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Competitive Bid Threshold Increased

The Michigan Department of Education recently announced the new threshold amount at which school districts, intermediate school districts, and public school academies must competitively bid for: (1) labor and materials for construction projects (Section 1267 of the Revised School Code (RSC)); and (2) the purchase of supplies, materials, and equipment (Sections 623a and 1274 of the RSC). For the 2017-18 fiscal year, the competitive bid threshold amount is $23,881.

Sections 1267, 623a, and 1274 of the RSC do not require competitive bids for construction projects or for purchases of supplies, materials, or equipment that cost less than the threshold amount. School officials should assess a construction project as a whole (including additions, repairs, and renovations) when determining whether the project’s cost will exceed the threshold amount. A project should not be separated into discrete components to avoid competitive bidding.

Similarly, for supplies, materials, and equipment, the competitive bid requirement applies to the purchase of “an item or group of items in a single transaction.” Again, a transaction should not be artificially dissected to avoid competitive bidding.

In lieu of obtaining competitive bids, Sections 623a and 1274 of the RSC permit school districts, intermediate school districts, and public school academies to purchase supplies, materials, and equipment through the cooperative bulk purchasing program operated by the Michigan Department of Management and Budget under Section 263(3) of the Management and Budget Act.