Is it a Conflict of Interest?

Started by GordonD1 • 50 replies • 3064 views

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GordonD1 (California)
Posts: 131

Posted:

Hi All,

Our board is in the process of getting bids for various painting projects throughout the community. We have a homeowner who is a licensed contractor who has offered his advice in the past. As such, the board requested
he review the bids and offer his opinion. Subsequent to forwarding the bids and he doing his review, he presented to the board his findings. Surprisingly, he has suggested that we get a bid from one of his painters. Immediately
after his proposal, some of the board members questioned whether there might exist a conflict of interest issue. It was felt to be unfair that the contractor/homeowner was allowed to review all of the bids first and then propose
his painter's bid. I am not certain there is any conflict of interest. If the contractor/homeowner has his painter submit the most reasonably priced bid for comparable services, do we need to inform the community at large of the
particulars of our selection?

I truly appreciate the input of anyone who has an opinion on this.

Regards,

Gordon

AnnJ2 (Colorado)
Posts: 120

Posted:

In my opinion there is a conflict of interest or may be bid fixing. The question is did this contractor have an unfair advantage by knowing his competitions pricing and other particulars of the job that the other bidders did not. It sounds like he likely did have access to priviledged information.

SusanW1 (Michigan)
Posts: 5,202

Posted:

The board should not have allowed him to "review" all bids and "give his opinion" if it did not want to hear what he had to say.

He HAS given his opinion - he thinks there should be more bids! (specifically, one of his own contractors)

All bids should be "blind" (contractor's name blanked out) and all bidding apples/apples. Then have a committee of 3 go over them and make a recommendation to the board.

After this, don't ask the fox to determine repairs on the hen house.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Gordon,

Being a homeowner and submitting a bid is not a conflict of interest BUT his being able to review the bids prior to making his proposal was definitely not kosher. I would not allow his bid to be accepted. This would be a big can or worms if you unlidded this.

MicheleD (Kentucky)
Posts: 4,491

Posted:

I totally agree with Donna and others.

Had you simply had him review the bids (and I think that was not appropriate anyway), you should have done so with all AMOUNTS and IDENTITIES redacted.

That way he would not have any clue what the top/bottom bid was, nor who the players were.

That information gives him (or "his painter") an enormous and unfair advantage.

What the board SHOULD have done, if they wanted his input, was to have the resident review the REQUEST FOR PROPOSAL before it was sent to any vendor.

But even that is tricky. Why? Because he could still have very easily "recommended" various specs or guidelines that he knew would favor "his painter."

All in all, sorry to say this, but the board screwed up in sending him anything to review.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

I see no problem for an HOA to solicit the opinion of a non-board member who brings expertise.

I see a huge problem with obtaining bids from the contractor's list of preferred vendors now that the first round of bids is unsealed.

The contractor's preferred paint WILL be the lowest bid. Mark it down. The question is, "What will you truly be receiving from the low bidder?"

The bidding is rigged at this point by soliciting one more bid. Your honestly-bidding companies don't stand a chance and they bid with confidence and on uniform job specifications.

I feel into this trap, by inexperience, in 2008 and learned a lesson. Going for that additional bid or two at the request of someone with a personal or fiduciary interest is inviting a headache. After all, where was this recommendation for the bid when the board was launching the bid process?

But, in this economy, I cannot blame anyone for recommending a job or that you "check out this guy." It's business. The board can play as clean - or as dirty - as the law allows. And that's pretty lenient.

JonD1
Posts: 2,350

Posted:

Gordon:

Without knowing the parties involved it is tough to make a judgement on that basis.

Is this owner who is suggesting you get another bid a square shooter or a ___________.

If the latter than why would you have sought his advice before?

I would ask for his painter to supply his bid just to see if it fits anywhere near the others. No rule says you must take the low bid if this is in fact the bid.

Perhaps the guy advising you just knows the numbers you are getting are way out of line with reality. Many contractors high ball bids to condos or HOAs as they believe no one will check out their numbers.

We had some hallways to paint (33) one bid was $33,000, the other $18,000 and the bid we accepted less than $10,000. Quite a markup there.

What is it you are painting? You could require a specific paint to even the bids are far as supplies.

Just maybe this guy is trying to work in the property's best interest?

Can't be...................Or maybe it can.

Do you think he would get someone the job who wouldn't do the right type of job living on the property???

Sounds hard to believe.

MicheleD (Kentucky)
Posts: 4,491

Posted:

Believe it, Jon.

It happens all the time.

The situation is already compromised.

I would no more accept a current bid from this guy's painter than I would try to paint it myself.

He can start from scratch NEXT time on a blind bid, off of a formal Request for Quote, just like everybody else.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

To those that are right, you are right.

For the Board or whoever to allow this guy to review the bids is more than conflict of interest. It may be actionable against who ever allowed this and they may find they are ordered to appear before a judge. Those folks that submitted their bid in a fair bidding process can get court mad at such unequal treatment.

JonD1
Posts: 2,350

Posted:

Michelle:

I'd love to know what Gordon is painting and what the bids are.

My job as a Board member is to do what is best for the property.

And if we can get the job done for less that is better.

I forgot to add in my situation when the bids were opened and we had one for $33,000 or $1,000 per hallway I knew these folks were out of their minds.

As I'm getting older I like to walk each day up and over the hill through a community of homes in the $750,000 range. Each day I was watching a painter who was doing the exterior paint on one of those homes. After the bids were opened I made it a point to meet him taking notice of the type of work he was doing and that's where we got our bid for $20,000+ less.

Was it done officially according to bid guidelines? NO
Did it save us over $20,000? YES

Sometimes it is ok to go out of the box.

Or at least take a look at some option.

Get the numbers and then decide.

It is painting not brain surgery........

MicheleD (Kentucky)
Posts: 4,491

Posted:

Quote:

Posted By JonD1 on 06/01/2009 6:24 PM
Michelle:

I'd love to know what Gordon is painting and what the bids are.

My job as a Board member is to do what is best for the property.

And if we can get the job done for less that is better.

I forgot to add in my situation when the bids were opened and we had one for $33,000 or $1,000 per hallway I knew these folks were out of their minds.

As I'm getting older I like to walk each day up and over the hill through a community of homes in the $750,000 range. Each day I was watching a painter who was doing the exterior paint on one of those homes. After the bids were opened I made it a point to meet him taking notice of the type of work he was doing and that's where we got our bid for $20,000+ less.

Was it done officially according to bid guidelines? NO
Did it save us over $20,000? YES

Sometimes it is ok to go out of the box.

Or at least take a look at some option.

Get the numbers and then decide.

It is painting not brain surgery........

I'm sorry, I wholeheartedly disagree.

Painting is not brain surgery, but it's not dummy work, either.

My job as a board member is just that, doing what's best for the HOA. But I can assure you, aiding and abetting "bid fixing" is not what's best for the HOA.

If this guy had simply made his comments, provided some expert "advice," that's one thing. The entire situation changed the minute he "suggested" his painter guy.

And there can be a huge swing in quotes for many reasons, some depending on quality of materials, expertise in workmanship, man-hours, and a variety of other things.

The point is, an HOA doesn't have to learn the hard way about conflicts of interest or "low bid" not always being the best. (As tight as money is, we rarely accept the low bid. Once one digs into the bid, the reasons for the lowball become very clear.)

The best way to avoid the sometimes very expensive School of Hard Knocks is to not put either oneself or one's residents in the awkward position of heading down that path.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

But Jon,

Regarding walking your nearby neighborhood and meeting a painter:

You didn't have a financial link to the painter of whose services you inquired. It was outside-the-box and BIG money savings and serendipity rolled into one conversation on a daily stroll, but the painter you spoke with certainly had no agent review bids, possibly, on his behalf and to his competitive advantage.

If the HOA accepts an estimate from the contractor's painter, then assume the contractor shared the job's competitive bid amounts and give the other companies a chance to revise their estimates or compare their services offered on a line-by-line basis if need be.

I've almost stepped in the whole low-bid scenario where the low bidder was going to use a spray gun on the cedar exterior siding of our clubhouse when brushing is recommended (but more expensive). AND, they'll quote you for one coat of paint when other vendors' default is two coats of paint. One coat bidders are always cheaper and don't always state on their estimates that they're offering one coat. That happened with some personal bids for my own house this past week. It may not be sneaky, but it feels sneaky.

By the way, I love the conversations on these forums and have learn much first-hand lessons by volunteering for my HOA. I just hope I don't start banning cars with bumper stickers from the neighborhood

GordonD1 (California)
Posts: 131

Posted:

Thank you all for your great input.

I will share this good information with the rest of the board members.

Regards,

Gordon

DanaB1 (Connecticut)
Posts: 319

Posted:

Hi Gordon,

I think that in your heart you know what the answer is.

But since you asked, your board can either use this owner's experience in helping the board come up with a bid spec or you can obtain a vendor list from him but you can't use him for both.

I always go out of my way in keeping board members from being involved in any type of conflict of interest.

And if you didn't let the owners know? Believe me, they'd end up knowing and that means you've then lost all credibility with them.

Go with your gut Gordon.

Dana

KirkW1 (Texas)
Posts: 1,665

Posted:

I don't think it is inherently wrong for the HOA to benefit from a professional relationship a member may have. But things have to done above board.

The next time let him know that you are taking bids and his partner/friend/whatever can bid. If the person is willing to offer wholesale pricing without knowing what others have bid, then they will likely win the bid.

Sometimes you can get a break for the organization. Especially if the contractor believes that the work could lead to other work for owners.

As an example if one owner is a contractor and willing to forgo his markup for the association then you can get great deals. But keep things on the up and up and let a bid process occur.

DanaB1 (Connecticut)
Posts: 319

Posted:

Quote:

Posted By KirkW1 on 06/02/2009 8:21 PM

As an example if one owner is a contractor and willing to forgo his markup for the association then you can get great deals. But keep things on the up and up and let a bid process occur.

I think your on thin ice with this.

We have a resident that lives here that is a painter. I would not want her to bid on work here. The reason that contractor's build in a mark up is 1) to make a profit so that they can then pay their fees, 2) the profit also covers them in case they need to do warranty work, 3) if the job comes out terrible you have to live with them.

Nope, I'll pass.

There are enough people out there that will do a good job at a fair price and they still can make a profit.

Once people start hearing "I'm not making any money" then they start thinking "kick backs". Human nature.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Kirk and Dana,
I think you are both on track. Not because you agreed on everything, but, of primary importance; some one is watching the store. I don't know what percentage of HOA's/Condos operate with no over site from a responsible source, but it is a lot and probably growing.

The Board has to be accountable and that means someone or all, on that Board has to watch the store. Retail wise, there is so much waste build into the profit margin, no one watching the store doesn't harm the bottom line. But,I sense this is a major, major problem for HOAs/Condos.

Take the bidding process, turn this over to a M/C (my opinion from posts on this site)long enough and unless you have good solid contact with the M/C, the whole process deteriorates to person gains of one form or another. Hire a individual to service your HOA and throw in 90% absentee owners, and you plant a garden of trouble, add no on site owners and you breed a Dictator. EVERY association needs people like Kirk and Dana.

I received a personal e-mail from a poster here and she said: Tongue in cheek, "I am the only perfect personal in my organization." Perfect I doubt, (I'm perfect), but, she stands up to be counted and believe me she, and many others here, are a FORCE in their organization, and they are watching the store.

We need more Storekeepers!

MaryA1 (Arizona)
Posts: 7,043

Posted:

Robert,

I agree, we need more storekeeps, but only if those storekeeps know what they're talking about!!! We don't need more storekeepers who only "think" they know what they're talking about. Sure you and I may know what we're talking about, but do your think all the neighbors on your block do? I've always been a strong advocate of education for the BOD, but I also think the members need to be educated too.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Mary,
You are absolutely co (ain't never gonna happen)rrect!

But you have to admit, our personal experiences reflect a different picture of the owners than those posting on this site. I would venture to say owners can be cut from about a half dozen different shapes. But the good guys, the ones that care, can look at the big picture and can lay down their personal agendas, and take up the banner for their association, those folks as we see them on this site, are varied and no two alike. Those folks take this whole thing seriously for the "rightness" of it.
No, I am sure many of my neighbors haven't got a clue, and never will,but, every now and then, up pops a winner! A few of us are pushing now to put together a Board members Packet. We have a pretty good idea of what to put in this packet and we have a new board. But for some reason, resistance is there, even if you offer to put it together and give them editorial and context final approval. I suspect they might think that members may get the idea they don't know their job. This will all come to pass here, but it will be a struggle and take time and patience.

JonD1
Posts: 2,350

Posted:

Mary:

Have you ever heard anyone admit they didn't know?

Many people tend to think they know a lot more than in fact they do.

In this case how many people have painted?? For profit??

How many have bid work on their own?

How many would know how to bid any job painting or other?

How many Board members can determine if a bid is in the range of reality or so out of bounds the contractor should be sent to jail?

So here you have Gordon with a few painting jobs. We don't know what they are painting or the price of the bids. You have a unit owner who has some knowledge of construction who offered their time to review the bids. His suggestion perhaps the Board might get another bid from someone they are familiar with.

Perhaps the unit owner knows MORE than the Board members. Perhaps they are trying to act in the best interest of the property. How do you know unless you ask for a price?

Asking people to review bids and make decisions on projects about which they know very little is difficult. Perhaps accepting and considering input from someone who just might know more would be advisable.

As volunteers Board members bring limited knowledge to the table in the areas they are familiar with. Some are more limited than others. The root of the problem is most don't understand this.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Jon,

Very true, most people will not admit they don't know, especially a board member or anyone else in a position of authority. And, IMO, even fewer will admit to being wrong even when shown proof of it. Is this human nature???

Regardinf Gordon's delimna, the BOD trusted this member enough to give him access to the bids so he could review them. Then, after reviewing the bids he suggests allowing a painter he's contracted with to submit a bid. Should the board trust him even further and believe he didn't give any of the bid info to his painter friend? Has the board had past dealings with this member contractor to the extent that he has demonstrated to them his trustworthiness? There may not be a conflict of interest (unless he stands to benefit monetarily if the painter gets the bid and how would the BOD find out about this?) but there is a good possibility of bid rigging. So how much trust should the board place in this individual? IMO, the best route to take may be to inform this guy that his painter friend cannot submit a bid, because the bids have already been closed. Then, in the future the BOD will no longer allow any non-board member to review bids no matter what their work experience is. In fact, the board may want to review their bid policy and put requirement in place that would prevent something like this from happening again.

JonD1
Posts: 2,350

Posted:

Mary:

The Board trusted this owner enough to let him in on the process. For some reason. I agree they should not have allowed them to see the bids and then offer their advice. Not the best practice but that mistake lies at the feet of the Board not the owner. But that is what happened.

Now for some reason this owner has suggested they ask for another price. Does he think this new price would be higher? What would be the harm of asking for that price?

Now say this new price comes in 50% lower than the lowest bid?
Or in my case $20,000 lower does the Board ignore it and abide by the bid process.

I would think this Board asked for help becuase they were not comfortable making this sort of decision and for that they should be given credit.

But HOW does someone help you when you refuse to take their advice.

So stick with the original bids and pay how much more for a job you could have gotten done for less.

Some time ago a resident asked me for my opinion about the replacement of their furnance. Her heating and cooling guy had sold her a $6,000 new system. When she explained the reasons for replacing the entire system to me and they made no sense, I suggested she might call a contractor who does work on our property all the time and verify his opinion and cost.
In the end her furnace (gas) was NOT in need of replacement and after some needed repairs she saved $5,000.

But only if she had taken my advice.

Advice is only good if you use it.

MicheleD (Kentucky)
Posts: 4,491

Posted:

Sorry, Jon.

There is absolutely nothing about that post that I would take to heart.

The owner was asked to review. He was not asked to submit additional bidders.

What would be the "harm"? We've already enumerated that, several times over.

Now, let's say the bid does come in 50% lower. That would throw a complete red flag to me. In spite of your recent experience, we are looking at even more cause to not open the bids back up. Clear indication to me that there is serious low-balling going on, which, with all due respect and your experience notwithstanding, is always an issue.

From what I can tell, the board may have wanted to get an expert's eye to see if there were anything out of whack with any of the bids.

Clearly there wasn't, because he didn't come back and say so. Only that they consider "his" guy.

So what value does the board gain from opening the bids back up, now to someone who has had the opportunity to see each and every previous bid? None whatsoever, except to open themselves up to the appearance of bid rigging. I wouldn't touch that with a painter's pole.

Serious conflict of interest. Serious bad business.

Nope, if the "owner" wants the board to consider "his guy," then he should have been ethical enough to wait until after this process was completed and offered his name for the bidding process on the next painting project.

The board screwed up by asking him to begin with. But there was no harm/no foul as long as they don't open the bids back up to let this guy's "guy" bid.

In addition, they didn't ask him to suggest another vendor, they asked him to give the bids a once over to see if there was anything that jumped out as wonky.

He did that. There was nothing. So there is no "advice" for which they asked that they are now ignoring.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Jon,
I suppose there comes a time when push comes to shove.
Your well explained example was not against the law. Advertising or taking sealed bids for a construction job and revealing those bids to anyone having an interest in those bids is against the law.
But, that seems to be the consensus here, doesn't it. Are you suggesting this kind of action is not illegal, I don't think so Jon.
The other folks that made their bids in good faith and as instructed, from that minute have an interest in this issue.
This probably is not an earthshaking transgression, especially if the interested parties don't know about it, and all I am giving is an opinion. But to suggest the association has missed an opportunity to save some money from an illegal act, I can not support this. Sure I could be wrong, any of us can be wrong, but the wrongness and the rightness of this seems clear cut.

MaryA1 (Arizona)
Posts: 7,043

Posted:

You know, the more I think about this the more I wonder why the BOD felt they needed the advice of this contractor member. We're talking about a painting contract not a complicated repair issue. A painting contract might require patching and repairing of surface to be painted; a power wash and perhaps a particlar type of paint. It seems to me the board could easily review these bids and make a decision w/o needing the assistance of a nonmember of the board. Unless they just want the ability to point the finger to someone else if the paint job doesn't turn out right.

I know this has nothing to do with the basic problem; just had to throw this out!

MicheleD (Kentucky)
Posts: 4,491

Posted:

Mary, I almost think it was done as a courtesy, since the OP said they've used his "advice" or consult in the past. Maybe someone was afraid that if he found out they put bids out he'd wonder why they didn't ask his help this time and it would hurt his feelings? Who knows?

But it also might be that one board member (possibly a friend of his?) manipulated this in such a way as to give him the opportunity to throw a hat into the ring.

Naturally I'm basing that on the fact that we've had that happen in our own association.

I won't go into the entire story here, but it was a horrible mess and ended up costing the association a lot of money.

JonD1
Posts: 2,350

Posted:

MicheleD:

First and most important you need not be sorry for having a different opinion.
I don't come to this site with the unrealistic expectation that in the end everyone is going to agree. You give your thoughts take into consideration what others have to say and move along with life. I enjoy reading the opinions of others and the back and forth that occurs here. Plus in some cases valuable information can be provided for FREE!

That said and covered let me say this to the topic at hand. I agree with much of what you have said was this handled in some ways poorly YES. Do you see this with Boards on a regular basis. I would guess YES.

Again recenly a neighboring property is in the process of having some concrete work done. A portion has been completed. I was asked to take a look.
GARBAGE! Now anothe phase of the same work has gone out to bid. I was told the price.Unbelievable! I was asked for MY opinion.

MY opinion I suggested they call a gentleman who does OUR concrete work. A young man who when we first met while he was bidding a job, looked to YOUNG to know his craft. I WAS WRONG. ( Doesn't happen often and I admit it even less. LOL) This "kid" must have been fed concrete in lieu of baby food he is a craftmans and artist when it comes to his work.

I would suspect his price would be less and I am sure the quality of work will be better. Will I give him the numbers? NO.

Is this somehow wrong? I don't believe so. A mistake was made try not to repeat the same one.

I am a details and question guy. Gordon in his OP either left a lot for us to fill in or the Board IMO did not ask the right questions.

When suggested they a price from another painter someone, anyone in the room should have asked WHY? One simple word?

Bid-rigging would imply that someone were to profit from arranging who secured the work. In this case who?

Another question to the owner, "Have you informed your painter as to the prices bid by these other contractors?"

Simple question which they should be able to answer honestly. The was a situation on which the Board could have learned a lot about all those involved
they missed that opportunity.

I agree going forward if there is an interest then allow this painter to bid future work.

With all due respect Michelle I am not so much worried about appearance, what I will do everything to avoid is "actual" unethical behavior.

I reread the OP and Gordon gave little information as to what this owner stated other then they should seek another bid. He gave no review good or bad of those presented. Or I missed that part.

And finally I disagree with your statement " the Board screwed up by asking him to begin with."

Many Boards, not just this Board, lack knowledge in some of the areas they are bound to encounter. If someone has this lacking knowledge why not ask for their input. Rather then finding your way through the process blindly.

I just read your subsequent post and would suggest Michelle that possibily YOUR expierence on YOUR property has left a very bad taste in YOUR mouth and perhaps rightfully so. Not every situation has to be the same. IMO

Michelle in the end we might not agree but I have learned this will not bring our world to an end.

Good luck.

JonD1
Posts: 2,350

Posted:

Robert:

As I am always interested in any opportunity to learn could you please cite for me the law that covers this situation.

Would this be criminal or civil?

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Jon,
Thanks for your reply and request.

Jon, don't bait me, and frankly, if I knew the specific law, I would not post it now. I am not an attorney giving advise, I am giving opinions, as I stated, my opinion is I would not reveal any information in a closed bid to any unauthorized person. In my opinion it is against the Law...........I could damn near bet my life on it. If you could get away from this and look at it from a distance you would have to ask: "why closed bids", ring any bells, it does for me. Do you or anyone else have to take my advise, of course not, even I don't take my advise all the time, because I know I can be wrong...............I even sometimes ignore my own advise, when I know it is right.

MicheleD (Kentucky)
Posts: 4,491

Posted:

Robert, I still say the screwed up by asking him after the fact.

They could have brought him in to "consult" (ie, review the request for proposal), but once he viewed all the bids, it's poison fruit.

Bid rigging who would benefit? Seriously? You can't see that?

The owner (possibly) and the new bidder, definitely.

No, it's better to just consider the bids in place, especially since apparently there are no issues with those. I'm certain that had the owner who reviewed the bids had something to about the bids that Gordon would have told us.

His only concern was the issue of conflict of interest at this point in the process and my vote (no surprise) is yes, indeedy, there is a conflict of interest. . .now. . .

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Michele,
What in the world did I say that would led you to think otherwise. Of course it was a conflict of interest and maybe more than that.

Some times I don't clarify my thoughts, but I think I did with Jon. Maybe I said something to Jon that didn't explain my position also, but darned if I can figure what.

Got any help for me?

Maybe Mary is right, I should just go to sleep....yauk...yauk!

Woe is me!!!!!!!!!!!!

MicheleD (Kentucky)
Posts: 4,491

Posted:

Either that or back off the caffeine?

LOL!

I dunno, don't dismiss the idea that I didn't read the post too closely! That's a real good bet, too!

RobertR1 (South Carolina)
Posts: 5,164

Posted:

:

Either that or back off the caffeine?

LOL!

I dunno, don't dismiss the idea that I didn't read the post too closely! That's a real good bet, too!

............................

George,
Don't worry about it.
Love and kisses,
Sandy

JonD1
Posts: 2,350

Posted:

Robert:

By not answering my question you did in fact answer it.

When you state something is in fact illegal that would require this action to violate some law.

Federal, state, local, criminal, civil pick one.

I would suggest perhaps you research bid-rigging as in my opinion none of what was discussed here would qualify as such.

It might seem wrong in your mind but that is a far cry from illegal.

But that is just MY opinion and you need not abide by it.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Jon,
Thank you for your advise, I will research bid-riggin as you suggested.

So, by your answer you also answered my next question and that is do you think that once the sealed bids are in, as determined by those offering the contract, and those same individuals then disclose these sealed bids to another person not involved in the process, then contemplate sending another bid out to his suggested friend, does not suggest conflict of interest and maybe worse. Therefore you have concluded without justification that this was a safe and legal act and you would recommend they conduct business in this fashion. Can I ask you to support your position with case law.
As far as bid rigging is concerned, I don't recall the act was suggested by anyone and certainly not I. I gave my opinion, you have now have given yours by stating the act was legal. Both without case law and legal opinion to support our claims.
Surely you know Jon that for the legality of something to be established by hearing second hand information and not knowing the complete and true history of the tale, and having some court authority to render court decisions, we got nothing Jon.

Even when we read association documents and we give opinions, we got nothing Jon, all any of us can really give are opinions.

Citing case law would not change the disclaimer posted on this site, we do not give legal advise. If I failed to be as explicit as you desire I should be, I try very hard to be clear I give opinions. Anyone that takes anything posted on this site to court to use as evidence, is in for a big disappointment. Any legal ruling or cited case law or court cases does not past the disclaimer on this site, we simply do not give legal advise.

MicheleD (Kentucky)
Posts: 4,491

Posted:

I was the one who suggested bid-rigging.

It may or may not apply, but there is potential in this case, at least in regard to subverting competition, in the semantic case of the word, whether in the actual legal definition or not.

If a board member is colluding with the "helpful" owner, who now has complete knowledge of specs and other bids, and now offers someone with whom he may or may not be financially tied to offer a "new" bid. . .

No matter how you define it, it has huge "ugly" potential.

MaryA1 (Arizona)
Posts: 7,043

Posted:

If the board had an ounce of common sense they could circumvent all the speculation of bid-rigging, conflict of inteest, etc. by simply stating the bids have been closed, we cannot accept your painter friends bid. Sorry! When the request for bids are sent out isn't a closing date specified?

JonD1
Posts: 2,350

Posted:

Mary:

Common sense as connected to Boards is a stretch. Many Boards and their members simply have no knowledge or expierence in the areas they must work in. Many make uninformed decisions based on belief rather than knowledge.

How many Board members have worked awarding bids to contractors? How many have any knowledge of painting, electrical, landscaping? Who gives the bids? Where do you find them? What are the bid specs.? Who determines them?

In this particular case the process was handled badly. And I would suggest this Board has no idea how or what decision to now make. And in the end they will never know what type of decision was made ( good or bad) and in the future more than likely repeat the same mistakes over again.

Having attended CAI seminars which allowed me to speak with other Board members it is quite obvious many are operating with limited knowledge in many areas of Board operations. That is being kind.

If you lack the knowledge you ask someone who you believe has more understanding of what you are involved with. How else do you learn?

IMO in THIS case the Board has two choices 1) they can go ahead blindly and follow a system that more than likely will not work to the benefit of the property 2) they can attempt to learn from this process and fix as many mistakes as humanly possible. This will not be the last project they take on with bids so it would probably be best for them to learn something from all of this and hopefully do it better next time.

From the lack details presented in the OP I don't have the necessary information to determine what is motivating the "helpful" homeowner,( some seem to have assumed they are self-serving, I would hope not everyone operates in that manner) why they suggested another painter be asked to provide a bid, what input have they provided in the past and to what degree has that been helpful if at all, what is the scope of the work to be done, and what are the quoted prices and their range of cost?

Without this information and avoiding my making assumptions based on nothing there are many questions for me that remain unanswered.

Again the key ingredient missing here as Mary suggested commonsense with a little knowledge and the ability to learn. When that will come along if ever is anyone's guess.

MicheleD (Kentucky)
Posts: 4,491

Posted:

Your own words belie your contention regarding the homeowner who was asked for his opinion on the received bids.

We DO know that the gentleman IS in a business that would know something about bids, hence why he was asked to look them over.

So, quite frankly and bluntly, he knew perfectly well his "suggestion" to let "his guy" place a bid, at that stage in the process was inappropriate. From that alone we can only surmise that the "reasons" were not completely lacking self-interest, and that's the best we can surmise.

And you may or may not be right about board members and obtaining quotes, etc.

But they have to learn sometime. The learning curve is not that steep. It's pretty straight-forward stuff.

It's also not that hard to find organizations or individuals who can assist them to know what sort of specs they should be putting into their proposal requests.

Some will learn in constructive ways, some will learn the hard way.

In this case, the board simply need to disregard the request to have someone else enter a bid at this point.

Apparently there was little if anything wrong with the ones that were submitted.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Good post Jon,
Makes a lot of sense and provokes some brain neuron action.
I also concur with your opinion about the limited knowledge of some players. But, we can all remmeber our first encounters with this problem. Once in a while I am struck with awe at the fact the system operates as well as it does when considering the number of people involved that don't contribute. Also we run across associations that have operated for years and years outside the box and they seem fine.

DanaB1 (Connecticut)
Posts: 319

Posted:

Quote:

Posted By RobertR1 on 06/05/2009 11:52 AM
Good post Jon,
Once in a while I am struck with awe at the fact the system operates as well as it does when considering the number of people involved that don't contribute. Also we run across associations that have operated for years and years outside the box and they seem fine.

Robert,
I feel that most associations mirror the pathetic attitude of people concerning the town, state and federal level. Look at the limited number of people that turn out to vote for town, state and national elections or budget votes; it's minimal.

Our town budget failed the first time and barely passed the second on the votes of less than 25% of the total registered voters of the town. In my assocition the budget automatically passes unless a majority of owners say no. Makes you wonder if the town should do that. I figure if 75% of the voters didn't vote than they were automatic yes votes.

It's funny how you go to a CAI event and you meet board members that have been on their boards for 10, 15, 20 years. The Presidents are usually the same people year in and year out.

I tend to think that many associations run like many businesses........ on momemtum. Look at the number of companies that survive even though the leadership and business practices are terrible. When the economy finally turns for the extreme worse they finally crash and burn.

In many associations it takes about 20 to 25 years for the lack of leadership to come to the light of day. Why? Because that is about the time that they need to fix things but they don't have the money. Their short comings quickly come to the surface.

Dana

JonD1
Posts: 2,350

Posted:

Michelle:

Not knowing any more than the details presented by Gordon I have to work with those not what I assume to be true.

I worked in the construction field for 30+ years in NYC. I at one point owed my own company. I have performed work for the federal governement, state governement and several large US companies. All included bids and the awarding of these bids. As a result I have some limited knowledge of the bidding process.

Over the years I have been asked for my opinion several times and IF I was presnted with bids to review and found them to be out of line as far as cost, specs., or some other issue I would perhaps suggest the SAME as the "helpful" owner in this situation. Simply "You might want to get another bid or price." NOW does that make me self serving?

Michelle, for some the learning curve is simply impossible. Some people
(Board members) haven't a clue and never will.

So IMO securing bids, picking contractors, awarding bids, inspecting the work performed for compliance with the agreed upon terms all in different areas of construction can never be termed "straight forward".

Unless of course you are well versed in electric, AC, painting, plumbing, landscaping, snowplowing, pool maintanance, and any other area of service a Board might need to use.

"Apparently there was little if anything wrong with the ones that were submitted."

Michelle, on what do you base this comment? I read nothing in the OP that suggested this to be the case.

If YOU were on this Board you would disregard the suggestion to have an additional bid. If I were on this Board I would ask for that price.

We disagree. This will happen occasionally in life.

MicheleD (Kentucky)
Posts: 4,491

Posted:

I base it on him saying that the guy's response was pretty much to let someone else bid.

I stand by my position. You stand by yours.

Makes life fun.

But I would have questioned YOUR response, too.

It would have been self serving.

If there were problems with the bids then just say so.

Don't play games.

Don't be coy.

And don't offer other bidders until and unless it's made absolutely clear that you will not share any information with them.

Or I would question your ethics, too.

KirkW1 (Texas)
Posts: 1,665

Posted:

I don't think it is fair to assume that the owner who then submitted a bid was guilty of trying to work the system. Consider that there could be another case:

He is reviewing the bids and thinks they are all steep. After all he is used to getting the insider's discount. So now he goes and asks the guy who he subs out to to bid. Of course the bid comes in lower. Because the bid was given to someone as a sub.

And a contractor foregoing their cut for the benefit of the association is not a red flag in itself. The contractor marks up not because the contractor spent the time to get the bids, and will supervise the work. If warranty work is needed, the contractor will expect the sub to come and fix it and not get paid again.

Now the current problem is that this guy made the bid after the fact. And it could appear to be an attempt to benefit the owner who suggested the lower bid. If one of the other bids happened to be connected to a resident, then it will really fowl the air. Thus why such should be done up front. If the guy wants to save the association money because he will forgo a markup, then he should state this on the front end.

MaryA1 (Arizona)
Posts: 7,043

Posted:

And here's more food for thought. If this contractor friend of the board knew of a painter who he thought might come in with a good bid, why didn't he tell the board to send him a request for bid? Why did he wait until he had the bids in his possession for review. Perhaps there is no ulterior motive involved in his actions, but just the "appearance" of one. IMO, the board should be just as concerned with the "appearance" of ulterior motives as with definite ulterior motives.

I agree with Jon that there's nothing wrong with the BOD seeking input from a knowledgeable person. But I also agree with Michelle that this contractor friend of the BOD didn't handle his new-found resp. in the proper manner.

JonD1
Posts: 2,350

Posted:

A few days ago I ran into the landscaper who does our property. He has built a large and successful business. He lives with his family in an HOA consisting of homes starting at around $750,000.

So during our conversation he informs me he lost the account on his own property which he handled for several years. Some members of the Board in their infinite wisdom decided the "appearance" of him doing this work was questionable.

So they sent the work out to bid and accepted a bid much lower to do the same work from a newly formed landscaping company. His comment "I know you can't do the same amount of work I have been doing for this price." And you know what he was right.

Neither the Board nor this newly hired "landscaper" had any idea as to the cost of maintaining a property this size. But they are now both learning as they go.

Now the homeowners are complaining about the condition of the property and the Board NOW understands the level of service is far below what they had. And when this new landscaper realizes that at the end of the season he will be losing money he will cut back even further.

Our landscaper's comment

"How did the Board not understand that I live on the property. Why would I not want it to looks its best? My work would be a reflection on me, my business and my home, who else would give it the same attention?"

So here you have a case where "appearance" and the desire to give off the impression that all is done above board has now resulted in exactly the opposite result this Board had hoped for. Yes now everything "appears" fine the property just looks like hell.

There are a few folks who actually still operate with good intentions. Or perhaps in the best interest of the property on which they live. But sometimes Boards and their membership don't have the ability to make good decisions and have a real skill at making bad ones.

And in the end all of us, owners and Board members pay dearly for those mistakes.

I like to try my best to avoid them.

JonD1
Posts: 2,350

Posted:

Call me crazy Kirk but I would want someone to do work on our property who KNEW an owner had gotten them this work. An owner they work with.

Perhaps to would motivate them to do a proper job as you suggested. They have a business relationship and will work together again. And as both their reputations are at risk DO THE JOB RIGHT.

Perhaps the bids were so high this owner knew "his" guy would come in lower.

Worth finding out.

Now the Board has no idea if they paid to much, to little , or just right.

Plus you would find out something about the "friendly helpful" owner. Is their opinion worth anything? Now as it stands who knows.

I have learned one thing for sure most people have no idea how things work in the real world, how you work to make all parties happy, how you develope relationships with people rather then just "use" their services, how you work to learn from each expierence, and finally how you learn to consider the possibility that the way you see things just might not be acting in your own best interest.

Learning curve sometimes, for others life is a flat line.....

MicheleD (Kentucky)
Posts: 4,491

Posted:

Keep in mind, I'm also working from experience.

We've had several instances of "helpful" homeowner/subcontractors/contractors "helping out" the HOA.

Each...and....every...time... the HOA got screwed.

Because a homeowner/contractor "wanted to help" --- "has 30+ years experience 'in da field'" --- "knows" people who can do a better/cheaper job.

In one case we were looking at fines from the IRS.

Nope. Sorry. Too many times burned at the "trough" -- and I've only been doing this around 15 years. . . steep learning curve? No. Just fellow board members who are trying to "keep costs down."

We could have built a community building with all the costs we let go out the door "keeping costs down," and the homeowner/contractor/subcontractors? They're doing just fine -- still.

So come with all the "dream" scenarios you like.

I stand firm. Especially the way the process was handled in this thread, there is at best conflict of interest, at worst someone on the board being sneaky.

I may or may not be wrong on the latter, but I'm on solid ground on the former.

MicheleD (Kentucky)
Posts: 4,491

Posted:

PS: the "landscaper" who lived in our community who "just wanted to help the neighborhood look at its best," you know the one with the "vested interest" in making the community look nice? He's the one that screwed us the worst. With help from the board member who "collected" the bids.

We have over $20,000 we overpaid this guy, that we know of, for what it turns out was mediocre work, at best. In some cases we were billed for work he didn't even do. And that was over a 3-year period. God knows what we got screwed on prior to that.

All that regrading of the common area that he billed us for?

Never happened. But he turned in bills for it.

The concrete walkway that he installed, at "cost"?

That was so shoddy, it crumbled to gravel in less than 6 months. Just before we got cited from our Zoning Enforcement officer for building a walkway that was not only up to code, but violated some erosion of handicapped accessible guidelines.

So I totally don't buy into the myth that people who "are in the business" who live in the neighborhood have the best interests of the association at heart.

Nope. Not one dime do I believe that myth.

MicheleD (Kentucky)
Posts: 4,491

Posted:

This: Just before we got cited from our Zoning Enforcement officer for building a walkway that was not only up to code,

Should say NOT up to code....

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