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Formal Competitive Bidding When/When not needed

Started by SusanO3 • 15 replies • 189 views

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SusanO3 (California)
Posts: 163
Posted:
95 townhomes, Northern Ca, Annual Dues Collected $432,060. We just painted all our stucco and wood trim, cost over $400,000 and we put out SOW and got 5 competitive bids etc. Right and proper way to approach a costly project.
We now have to repair and paint our perimeter walls, got a bid from the company that just painted stucco. Cost for wall repair and paint is $22,000. I'm thinking we don't need to put out to competitive bidding. What would you all say? Checked our documents and no guidelines or rules in them for when to formally competitively bid. Thoughts from others? Sue
TerriS6 (California)
Posts: 3,284
Posted:
When a good contractor has done a lot of preparation and work for you, it doesn’t make sense to go through a formal bidding process for a very small job.
TimB4 (Tennessee)
Posts: 21,062
Posted:
Regardless of how good your contractor is, you can not be sure you are getting a fair market price for the work unless you obtain bids.

Obtaining bids does not mean you have to take the lowest one.

Obtaining bids simply gives you the idea of what the market price is.

As an example: in my past Association, we were very happy with our trash/recycling service. Renewed the contract for years without question. I thought it would be prudent to obtain bids so wrote a request for proposal and identified potential contractors. Because I had already done the hard work, when I presented the idea of obtaining bids to the board, they said go ahead. The bids showed we were paying $10,000 above the average market price. We changed contractors and still received good service.
TerriS6 (California)
Posts: 3,284
Posted:
Quote:
Posted By TimB4 on 01/11/2025 4:39 AM
Regardless of how good your contractor is, you can not be sure you are getting a fair market price for the work unless you obtain bids.

Obtaining bids does not mean you have to take the lowest one.

Obtaining bids simply gives you the idea of what the market price is.

As an example: in my past Association, we were very happy with our trash/recycling service. Renewed the contract for years without question. I thought it would be prudent to obtain bids so wrote a request for proposal and identified potential contractors. Because I had already done the hard work, when I presented the idea of obtaining bids to the board, they said go ahead. The bids showed we were paying $10,000 above the average market price. We changed contractors and still received good service.

I said when you have a small job. A trash collection contract is not a small job. When you have a good vendor who has done a big job at a fair price, it makes no sense to get formal bids for a related very small job. You already have confidence how the project will turn out. It's more valuable to the association to treat good vendors well.
SheliaH (Indiana)
Posts: 6,964
Posted:
I agree with Terri that bids for small jobs might not be necessary IF you have a vendor who's already demonstrated good quality of work at competitive prices. It depends on what you define as small. In this case that $432,060 has to cover expenses for the year, so $22k isn't necessarily a small thing. You might begin with establishing a dollar amount that would mandate 3 bids.

If tbe project will affect the entire community, you should get at least 3 bids and you have five, so that's a good start. The rest is a matter of common sense. When you have something major for your home, don't you ask for references and check them? Do you insist on written contracts and READ them before signing, asking about anything you don't understand? Do you check if the vendor is licensed and bonded, if appropriate? Do you check with the BBB or consumer protection division in your state to see if there have veen complaints and how they were handled?

If you do all that for your own home, you can extrapolate that to the community. You will heed to add a few things since we're talking about a large project, but you can consult your association insurance and attorney for that.
If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
ElleN (Idaho)
Posts: 1,338
Posted:
Quote:
Posted By SusanO3 on 01/10/2025 4:03 PM
Checked our documents and no guidelines or rules in them for when to formally competitively bid.
... and I checked California statues (probably just like you). My conclusion: Whether to get more bids here is a judgment call.

If an owner questions not getting multiple bids, I would just be prepared to give a reasoned response. As others pointed out, decent reasons do exist.

I will toss in that you all are volunteers. Under the specifics here, going easy on yourselves (and so not obtaining more bids) is understandable (to me anyway).
TimB4 (Tennessee)
Posts: 21,062
Posted:
Quote:
Posted By TerriS6 on 01/11/2025 5:28 AM
Posted By TimB4 on 01/11/2025 4:39 AM
Regardless of how good your contractor is, you can not be sure you are getting a fair market price for the work unless you obtain bids.


I said when you have a small job. A trash collection contract is not a small job.

I'm not sure that $ 22,000 would be considered a small job either.
TerriS6 (California)
Posts: 3,284
Posted:
If .06% is not small, what is?
TerriS6 (California)
Posts: 3,284
Posted:
Quote:
Posted By ElleN on 01/11/2025 8:24 AM
Posted By SusanO3 on 01/10/2025 4:03 PM
Checked our documents and no guidelines or rules in them for when to formally competitively bid.
...

I will toss in that you all are volunteers. Under the specifics here, going easy on yourselves (and so not obtaining more bids) is understandable (to me anyway).

It's called being smart. Protect your association by protecting your valued vendors while keeping an eye on the money.
ElleN (Idaho)
Posts: 1,338
Posted:
Quote:
Posted By TerriS6 on 01/11/2025 9:06 AM
If .06%
Math error.
TerriS6 (California)
Posts: 3,284
Posted:
Not surprised. 5.5% is still "small."
CathyA3 (Ohio)
Posts: 6,299
Posted:
Evaluating what percentage or dollar figure is "small" needs to be done in context.

For example: how many months/years of assessments is 5%? How large is your association? For a large one, 5% of the annual budget may be a sizeable chunk of change in dollar terms but maybe not as the percentage of the reserves. For a small one, it may be the opposite.

Speaking of which, how are your reserves? A small percentage of "not very much" is still not very much, but its impact on the finances can be out of proportion to either measure.

What other large projects are looming in the near future? If there are none, is your community old enough that unplanned expenses are popping up with some regularity?

Do any of the vendors do other work for the association? If you've given them lots of work, do they occasionally toss in a freebie or two as a "thank you?" These freebies can add up, and while they won't appear in the current bid, their value will reduce association spending overall.

As others have noted, getting bids does not obligate you to sign a contract. It also reminds your long-term vendors not to take your business for granted, which can be reflected in their next quote.

In other words, one size does not fit all, and you need look at the entire picture.
TerriS6 (California)
Posts: 3,284
Posted:
The question was - should a job 5.5% of the $400,000.+ job just completed be given to the same vendor who did the job well, or do we go through the whole bidding process anew?
DeanJ
Posts: 1,786
Posted:
Quote:
Posted By TimB4 on 01/11/2025 4:39 AM
Regardless of how good your contractor is, you can not be sure you are getting a fair market price for the work unless you obtain bids.

Obtaining bids does not mean you have to take the lowest one.

Obtaining bids simply gives you the idea of what the market price is.

As an example: in my past Association, we were very happy with our trash/recycling service. Renewed the contract for years without question. I thought it would be prudent to obtain bids so wrote a request for proposal and identified potential contractors. Because I had already done the hard work, when I presented the idea of obtaining bids to the board, they said go ahead. The bids showed we were paying $10,000 above the average market price. We changed contractors and still received good service.

Trash contractors are about the lowest denominator for the risk of a poor level of service. When you a have a contractor like lawn care in a developed community you are happy with, you had better think hard before making that change.

The board is always the loser when the owners are unhappy with services. Even the tight wads who complain about the level of assessments now tell you they aren’t getting what they payed for.

SusanO3 (California)
Posts: 163
Posted:
Thank you Terri, you have summarized my question correctly. Given how long it took us to bid out for the $400,000 paint job to 5 venders, and given that we paid a project management company to obtain those bids, I'm going to recommend we put the exterior wall repair and paint with the house painting vendor. We will see what the Board wants to do when they vote. Thanks for all the input, really value all of you. Sue
BarbaraT3 (Texas)
Posts: 5
Posted:
Quote:
Posted By TimB4 on 01/11/2025 8:39 AM
Posted By TerriS6 on 01/11/2025 5:28 AM
Posted By TimB4 on 01/11/2025 4:39 AM
Regardless of how good your contractor is, you can not be sure you are getting a fair market price for the work unless you obtain bids.


I said when you have a small job. A trash collection contract is not a small job.


I'm not sure that $ 22,000 would be considered a small job either.

To vendors, it is absolutely a small job. Some might not even consider it worth the time to prepare a bid.

Three bids for every job makes sense when there is an endless supply of patient vendors. The ones who don't get picked will stop bidding after a rejection or two.

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