Under the Uniform Municipal Contracting Law, the contracting procedures a local government must follow depend primarily on the estimated amount of the contract.
Generally, if the amount of a contract is estimated to exceed $175,000, the contract must be made by sealed bids, solicited by public notice, and awarded to the lowest responsible bidder. Under some circumstances, electronic reverse auction purchasing or selling processes may be used.
Generally, if the amount of a contract is estimated to exceed $25,000, but not to exceed $175,000, the contract may be made either upon sealed bids or by direct negotiation. If direct negotiations are used, then two or more quotes for the purchase or sale must be obtained when possible. The quotations must be kept on file for a period of at least one year.
If the amount of the contract is estimated to be $25,000 or less, the governing body can then decide to use quotations or the open market. If the contract is made upon quotations, it must then be based, so far as practicable, on at least two quotations that must be kept on file for at least one year.
Depending on the subject matter of the contract or other specifics, other contracting requirements or alternatives may apply. More information can be found in the Office of the State Auditor's two Statements of Position on the topic.
Date this Avoiding Pitfall was most recently published: 5/7/2020