BIDS from landscapers

Bids were submitted for a landscape contract. One vendor asked a board member if his was the lowest bid. This board member told him he was out bid by X amount of dollars and then the board member accepted a new bid from this landscaper that was the lowest. Is this ethical on the side of the board member? Is it common practice? The board member is friends with the landscaper but there is no self interest involved

Lowest bids do not always win. It's quality over quantity in some cases. It's important to make sure the contractor is going to do what is needed and not knock off services to save money. I've gone through hiring new landscapers. They are not created equal nor should be based on price. I generally gave a range of what we are looking for to bidders. Which was 2100 to 2500 a month. Also included when the contract started and what we needed done.

I don't see anything wrong with the board member telling his friend this information as long as that friend understands that lowest bid does not win. I'd also worry with low bidders wanting to then nickel and dime the contract to death raising costs in the end. Things like you want us to cut the bushes or blow leaves from certain areas? We will tack on an extra $100 for that. Watch out for that kind of behavior from contractors and don't fall for it unless it is reasonable and above normal request agreed upon.

Boy I do. It creates a disadvantage to other contractors. Additionally, bids may include non-disclosure clauses.

Granted, the lowest bid doesn't always win but it often wins and disclosing any bid information before the contract is awarded is, at the least, unethical. If it were the federal government, and perhaps some State governments, it not only would be unethical but could be criminal under the Economic Espionage Act of 1996(yep, it's an extreme but good to illustrate a point).

Now if it was made known that all bids would be published to all other vendors, that would be a different issue.

Let's not make a "federal case" out of this... One board member's friend bidding doesn't mean much. I am of the opinion of the situation being "Hey you have a lawncare company and we are taking bids on the contract in our HOA. Would you like to bid? Here is the price range we are looking for and the terms. You think you can beat it then offer that in your bid. I can't guarantee you get my vote, but you will be considered with the best 3 bidders for the contract".

Any contractor knows that lowest bid does not win and even having an "in" doesn't make it happen. No matter how much "inside" information one may get. There are still other board members and members to weigh in on the vote. One board member vote and one that they may even excuse themselves from doesn't add up to much.

The proper bidding process eliminates the "friend in" deal. We always took bids from anyone even if we knew them, related to them, or even was a member. We were up front about the 3 bid process and no guarantees made. The only advantage they truly got was knowing there was a contract open to be bid on and knowing what we paid out. If they were a member, they should already have access to knowing that information.

I got rid of a lawncare person in our HOA that lived in our HOA and mowed our lawns for 5 years. He was the former president's drug supplier and was a HOA member. Everyone knew the guy. There was just so many complaints whispered in my ear that I made his contract open with him getting first bid as the incumbent. So that can prove that even someone with the contract, a member, friends of the board (including myself), and lowest bidder can lose the bid.

Thank you for the welcome! this forum has been a wealth of information! and thank you for the responses to my post.
I am a new board member. We are currently a board of 4 members. The 5th member just recently resigned upon sale of his property. (which creates a huge problem!)
The contract has not been awarded. It will be voted on in a few days. We got 4 bids and one of the bids was $2,000 below other bids and came with fantastic glowing reviews and recommendations. Clearly looked like a winner, however the current holder of the contract asked a board member what was the lowest bid. The Board member told him and then this landscaper re submitted his bid to the board member (not the management company!) undercutting the other by $50 particular bidder.
We are a small HOA (30 units) with a property management company. I am sure it was not determined beforehand that is was a blind or open bid but the property management company sent out the request for bids. The member that disclosed the lower bid feels that he did no wrong. As a new board member, I was not sure if this was a common practice. Does not seem ethical to me on the part of the bidder or the board member.

Kudos for being willing to serve, MjDi. Here is Eric's citation again, "From the CAI's Model Code of Ethics for Community Association Board Members:
'Board members should not: Reveal confidential information provided by contractors or share information with those bidding for association contracts unless specifically authorized by the board.'"

Your fellow director acted unethically at best. So, did the vendor by going around your PM. For that reason alone, I'd not want this landscaper as a vendor at my HIA. Too much sleaze factor for my taste.

The CAI is the Community Association Institute and they offer all kinds of advice to HOA members. Kinda pricey to join, but some find their membership in it valuable.

If that is the way your Association runs, then that is the way it works for your Association.

If this is done after the receipt of bids are closed, then no, it would not be unethical. However, if the bids are open for inspection prior to the deadline to file bids, then yes, in my opinion, this would be unethical. However, if that is the way your Association runs your bidding process, so be it.

Our State Statutes allows us to withhold contracts that are under negotiation and that is what we have chosen to do. The names of all bidders are part of the open meeting minutes and who the contract was awarded to is identified, but the bid amounts themselves are only part of the executive session minutes. Once the contract is awarded, the contract itself is part of the records that the member has access to.

MJ

Asking for and evaluating bids does mean the lowest is the one that must be accepted. You said the best quality was $2,000 higher now an inferior bid has come in at $500 less. The question is the $500 lower bid (inside information or not) the best or only the lowest?

By your description it is only the lowest bid, not the best.

Fellow BOD members. Yes we have a bid $500 less then the one we liked. Remember we rejected this original bid as it was not a top quality presention/bid. Are we now willing to accept it as it is simply cheaper?

The bitterness of poor quality remains long after the sweetness of low price is forgotten” – Benjamin Franklin

Hi MjD1:

We would like to welcome to a new member to our discussion group!!!

In the past after working in Construction type business and helping prepare multi-million dollar bids. Generally the best method in a bid process is to have the various companies submit “sealed bids” by X date to the Corporation (which BTW most associations are “Non Profit Corporations). The reason for this process is to remove the underhanded actions you described in your Original Post where someone can give information to a friend.

BTW ... The Board does not need to accept the lowest bid. The lowest is not necessarily the BEST after the board checks the reviews, quality of work, insurance specifications, etc.

Also, best tip is to ask for references and go see the vendor's work at other sites if possible. Looking at how the landscaping is being handled on other commercial properties (preferably with the same size as yours) will speak volumes as to the skill and work ethic of the vendor.

OR go ahead and sign a multi-year contract with a termination clause that can be utilized by the contractor or Association with x days notice after the first year.

Our landscape contract is in the 70K range and I've only been an advocate of sealed bids because our PM has a lot of old relationships with some of the contractors, which is to be expected. I have seen our old Board and PM play the contracts against each other, which IMO is not short of sleazy. Maybe that's big business, but I don't like it. I know for a fact that the pm and board have played the vendors, gone back and beat them up on price, saying that they got another lower bid when they had no intention of going with the low bidder. There is no free lunch and I've seen where the contractor has dropped his price and then came back in order to try to make up it up on other items. Personally, I like the sealed bids.

Say, Larry, your opinion that MjD1's HOA is a "podunk" operation, it means a lot to him and his follow homeowners. How 'bout a little respect towards someone who's trying to learn? MjD1's HOA's size & complexity probably means it has a smallish budget and the board no doubt needs to carefully watch expenditures.

And some HOAs have fairly substantial contracts. Our custodial contract, for instance, was $200,000 a year for our twin 25 story high-rises with 3 levels of underground parking and lots of interior & exterior common area amenities. We just approved a new contract that's saving us $24,000 annually. Our PM solicits the bids; our board approves the contracts. And you bet our HOA attorney is reviewing it right now to make sure our HOA is protected.

My point, Larry, is that big & complex or small & with few components or amenities, HOA boards of directors--volunteers with no fancy salaries or perks--need to do their best for their fellow homeowners.

Regardless of whether this practice is legal or ethical, if your association get the reputation for doing this you may find many contractors reluctant or outright unwilling to submit bids. It costs a company time and effort to prepare a bid. They are entitled to be treated fairly.

It's not illegal but it's very very bad governing policy.

A lower-bidder gives a good price, in good-faith, to serve your community. Everyone in the transaction feels a bit of a win-win.

A higher-bidder, getting a second chance, is simply getting the work if they can undercut the lower bidder. You don't achieve the win-win.

Your board member undercut an honest bidding process and his friend's bid should be rejected outright or the other vendors be allowed to counter-offer. You're better off not getting multiple bids if the end result is a preferred vendor is given advantageous information.