Competitive Bidding Threshold Increased

The Michigan Department of Education recently announced the new threshold amount at which local school districts, intermediate school districts, and public school academies must competitively bid (1) labor and materials for construction projects under Revised School Code Section 1267; and (2) the purchase of supplies, materials, and equipment under Revised School Code Section 623a (intermediate school districts) and Section 1274 (local school districts and public school academies). For fiscal year 2013-2014, the competitive bid threshold amount applicable to Revised School Code Sections 1267, 623a and 1274 is $22,766.

Sections 1267, 623a, and 1274 of the Revised School Code do not require competitive bids for construction projects or for purchases of supplies, materials, or equipment that cost less than the threshold amount described above. School officials are cautioned to assess a construction project as a whole (including additions, repairs, and renovations) when determining whether the project's cost is likely to exceed the threshold amount. A project should not be broken down into discrete components to avoid the competitive bidding requirements.

Similarly, for supplies, materials, and equipment, the competitive bidding requirement applies to the purchase of “an item or group of items in a single transaction.” Again, a transaction should not be artificially dissected to avoid competitive bidding.

In lieu of obtaining competitive bids, Revised School Code Sections 623a and 1274 permit local school districts, intermediate school districts, and public school academies to purchase supplies, materials, and equipment through the cooperative bulk purchasing program operated by the Michigan Department of Management and Budget under Section 263(3) of the Management and Budget Act (Public Act 431 of 1984).

Revised School Code Sections 623a and 1274 require that local school districts, intermediate school districts, and public school academies adopt written policies addressing the procurement of supplies, materials, and equipment, including the competitive bid requirements. Please review your district’s policies to ensure that appropriate policies and procedures have been implemented. A policy that states that the “competitive bidding statute be followed” is legally insufficient and should be amended to establish the necessary procedures. Should you need assistance with drafting policy language for that purpose, please contact our office.