What is Job Order Contracting?
Job Order Contracting is a construction procurement tool, used for the completion of a large number of items with a single contract. Instead of individually bidding each item as a separate construction project, a unit price catalog captures pricing for all potential types of public works contemplated in the contract (e.g., paving, electrical, roofing, etc.).
What statutes govern construction procurement by political subdivisions?
Political subdivisions, such as counties, cities, and school districts, are required to comply with Idaho Code § 67-2805 with respect to public works construction purchasing. The statute sets forth certain requirements before procuring public works construction valued at $50,000 or more, and requires that the solicitation “describe the construction work to be completed in sufficient detail to allow an experienced public works contractor to understand the construction project the political subdivision seeks to build.”
Idaho Code § 67-2805 is supplemented by other relevant state statutes. See Idaho Code § 67-2802. For example, Idaho Code § 67-2309 provides that all officers or boards of political subdivisions “required by the statutes of the state of Idaho to advertise for bids on contracts for the construction, repair or improvement of public works, public buildings, public places or other work, shall make written plans and specifications of such work to be performed or materials furnished” available, and such plans and specifications must state “the number, size, kind, and quality of such materials and service required for such contract.”
Is Job Order Contracting permitted under Idaho law?
Job Order Contracting is not expressly discussed in Idaho law. However, the Idaho Supreme Court has held, in interpreting related statutes, that the use of unit pricing is permissible in a public works construction bidding process, that flexibility in the bidding process does not make it less competitive, and that requiring the exact quantity of an item to be constructed to be included in the bid documents would impede, rather than facilitate, the competitive bidding process. See SE/Z Const., LLC v. Idaho State University, 140 Idaho 8, 89 P.3d 848 (2004). Job Order Contracting should likewise be permissible under the state and local government purchasing statutes. Additionally, both the Idaho Supreme Court and courts of other jurisdictions have recognized that purchasing entities are permitted flexibility in describing the project being bid.
In SE/Z Const., LLC v. Idaho State University, the Idaho Supreme Court analyzed whether Idaho Code § 67-2309 and another similar government purchasing statute allowed for flexibility in the solicitation of competitive bids. See SE/Z Const., LLC v. Idaho State University, 140 Idaho 8, 89 P.3d 848 (2004). In that case, the university took bids for the renovation of a classroom building. The Court concluded that bid documents prepared by the State that did not provide the exact number of classroom audio-visual package units for purchase did not violate the applicable procurement statute, Idaho Code § 67-5711C, or Idaho Code § 67-2309. Only after the bids were opened did the State determine that it would purchase fourteen total classroom packages, and it used that information in determining the low responsible bidder. The district court found that the state had acted “reasonably and legally under the bidding statutes[.]” On appeal, the Idaho Supreme Court affirmed and held that although Idaho Code § 67-2309 requires official-prepared bid documents to state the “number, size, kind, and quality of materials and service required for such contract,” the spirit of the competitive bidding statute was still satisfied without specifying quantity. The Court concluded that “[a] finding that the State must know the exact quantity of each unit or alternative for which it seeks bids . . . would make invitations for bids virtually inflexible and impede, rather than facilitate, the competitive bidding process.” Allowing for flexibility in the bid documents did not make the bidding process any less competitive.
In line with this theory of flexibility, other states have determined that the “awarding of a contract is an administrative act of discretion.” See Queen City Const., Inc. v. City of Rochester, 604 N.W.2d 368, 374 (Minn. 1999); S. Christian Leadership Conference v. Combined Health Dist., 191 Ohio App. 3d 405, 414–15, 946 N.E.2d 282, 290 (2010). The competitive bidding statutes give “public officials some latitude in purchasing items on which bids are required.” Queen City, 604 N.W.2d at 374. An award of a municipal contract will only be enjoined if it is illegal, arbitrary, capricious, or unreasonable. Telephone Associates, Inc. v. St. Louis County Bd., 350 N.W.2d 398, 400 (Minn. 1984). This level of discretion, particularly in light of the Court’s reasoning in S/EZ Const., LLC v. Idaho State University, indicates that using Job Order Contracting would not prevent an experienced contractor from understanding the public works to be built, or constitute an omission of a required “specification” or “contract document” within the meaning of Idaho Code §§ 67-2805 and 67-2309.
Job Order Contracting is also consistent with the legislative intent behind the competitive bidding process. The purpose of the public works procurement statute is to promote efficient and cost-effective procurement of goods, services, and public works construction in Idaho, through a “publicly accountable process that respects the shared goals of economy and quality.” See Idaho Code § 67-2801. The process requires competitive bidding and the preparation of detailed documents. Job Order Contracting satisfies the purpose of the competitive bidding process because the unit catalog and other bid documents provide all necessary information for contractors to competitively bid.
While Job Order Contracting has not been expressly adopted, the Idaho Supreme Court’s interpretation of related statutes, coupled with the legislative intent behind the competitive bidding process, suggests that Job Order Contracting is permitted under Idaho law.
If you need assistance utilizing Job Order Contracting for your organization or have any questions, contact our office.
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