What’s All This About No-Bid Contracts Anyway?

There’s been a lot of talk (and some shenanigans) about the “no-bid” provisions in the proposed Costa Mesa charter.  The Council insists there’s no such thing as “no-bid” contracts or purchases, but there are.

Here is the real story.

What State Law Says

California’s Public Contract Code was enacted by the State legislature to, among other things, “eliminate favoritism, fraud, and corruption in the awarding of public contracts.”  (Public Contract Code Section 100 – emphasis added)

Other objectives are, “Ensuring full compliance with competitive bidding statutes as a means of protecting the public from misuse of public funds” and “To provide all qualified bidders with a fair opportunity to enter into the bidding process, thereby stimulating competition in a manner conducive to sound fiscal practices.”  (Public Contract Code Section 100 – emphasis added))

Allows public works contracts of $45,000 or less to be issued without competitive public bidding.  (Section 22032(a))

Requires public works contracts between $45,000 and $175,000 to be let by informal bidding procedures.  (Section 22032(b))

Requires public works contracts exceeding $175,000 to be let by formal bidding procedures.  (Section 22032(c))

Prohibits splitting a project into smaller parts to avoid exceeding the limits established for competitive bidding.  (Section 22033)


What the Costa Mesa Municipal Code Says (Today)

Requires all public works projects (except for maintenance) to be bid (or be exempt from bidding) in accordance with the State’s Public Contract Code Section 22032.

Prohibits splitting a project into smaller parts to avoid exceeding the limits established for competitive bidding.

Allows purchases of less than $5,000 to be made without competitive bidding. (CMMC Section 2-165)

Requires purchases between $5,000 and $50,000 to be made according to an informal bidding process.  (CMMC Section 2-167)

Requires purchases exceeding $50,000 to be made according to a formal process involving competitive bids.  (CMMC Section 2-166)

Note: The provisions of the Municipal Code may be changed at any time, by a majority vote of the City Council (3 Council members), as long as the change complies with other applicable laws or regulations (state law now, or city charter if adopted).

What the proposed charter says

The proposed charter says, “the City is exempt from the provisions of all California statutes regulating public contracting and purchasing” for projects and purchases that are considered “municipal affairs” and are funded only by City revenue sources (no state or federal funding).  (Section 401(b))

The proposed charter requires the City Council to annually “set a value at which Municipal Public Works Contracts shall be exempt from formal public bidding” and requires the City Council to adopt procedures to ensure “the best value and quality of work is being obtained.”  (Section 401(c))


What it Means

If adopted, the proposed charter would allow 3 members of the City Council to remove current competitive bidding requirements for purchases and contracts and replace them with an unspecified limit to be determined by a vote of 3 Council members.  It could be $6,000 or it could be $6 Million – the charter doesn’t say.

The Municipal Code sections that currently regulate purchases and public works contracts may be amended or deleted by a vote of 3 Council members, and any new limits may be adopted by ordinance (requires notice, two public hearings and a 30-day “referendum” period before the ordinance is effective) or by resolution (no notice required, effective immediately, not subject to referendum).

In summary, if the charter is adopted, 3 members of the City Council will have unlimited authority to allow for “no-bid” contracts.  Removing, or greatly increasing, the caps on contracts not requiring competitive bidding opens the door to favoritism, fraud, and corruption in the awarding of public contracts.

Remember, when thinking about the proposed charter, it’s not what the Council tells you it says, but what it actually says (or doesn’t say, or leaves open for City Council decision).

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