Q. At the most recent open board meeting, seven contracts were approved by the HOA board. Some of the contracts were not put to competitive bid. The board indicated that these (including snow clearing) were “renewals,” and that the board was satisfied with the contractor services provided so there was no need to seek competitive bids. What is the best practice for dealing with contractor bids? Was that incorrect?
—Resident Concerned About the Process
A. “Although the law varies by state, neither Massachusetts nor New Hampshire requires condominium boards to solicit any minimum number of bids for retaining vendor services,” says attorney Gary M. Daddario, partner at Winer & Bennett, LLC, in Tyngsboro, Massachusetts.
“That said, both states impose a fiduciary duty on board members. In fact, the amended version of New Hampshire’s Condominium Act now makes that statement explicitly. This means that the board members have a duty to act in the best interest of the association. Bear in mind, however, that it may be possible to act in the association’s best interest even in the absence of collecting multiple bids. For example, board members may be personally aware of the pricing and/or practices in a particular industry. They could possess this information because of their own occupations or because of having had business dealings in their personal lives or previously as members of the board.
“In any event, it is possible that the board members know a good deal when they see it. Another consideration is the relationship with a vendor. Most people have examples of the various ways in which having a solid, long-term relationship with a vendor pays benefits and dividends. So, some value is appropriately placed on continuing a good relationship. The best practice is really just getting the best deal for the association overall. Pricing, level of service, responsiveness, and other factors may all be analyzed in determining an appropriate course of action.
“Finally, if board members do not possess knowledge about an industry’s norms then, even in the presence of a good vendor relationship, it would be prudent to occasionally seek competing bids if only to ensure that the terms with the long-term vendor are still favorable/competitive.”