House Bill 509 Makes Significant Changes to Ohio Public Bidding Law
October 2, 2012 • 3 min read
Buckingham attorneys Frederick M. Lombardi and Joshua D. Nolan offer the following insight into the recently enacted Ohio House Bill 509:
Governor Kasich signed Ohio House Bill 509 on public bidding into law on June 26, 2012. The bill was filed with the Ohio Secretary of State’s office on June 29, 2012 and the amendments and sections described below are effective as of September 28, 2012.
The Bill makes changes to the public bidding procedures related to public authorities such as metropolitan park districts. Specifically, H.B. 509 raises the dollar thresholds above which competitive bidding is required in certain circumstances.
H.B. 509 is one of a series of sweeping reforms to Ohio’s public construction and competitive bidding statutes. The new statutes and regulations are extensive, complicated and, in some instances, internally inconsistent. See H.B. 153 effective September 29, 2011. These changes have resulted in a wave of litigation against public entities that have allegedly failed to comply with the new statutes and regulations. See e.g. The Beaver Excavating Company v. City of Cuyahoga Falls, Summit County Court of Common Pleas Case. No. CV-2012-03-1762 (resulting in settlement in which the City agreed to reject all bids and repeat the bidding process). Both public entity clients and those who seek to bid on public contracts under this new statutory regime should be encouraged to seek legal advice prior to and during the public bidding process.
Amendments to R.C. 1545.07 (metropolitan park district contracting authority):
R.C. 1545.07 raises the threshold beyond which public bidding is required from $25,000 to $50,000. Specifically, the bill adds the following language in bold to the statute:
In procuring any goods with a cost in excess of $50,000, the Board shall contract as a contracting authority under sections 307.86 to 307.91 of the Revised Code, to the same extent and with the same limitations as the Board of County Commissioners. In procuring services, the Board shall contract in the manner and under procedures established by the bylaws of the Board as required in Section 1545.09 of the Revised Code. (emphasis added)
The plain meaning of the amended statute provides that a park district does not need to follow sections 307.86 to 307.91 of the Revised Code providing for bidding procedures if the cost of procuring goods does not exceed $50,000. It does not provide guidance, however, on how the park district should procure goods the cost for which does not exceed this new threshold. For example, it does not state that a procurement that does not exceed the threshold must adhere to bylaws of the park district. R.C. 1545.07 and 1545.09 requires service contracts to follow bylaws of the park district.
To the extent that applicable bylaws do not address the process for procuring goods under $50,000, they should be amended to address this requirement
- Amendments to R.C. 307.86
This section 307.86 of the Revised Code requires, with a limited exception,[1] that anything that is purchased, leased, leased with an option or agreement to purchase, or constructed by or on behalf of the public authority must be obtained through competitive bidding. R.C. 307.86. H.B. 509 raises the threshold from $25,000 to $50,000 above which amount competitive bidding procedures must be used.
H.B. 509 also raises the dollar thresholds for the exception to competitive bidding in emergency situations. Competitive bidding is not required if there is an emergency situation and the estimated cost is less than $50,000. This amount is raised to $100,000.
H.B. 509 also raises the minimum threshold for soliciting at least three informal estimates for emergency procurement of services from $25,000 to $50,000.
Amendments to R.C. 307.861
H.B. 509 raises the minimum bidding thresholds above which competitive bidding is required for the lease of electronic data processing equipment, services, or systems or radio communications systems. The threshold is raised from $10,000 to $50,000.
Amendments to R.C. 307.87
H.B. 509 raises the minimum threshold from $25,000 to $50,000 when notice of competitive bidding is required.
Amendments to R.C. 307.88
The changes to subsection (A) of R.C. 307.88 include raising the minimum dollar thresholds from $25,000 to $50,000 which trigger the requirements that section 153.54 (Bid guaranty/Bond) of the Revised Code be followed for construction, demolition, alteration, repair or reconstruction contracts. Importantly, H.B. 509 makes the requirement of a bond or certified check (not to exceed 5% of the bid) optional rather than mandatory for non-construction related contracts in excess of $50,000 authorized under sections 307.86 to 307.92 of the Revised Code.
The suggested changes to subsection (B) of R.C. 307.88 increase the dollar threshold which allow the Board by unanimous vote to exempt a bid from any and all requirements of section 153.54 of the Revised Code as long as the estimated cost of the project is $100,000 or less. This is a four-fold increase from current $25,000 level.
[1] Services of an accountant, architect, attorney at law, physician, professional engineer, construction project manager, consultant, surveyor, or appraiser are not included here.
