offensive way intentionally is another, isn't it? Any views on this topic?

Hi Carmen:

Brad is correct in saying that you get what you pay for. With that many bids, it would be worthwhile to throw out the highest and lowest bids and see what the rest look like.

Checking the reputation of the companies would be very important, as well as reviewing the bids to make sure that they are all bidding on the same level of service. [When I used to manage a portfolio of HOA's I would send out a request for bid to 4 companies I trusted, and then meet them all at the property to walk through, discuss issues there and answer questions so that they were all bidding on the same service with the same answers to questions.]

Also, check out the size of the companies and see how big the projects are that they've serviced before. I had one company that wanted to get into the HOA landscape business but they had never done anything near the size of the community I was managing; I recommended to the Board that they choose a company with experience similar in size to the Association's.

You might want to go to CAI's website, www.caionline.org, and check out the local chapter's website for vendors in the area; see if any of your bidders are on their list of vendor-members. That should give you a good idea of which companies have done the work similar to what you are asking.

Another issue is the availability of emergency work on nights/weekends when there is a leak, a stuck valve, etc. on an irrigation system. It's a lot easier if the company comes out to take care of it, rather than having a board member looking for where to turn things off.

Best of luck in the process. By the way, what is the range of bids? If you're looking at $30k vs. $60k, that's a lot different than $300k vs. $330k.

J. Patrick Moore, CMCA

We compared apples to apples. The number of cuttings will be the same. we are now paying 94,000. Out of six bids, all of which was lower than $94,000, the lowest was $ 59,000. Same edgings. In fact we did interview their references and found them positive. The current landscaper got the account with no bidding and no reference checks. so we feel that it will be win/win by going to the lower cost landscaper. Ther is a clause in the contract to terminate with 30 days notice.

Carmen,

If the amount of service is the same and the references and things check out, you should go with a lower bidder. As long as the new contract also has a termination provision, you can always go back and get new bids in 9-12 months if the new landscaper can't cut it, (pardon the pun!).

Good fiscal sense would dictate that we should go with the lowest responsible bidder, right? But if the BOD is stubborn and wants to stay with the current higher priced landscaper, what can we do about it legally? Any one know?

There are two problems. 1 Apathy 2. No one wants the job as trustee. The five we have on the Board now are there by default. No opposition. there were five vacancies when the Bldr. turned over the Board to us residents and only five filed as a candidate, so there was no election. That is the problem. How do you deal with that?

Carmen,

Sadly, I agree with the other post here… I’ve learned that it is very difficult to get past community apathy as well.

We are an HOA community that has been around for over two decades. The current President has held this position for 21 years (I’m not joking, I’m very serious). I am the newer member of the BOD with others serving closer to ten or more years. So, what is my point in telling you all of this?

We had a landscaping company for approx. 18 years; it is my understanding in conversations with other members who have been here for a while, that for ten years of this time, the landscaping contractor was “supervised” by the Presidents son. In 2005 we were starting to have major problems with weed growth in the community, and to make a long story short. The BOD made a decision as to not renew that particular landscapers contract for the coming year.

Some options were tossed around in our monthly board meetings as to how we should best move forward. The President said that his son would be interested in doing the work, and if the BOD would give him a six-month “verbal” contract. This would be time for him to prove himself. The BOD agreed to this, thinking, if his son had been the supervisor for the past several years, who better than to put us back on the correct path, little did I know back then, and there were problems from the beginning.

Once the decision was made, I began to feel uneasy moving forward. I had believed things would be handled in a proper, ethical and business like manner. The more I voiced my opinion, the more opposition I received from the other board members. The following outline is meant to touch upon some of the problems that began to surface shortly after the board’s decision, and then to outline the current status.

1. The son who’s now providing landscaping services has no license or landscaping business. It is my understanding that he has no intentions of obtaining a business license, and in fact the board of directors voted to buy the landscaping equipment for him to get started (As stated at a board meeting by the President, “The equipment is a signing bonus”).

2. Has no insurance, workers comp or any type of liability coverage, so that by proxy is provided by the association now, which makes him an employee of the association.

3. Has one employee working for him (who is a great hard worker to his credit but there is 7 acres here). Yet bills the association for a greater amount than any other landscape company in the history of the community.

4. Has never produced a bid or contract in writing, which outlines any objectives or commitment or means to hold him accountable.

5. Does not address the BOD when buying plants or shrubs and decides on his own what they will be, and where they will go and how much to spend.

6. Has not produced (when asked by members of BOD) any receipts for plants or supplies.

7. Has now worked without a contract for a year, and to the best of my knowledge this has not been addressed at any meetings of the BOD.

8. Before the six-month trial period ended. I produced bids from landscaping companies which have been in business for 25-30 years, each having major commercial contracts on their resume. I did a walk down of the community with each landscape contractor on different days. They came back with bids and almost identical numbers, which were 10,000 dollars less than what we are paying to a non licensed, uninsured person who we now understand is not even close to being a landscape professional. When I presented the bids to the other board members. The president said, “the bids are low ball, my son is staying, he’s earned it.” That was over 8 months ago, and the bids have been taken off the table completely.

For those of you who are experienced in HOA law, as well as the importance of community service, I will answer your question before you ask. No, there was no disclosure. The community members were not allowed to vote as to if this is ethical, or for that matter, a reasonable thing to do. To date, the board has never addressed this as a conflict of interest. Interestingly enough, the president selected the inspector of election this year as well. I’ll save that for another day.

If you’ve made it this far, thank you for reading. My real point in all of this is to assure you that you are not alone, and although I am new here to this site. In what I’ve read so far, there are some great people here with a lot of knowledge and background regarding HOA’s. In my 4 years, 3 as a V.P. and now as a Member At Large. I have learned many things as well…

The direction and advice in regard to your post is very accurate, D&O’s will cover the board’s decision making, however. Most board members understand very well if they are operating on an ethical and responsible level, and to that end, so do the keepers of the policy. They may foot the bill, so to speak today; however, with more and more laws changing to protect the homeowners in HOA’s across the nation. I would imagine that somewhere in the near future, there would be investigations of BOD’s by the policy holders to protect themselves… “The times, they are a changing.”

My problems seem pale compared to Dennis' s problems. The HOA Boards have too much power. No checks and balances If you sue them you are only suing yourself as your assessment may rise due to large lagal fees. But Dennis you can try this: Your BOD has D&O policy I assume. Now they know that they can get their landscaping $ 10,000 cheaper. If they ignore these bids is this an intentional act ? Many policies EXCLUDE intentional acts. So if they are sued any legal defense and awards may have to come out of their pockets. Have the Insurance checked out or tell your BOD, they may think twice after they learn of this possibility. They may reconsider in light of this information.