Bid question

I’m in Sacramento and we live in a community of 307 townhomes. We recently were assigned a new PM who immediately began containing bids from vendors he worked with. No one on the board requested he do this. The vendors we currently use are doing a great job for many years. I told the PM this but they ignored me and went out an got a quote for work. I let them know to let our current vendor know if they could meet the bid they received to be fair. They refused and so I went ahead and did it and they were able to offer us a much lower competing price and wanted an opportunity to talk with all Board members as to why we want to cancel of them. I told the PM and now he is saying that doing what I did is illegal because the bid was confidential however it was not a sealed bid and he didn’t get any other bids for the same work. He only got the one bid from someone he had worked with before in another association he works at. What do I tell him as he is insisting that I was wrong and seems upset that my actions led to him not getting the vendor he had work since our current vendor now wants to give us a lower price so they can maintain our business.

Tim, had a very good suggestion. The property management company probably has their list of vendors, but the Board has the final say as to who they hire for a particular project. The property management company works for the Board.

What Tim said. If this is a management company and the property manager has a supervisor, be sure to express your concern to him or her as well. If the property manager has done a good job up to this point, I'd like him know that if he pulls such a stunt again, you will ask to be reassigned - or consider dropping the company altogether.

When I was on the board, vendors would fax bids to our property manager, but we soon learned the fax machine was in the management companys' maintenance department (which also bid for various projects). Guess who always came in with a lower bid? Ironically, our property manager found out about this, told our president, and after a discussion, we changed the procedure so the bids would be emailed directly to the property manager and then forwarded to the board. We still reserved the right to ask the property manager to obtain more bids or bids from a company we'd heard provided quality work.

Even if you keep your PM, it's time to review your contract with them. Some include clauses that, on termination of the management agreement for any reason, allow them to pay off any vendor they brought in.

Got burned once that way. Painting punch list never addressed. Crappy painter. Crappy MC.

Janet,
I would say the Net result was a good one. Your pricing has been lowered. I agree with all the others that this PM going out for bids that the board did not request is very questionable. That being said when ever you ask your PMC to go out for bids on any project who do they seek out? The easy answer is vendors they know and trust. I have always been someone who looks at bids very closely and challenge when needed. The PM just needs a Tune Up and the whole board needs to do it not just 1/5 of the board.

It is a lot of work having the PM go out and get bids for every vendor every year. I usually like to do it every couple of years or when an issue arises from one vendor. Now you know that the bids typically always go to the PM who then puts them together for the board in the meeting notes. What would keep a PM from saying hey Joe you are a few thousand high on this bid my friend and get him to shave his bid to meet or beat others?

You have to trust your PM is working for the HOA and the board and not for his friends. Trust but verify.

I'd say chances are pretty good that your PM took your current vendor contract and handed it to his guy . . . and what do ya know?!?! . . . his guy's bid came in lower than your current contract. Now that's unethical. But without solid proof, I wouldn't make that claim to your PM. Also, chances are that your new PM had nothing but good intentions, but the other types of responses you say he's had make me think there's not a great chance of that.

That said, it also sounds like that's sort of what you did as well . . . or at least took the new vendor pricing to your current vendor, and they agreed to do it for the same/similar price. That's not entirely great either, but you were kind of forced into that situation to try and save the relationship with your current vendor and you MC didn't give you much other choice. However things could/should have been discussed among the Board before any of these things were done (by PM or by you).

All that said, as others have mentioned . . . how your new PM did things is not the way to handle.

The way it should work in my opinion:

Someone suggests it's time to have a certain contract put out for bid . . . could suggested by the Board, MC, a homeowner, or perhaps a vendor off the street wanting to toss you a proposal. It's discussed at Board/MC level; the BOARD makes the decision to get bids; the BOARD agrees to the necessary scope of work; and then the PM goes out and gets bids for that scope of work (from his known vendors, from teh current vendor, and from as many other vendors as others want to go out and find . . . keep in mind all proposals received will have to be reviewed, perhaps references contacted). The scope of work is important to ensure all vendors are bidding to the same work and proposals that come in are comparable. Proposals would be received and presented to the Board for review. Board will decide how bids should be received and by whom. If you have concerns over the PM receiving and perhaps being sneaky, then have them sent somewhere else and wait to open them all until the Board is all together.

I thought it would be good to show the cover letter we used to send the RFP to the current contractor.

See attached

Janet,

Your board president needs to stop this activity dead in its tracks and establish expectations on the PM. Releasing bids is not illegal. However, your board shouldn't engage with any vendors or bidders if you've not authorized it. There's no reason to.

In fact, it's probably ethical to report to your vendors that the property manager solicited bids without board authorization (and hope that's actually true). Great vendor relationships must be managed.

Above all, get the PM aligned with their role in your community.

Make that finders or originator fees. Sounds so much better...........LOL

Sorry Tons of Money.

When we need a project done, we will ask our PM for recommendations/suggestions based on their experience but we also request bids from others. Ironically we have never used a company suggested by our PM but some came close to winning.

That said, we have few projects to bid on. Probably average only one a year or less. Last project was replace our retention pond sprinkler at about $3K.

Interesting story. One company I asked to quote came out and when they realized we were an HOA they declined to bid saying HOA's are a PIA to deal with. They said they are always nickel and diming you and want multi quotes and if the BOD changes, we are back a square one. Thanks, but no thanks. I think many vendors have that attitude/experience.

John,
I have never had the experience you are mentioning but I have no doubt some may say that after a bad time with an HOA.

As someone who has been in business and around job sites for 39 years before retiring. I would never have done that walk away from a HOA. Since being on boards and seeing the contractors that work on HOAs I do feel that many are not the Top Shelf contractors. I have really seen poor quality of jobs done before I got on boards and watch them closer. I have said many times a Bad contractor must Love HOAs. You have a PM who is getting the bids and may or may not know what questions to ask or what to avoid in contractors. I can see a bad one a mile away. They also in many cases have boards that are spending other peoples money and who really don't care enough. Then finally how many board members and PMs actually check to make sure they are getting what they are paying for?