Rules for Missouri Fire Protection Districts - Page 12

XI. Purchasing, Bids and the Bidding Process

Parenthetical numbers in the text refer to sections of the current Revised Statutes of Missouri, abbreviated as RSMo.

Purchasing

An FPD may want to contact other FPDs for examples of purchasing policies and also speak with the FPD lawyer.

An FPD can purchase what it needs to get the job done (321.220[6]; 321.600 [6]); however, it is prudent for FPD boards to adopt a formal purchasing policy. Examples of topics potentially included in a purchasing policy include:

  • Avoiding conflicts of interest (105.454; 105.458.1; and 105.458.2);
  • Avoiding double taxation of sales taxes and fuel excise taxes;
  • Purchases cannot cause the budget to be exceeded (67.080);
  • Standards for personal protective equipment (PPE) (320.088);
  • Regulatory reporting for certain purchases, for example, reporting a new ambulance to the Centers for Medicare and Medicaid Services (CMS) within 90 days of acquisition (42 CFR § 424.516[[d]);
  • Commandeering products or services;
  • Use of products from prison industries (217.575);
  • Interest-bearing bank accounts (321.270; 110.030; 110.130);
  • Ensuring payment of materials for construction of public works, and for labor performed for such work, by requiring performance bonds for public works over $50,000 (107.170);
  • Requiring contractors provide 10 hour safety training (292.675);
  • Ensuring contractors’ employees have the right to work in the United States (285.530);
  • Certificates of workers’ compensation insurance for contractors (avoids the FPD from potentially paying for such insurance during the annual workers’ compensation insurance audit);
  • Liability insurance (105.1070-105.1079);
  • Health insurance for public employees – competitive bidding required every three years (67.150);
  • All other types of insurance – competitive bidding required every six years (376.696)
  • Increased preference to service- and disabled-veteran businesses (34.74.3); and products from organizations for the blind (34.165.1);
  • “Buy America,” “Buy Missouri,” and use of certain Missouri products (34.350-34.359; 34.073.1, and 8.280, respectively);
  • Proof that products were produced in America, or else the payment is illegal (34.355).

Legal requirements

Bid Form
The Office of Administration provides an example of a bid form

For purchases of $10,000 or more of goods or construction work, an FPD is required to “publish” its specifications before making the purchase. No one knows exactly what this requirement means because it has not been litigated, but most FPD attorneys assume it means that you must: (1) advertise for bids; and (2) take the “lowest and best” bid if the price is $10,000 or more (321.220[4]; 321.600[4]).

Phone and email bids

While it contains multiple bids, a separate sheet can be used for each telephone bid and place each bid in a separate sealed envelope.

Seeking bids by telephone or email is acceptable and is often necessary. However, phone and email bids need to be treated exactly like written bids. Design a simple form for soliciting phone bids that lists the same information that would be provided in written bids, including the person calling for the FPD, the firm called, the date, the person speaking for the vendor, what was offered and for what price.

Files

Make a file folder for every item the FPD bids. The folder should contain a copy of the announcement, the specifications, written bids received and telephone bids solicited, the affidavit of publication of the notice and, eventually, the contract. Specifications can be kept closed until public announcement of bid Ietting is made (610.021[11]). Sealed bids can be kept closed until bid opening (610.021[12]). It is advisable to seal phone bids (in an envelope or other manner) after the paperwork has been completed until the opening of all bids.

Rejecting bids

Every bid call should include the statement, “The FPD reserves the right to reject any and all bids.” This is necessary because often bidders will offer to provide goods or services different from those the FPD is seeking. If the bids received do not meet the specifications announced, the bids should be rejected, even though this slows down the process. Appellate court decisions have now given unsuccessful bidders standing to challenge a bid process for irregularity in some situations, so formality and strict adherence to the FPD’s own internal policies is critical.

Specifications

Drawing specifications is not easy or simple. Suppliers will be glad to offer help, but be cautious about accepting it. Suppliers might write specifications so that only their product will qualify, nullifying the statutory “due opportunity for competition” mandate. The law forbids state purchasing from using brand names in bid specifications (34.060). This law might apply to FPDs too, especially in certain grant-funded purchases. As a part of state government, FPDs can use state purchasing programs such as fleet fueling, specifications and bids. Smaller FPDs might also consult larger FPDs within the state for specifications of similar products.

Sole-source suppliers

Do not assume only one supplier can furnish what the FPD wants.

Remember some years ago when it was exposed that military purchasers were buying exorbitantly priced toilets and tools through sole-source suppliers. Usually, more than one supplier can furnish an acceptable product. Search the internet for possible suppliers. It can be surprising how many vendors are out there.

Contracts must be in writing

Contracts must be in writingAll contracts to which an FPD is a party must be in writing and must be signed by authorized representatives of the parties involved. FPDs are not required to pay for any product, good or service unless there is first a written contract. Missouri has a special rule on contracts that protects all local governments (432.070). Although private individuals and businesses can be held liable for oral agreements — such as a telephone order or a quasi-contract, where goods are delivered, unpacked and displayed for sale — Missouri governmental entities cannot be held liable for such agreements.

Thus, if an FPD receives a bill for goods or services for which it does not have a written contract, it can refuse to pay the bill. The vendor must be able to produce a properly signed contract to collect on the bill.

Prevailing wage

Prevailing wage must be paid on construction, reconstruction, improvement, enlargement, alteration, painting and decorating, or major repair of public works (290.210-340). Prevailing wage is defined as the “hourly rate of wages for work of a similar character in the locality in which the work is performed” (290.220). Missouri’s Prevailing Wage Law also applies to all public works projects on behalf of FPDs, so having a company or organization construct the public works may not get an FPD out of paying prevailing wages.

FPDs thinking about a public works project should be familiar with a slew of other laws that may be applicable:

  • Construction or renovation practices (8.677; 8.675-8.681; 34.057; 34.059.1; 34.076; 34.209; 290.550-290.550; 290.210-290.340; 292.675.2; 292.675.4);
  • Engineering, surveying and architectural services — interview and negotiate, not bid (8.285-8.291); and
  • Ensuring payment of materials for construction of public works, and for labor performed for such work, by requiring performance bonds for public works over $25,000 (107.170).
  • Revisions to the prevailing wage law in 2018 exempt projects with engineering cost estimates or actual contract amounts under $75,000 from prevailing wage requirements. Complicated rules and exceptions apply, so when work exceeds $75,000, even only after a change order, the FPD’s legal counsel should be consulted about compliance.

Lease purchases

Many public entities dodge bond issue requirements with lease-purchase arrangements. Such an agreement must be cancelable by a new board when elected, even if the members do not change. This puts the vendor at additional risk, which usually is factored into the price quoted. A board should enter into such agreements with caution (see Chapter XVII. Bond Issues for more information about bond issue requirements).