The main competitive bidding requirements for local government are included in Article 8 of Chapter 143 of the North Carolina General Statutes (G.S.). Most of the formal bidding requirements are set forth in G.S. 143-129, and the informal requirements are in G.S. 143-131. These statutes apply to the “expenditure of public money” within established dollar limits and on specific types of contracts. The statutes do not identify the specific entities covered. Hence, unless a particular statute offers otherwise, these bidding requirements are applicable to all local government entities, comprising of municipalities, special districts, counties, local school units, and other special purpose local governments.
There are several types of local governments that are either exempt from bidding requirements or follow laws that establish special contracting procedures. These local governments comprise of housing authorities [G.S. 157-9], hospital authorities [G.S. 131E-23(d)], joint municipal power agencies [G.S. 159B-11(10)], regional solid waste management authorities [G.S. 153A-427(b)], soil and water conservation districts [G.S. 131E-23(d)], and transportation authorities [special purchasing procedures under G.S. 143-129(h)].
Types of Contracts Covered
Statutory bidding requirements generally apply to two categories of contracts:
- Contracts for the purchase of apparatus, supplies, materials, or equipment and is generally understood to include all types of personal property.
- Contracts for construction or repair work. This category includes both horizontal construction (roads, utilities, and other infrastructure) and vertical construction (buildings and other structures). Special rules apply to building construction projects.
The contracts that do not fall within either of the above mentioned categories and are therefore are not subject to bidding, include:
- Service contracts
- Contracts for the purchase of real property
- Contracts for the lease of personal property. It is important to note that lease-purchase or lease contracts with an option to purchase are subject to bidding. Besides, contracts that are below the informal bidding threshold do not require any procedural requirements.
Many local governments have policies that require conducting bidding procedures for contracts that do not need mandatory bidding requirements and some might do so on a case-by-case basis by local discretion. In such situations, the local unit may not employ the statutory procedures, but it may opt to use some or all of them, or it may develop procedures of its own. While establishment of local procedures is not legally mandated, failing to meet the established local procedures may cancel the validity of the resulting contract.
Some types of contracts are subject to additional requirements that do not specifically replace the bidding requirements, where both sets of requirements should be fulfilled. Like additional procedures that affect the purchase of voting systems are set forth in G.S. 163-165.7 through 163-165.10.
Formal Bidding Requirements [G.S. 143-129]
The formal bidding requirements cover construction or repair contracts estimated to cost more than $500,000 and the purchase of apparatus, supplies, materials, or equipment [hereinafter purchase contracts] estimated to cost more than $90,000. The threshold applies to the estimated cost of the total contract (not each item). The bidding requirements also cover lease-purchase contracts and leases containing an option to purchase. [G.S. 160A-19; G.S. 153-165] Contracts should not be divided with the objective of evading the bidding requirements. [G.S. 143-133]
Some of the exceptions listed below apply only to purchase contracts, while others apply to both purchase and construction or repair contracts. Community colleges follow state rules to purchase contracts and hence, exceptions in this section that are applicable to purchase contracts do not apply to or community colleges. Exceptions to the bidding requirements for community colleges are included in the procedures and policies of the Division of Purchase and Contract.
- Exceptions that apply to purchase contracts only
- Purchases from other governmental agencies [G.S. 143-129(e)(1)]
- Competitive group purchasing [G.S. 143-129(e)(3)]
- Gasoline, , motor oil, alcohol fuel, fuel oil, diesel fuel or natural gas [G.S. 143-129(e)(5)(informal bidding required)]
- Sole sources [G.S. 143-129(e)(6)(requires governing board approval, specified criteria must be met)] Separate provisions for soles sources apply to hospitals under this exception.
- Information technology goods or services purchased through state Office of Information Technology [G.S. 143-129(e)(7)] or under request for proposals (RFP) procedures authorized under G.S. 143-129.8 [G.S. 143-129.8]
- State contract purchases [G.S. 143-129(e)(9)]
- Federal contract purchases [G.S. 143-129(e)(9a)]
- Used apparatus, supplies, materials, or equipment that do not include remanufactured, re-fabricated, or demo items [G.S. 143-129(e)(10)]
- Previously bid contracts [G.S. 143-129 (g)(requires approval of governing board at a regular meeting upon ten days public notice)]
- Purchase of goods as well as services from nonprofit work centers for the blind and severely disabled [G.S. 143-129.5]
- Exceptions that apply to construction or repair contracts only
- Change order work [G.S. 143-129(e)(4)]
- Construction management at risk projects [G.S. 143-129 (e)(11); but note requirements of G.S. 143-128.1 for these projects.]
- Force account work [G.S. 143-135; note dollar limitations and bidding requirements for materials purchased for these projects]
- Projects using unemployment-relief labor paid for in whole or in part with state or federal funds [G.S. 143-129(d)]
- Contracts with North Carolina Department of Transportation for street construction and repair [G.S. 136-41.3]
- Exceptions that apply to both construction and purchase contracts
- Special emergency involving the health and safety of the people or their property [G.S. 143-129(e)(2)]
- Guaranteed energy savings contracts [G.S. 143-129(e)(8); but note the requirements of G.S. 143-64.17 through 143-64.17G for these projects]
- Solid waste management facilities [G.S. 143-129.2]
Advertising for Bids
- Bidding opportunities must be advertised in a newspaper having “general circulation” (defined in G.S. 1-597) in the jurisdiction that is seeking bids. Notice of bidding opportunities may be provided in other ways in addition to published notice. The governing board may authorize the use of advertisement by electronic means instead of published notice. Action to authorize this must be taken at a regular meeting of the governing board. [G.S. 143-129(b)]
- The advertisement must appear at least one time and at least seven full days must lapse between the date on which the advertisement appears and the date of the opening of bids. [G.S. 143-129(b)]
- The advertisement must
- “state the time and place where plans and specifications… may be had,”
- “state the time and place for opening of the proposals,” and (c) “reserve to the… governing body the right to reject any or all proposals.” [G.S. 143-129(b)]
Bond or Bid Deposit
- “No [bid] for construction or repair work shall be considered or accepted… unless at the time of its filing [it is] accompanied by a deposit… equal to not less than five percent (5%) of the [bid amount]. [G.S. 143-129(b)] Bid deposits are not required for purchase contracts. The bid deposit may be in any of the following forms:
- Cashier’s check
- Certified check
- Bid bond executed by a surety licensed in North Carolina
- The bid deposit ought to be retained if the successful bidder fails to execute the contract within 10 days after the award or is unable to give satisfactory surety as per law. [G.S. 143-129(b)]
Withdrawal of Bid Because of Error
A bidder may request permission to withdraw his or her bid after the bid opening if the bidder can submit credible evidence that the bid was based on a mistake that constituted a substantial “unintentional arithmetic error or unintentional omission”- but not a judgment error- in the preparation of the bid. The request to withdraw must be made in writing no later than seventy-two hours after the opening of bids, unless a longer period has been specified in the instructions to bidders. If the agency determines that the error meets the standard under the statute, the bid may be withdrawn. If not, the bidder forfeits his or her bid deposit. A bidder who requests withdrawal cannot participate in the contract, even on re-advertisement. [G.S. 143-129.1]
Standard and Procedures for Awarding the Contract
The award is offered to the “lowest responsible bidder or bidders… taking into consideration quality, performance and the time specified in the proposals for the performance of the contract.” [G.S. 143-129(b)]. Here the term “responsible” implies judgment, skill and integrity much required for a faithful performance of the contract.
ontracts for construction or repair work in the formal bid range must be awarded by the governing body. [G.S. 143-129(b)] The governing body may delegate to the manager or purchasing agent, or both, the authority to award purchase contracts in the formal range. [G.S. 143-129(a)].