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Oklahoma Association of Municipal Attorneys

Competitive Bidding Act, Sole Source Exemption?

John R. Andrew

Mon, Aug 16, 2021 8:48 PM

All,

Our Information Services department is working on expanding our Broadband utility, and they are building Network Operation Centers to service our expansion. They do not want to have a different contractor to construct or put together these facilities because they need for the system to be compatible.

While there is a sole source exemption in the Central Purchasing Act for the state, I wasn't seeing anything like this in the Competitive Bidding Act. Is there another way to make sure that our facilities are all compatible using the same system, other than just specifying in the bid packet that the facilities MUST be set up in a particular way to match what's been done before?

Thanks,

John R. Andrew, J.D., M.P.A.
City Attorney, City of Ponca City, OK
PO Box 1450
Ponca City, OK 74602-1450
(580) 767-0337
andrejr@poncacityok.gov

All, Our Information Services department is working on expanding our Broadband utility, and they are building Network Operation Centers to service our expansion. They do not want to have a different contractor to construct or put together these facilities because they need for the system to be compatible. While there is a sole source exemption in the Central Purchasing Act for the state, I wasn't seeing anything like this in the Competitive Bidding Act. Is there another way to make sure that our facilities are all compatible using the same system, other than just specifying in the bid packet that the facilities MUST be set up in a particular way to match what's been done before? Thanks, John R. Andrew, J.D., M.P.A. City Attorney, City of Ponca City, OK PO Box 1450 Ponca City, OK 74602-1450 (580) 767-0337 andrejr@poncacityok.gov

Jon Miller

Mon, Aug 16, 2021 9:37 PM

John,

I would consider whether the construction of the system would qualify as a contract for “professional services” which would be exempt from competitive bidding. I’m not certain whether the “Network Operations Center” is a physical structure, or a name for the system, but I would think that the system could be separated out regardless. Following is some material I assembled on professional services contracts:

A question that often arises is whether a contract for professional services is exempt from competitive bidding and, if so, whether the particular services sought constitute professional services. It has been recognized that competitive bidding generally is not required where professional services are sought:
Constitutional and statutory provisions requiring public contracts to be let upon competitive bidding do not apply to certain contracts for personal services, particularly those of a technical and professional nature such as the services of attorneys or physicians or to contracts requiring special training and skill such as contracts calling for the services of architects; engineers; surveyors; accountants and auditors; construction superintendents or supervisors; real estate appraisers or brokers; title abstracters or preparers of real estate records; insurance brokers; pawnbrokers or financial advisers; artists, actors, and musicians; or other specialists or skilled people; and such contracts may be let without bids.

64 Am. Jur. 2d Public Works and Contracts § 34. One Oklahoma case also supports the existence of an exception to competitive bidding requirements for professional services:
Scientific knowledge or professional skill has also been regarded as furnishing a ground for an exception to the statutory rule. Thus it has been said that the services of a lawyer, or a physician, or of an architect, or surveyor, are not embraced within a provision requiring the letting of contracts to the lowest bidder.

Weathers v. Layton, 1924 OK 995, 230 P. 750. As a local commentator has stated:

When a contract on a public project involves “professional judgment or scientific knowledge,” the legislature does not require that the lowest price be the determining factor. “A contract for personal services, such as services of architects, engineers, and surveyors, is not subject to competitive bidding statutes because the services are not subject to uniform specifications.” According to the Oklahoma Supreme Court, the purpose of the Act is to require contracts to be awarded to the lowest bidder when the work or materials at issue have to conform to specifications so accurate comparisons can be objectively made.

R. Donaldson, 9 Okla. Prac., Construction Law § 5:3 (2010).

An understanding of the basis for the professional services exception is important because an exception is not included in every statute requiring competitive bidding. The Public Competitive Bidding Act, 61 Okla. Stat. §101, et seq., only applies to contracts for “making any public improvements or constructing any public building or making repairs to or performing maintenance on the same” and by its terms does not apply to professional service contracts. The Oklahoma Court of Appeals held in McMaster Construction, Inc. v. Board of Regents of Oklahoma Colleges, 1997 OK 23, 934 P.2d 335, that the Public Competitive Bidding Act did not apply to contracts for professional services. In McMaster, the University of Central Oklahoma (“UCO”) submitted newspaper advertisements and solicited proposals for construction management services for capital improvements to the university. UCO received seven proposals and awarded two contracts. Plaintiff sued alleging in part that the construction management contracts were subject to competitive bidding because they are contracts for the purpose of making a public improvement or constructing a public building and the statute was not followed. UCO argued that contracts for management services were not “public construction contracts” within the meaning of the act. In holding that the contracts were for professional services and not subject to competitive bidding, the court stated:
The purpose of the Act is to obtain the best results at the lowest cost, the greatest value for the fewest dollars. Competitive bidding statutes are to be construed to give effect to the apparent legislative policy. The Act is intended to require a contract to be awarded to the lowest bidder when work or materials must conform to specifications so that accurate comparisons can be objectively made. When a contract involves professional judgment or scientific knowledge, the legislature does not require the lowest price to be the determining factor. A contract for personal services, such as services of architects, engineers, and surveyors, is not subject to competitive bidding statutes because the services are not subject to uniform specifications. Because the Flintco and Sverdrup contracts are for a personal service and call for professional judgment, they are not subject to the Act.

The Central Purchasing Act contains an exemption for professional services. 74 Okla. Stat §85.7. In defining the professional services exempted from competitive bidding, §85.7 specifically references, in addition to actuarial, architectural, engineering and legal services, “other professional services as such term is defined in Section 803 of Title 18 of the Oklahoma Statutes.” Section 803 of Title 18, Oklahoma Statutes (the version below going into effect on 11/01/2012), defines “professional service” as the personal service rendered by:

a. a physician, surgeon or doctor of medicine....
b. an osteopathic physician or surgeon....
c. a chiropractic physician....
d. a podiatric physician....
e. an optometrist....
f. a veterinarian....
g. an architect....
h. an attorney....
I. a dentist....
j. a certified public accountant or a public accountant....
k. a psychologist....
l. a physical therapist....
m. a registered nurse....
n. a professional engineer....
o. a land surveyor....
p. an occupational therapist....
q. a speech pathologist or speech therapist....
r. an audiologist....
s. a registered pharmacist....
t. a licensed perfusionist....
u. a licensed professional counselor....
v. a licensed marital and family therapist....
w. a dietitian....
x. a social worker....
y. a licensed alcohol and drug counselor..., or
z. a licensed behavioral practitioner....

The question that presents itself is whether a contract for professional services would be excluded under the competitive bidding requirements for public trusts set forth in 60 Okla. Stat. §176(h). As noted in one treatise, “contracts for services, particularly for professional services and other services requiring special training and skill, are generally not contemplated by provisions requiring public contracts for work to be let upon competitive bidding.” 64 Am. Jur. 2d Public Works and Contracts § 32. If the professional services exemption is viewed as a common law rule, then arguably professional services need not be competitively bid under §176(h) even though there is not an express exemption.

Hope this helps.

Jonathan E. Miller
City Attorney
City of Mustang
1501 N. Mustang Road
Mustang, Oklahoma 73064
Telephone: (405) 376-7746
Facsimile: (405) 376-7721

This email is sent by the City Attorney and may contain information that is privileged or confidential. If you received this email in error, please notify the sender by reply email and delete the email and any attachments. If you are a and officer, employee or agent of the City of Mustang, you should not share this email with others. Sharing this email may result in a loss of the attorney-client privilege.

From: John R. Andrew andrejr@poncacityok.gov
Sent: Monday, August 16, 2021 3:49 PM
To: oama@lists.imla.org
Subject: [Oama] Competitive Bidding Act, Sole Source Exemption?

All, Our Information Services department is working on expanding our Broadband utility, and they are building Network Operation Centers to service our expansion. They do not want to have a diff

All,

While there is a sole source exemption in the Central Purchasing Act for the state, I wasn’t seeing anything like this in the Competitive Bidding Act. Is there another way to make sure that our facilities are all compatible using the same system, other than just specifying in the bid packet that the facilities MUST be set up in a particular way to match what’s been done before?

Thanks,

John R. Andrew, J.D., M.P.A.
City Attorney, City of Ponca City, OK
PO Box 1450
Ponca City, OK 74602-1450
(580) 767-0337
andrejr@poncacityok.gov mailto:andrejr@poncacityok.gov

John, I would consider whether the construction of the system would qualify as a contract for “professional services” which would be exempt from competitive bidding. I’m not certain whether the “Network Operations Center” is a physical structure, or a name for the system, but I would think that the system could be separated out regardless. Following is some material I assembled on professional services contracts: A question that often arises is whether a contract for professional services is exempt from competitive bidding and, if so, whether the particular services sought constitute professional services. It has been recognized that competitive bidding generally is not required where professional services are sought: Constitutional and statutory provisions requiring public contracts to be let upon competitive bidding do not apply to certain contracts for personal services, particularly those of a technical and professional nature such as the services of attorneys or physicians or to contracts requiring special training and skill such as contracts calling for the services of architects; engineers; surveyors; accountants and auditors; construction superintendents or supervisors; real estate appraisers or brokers; title abstracters or preparers of real estate records; insurance brokers; pawnbrokers or financial advisers; artists, actors, and musicians; or other specialists or skilled people; and such contracts may be let without bids. 64 Am. Jur. 2d Public Works and Contracts § 34. One Oklahoma case also supports the existence of an exception to competitive bidding requirements for professional services: Scientific knowledge or professional skill has also been regarded as furnishing a ground for an exception to the statutory rule. Thus it has been said that the services of a lawyer, or a physician, or of an architect, or surveyor, are not embraced within a provision requiring the letting of contracts to the lowest bidder. Weathers v. Layton, 1924 OK 995, 230 P. 750. As a local commentator has stated: When a contract on a public project involves “professional judgment or scientific knowledge,” the legislature does not require that the lowest price be the determining factor. “A contract for personal services, such as services of architects, engineers, and surveyors, is not subject to competitive bidding statutes because the services are not subject to uniform specifications.” According to the Oklahoma Supreme Court, the purpose of the Act is to require contracts to be awarded to the lowest bidder when the work or materials at issue have to conform to specifications so accurate comparisons can be objectively made. R. Donaldson, 9 Okla. Prac., Construction Law § 5:3 (2010). An understanding of the basis for the professional services exception is important because an exception is not included in every statute requiring competitive bidding. The Public Competitive Bidding Act, 61 Okla. Stat. §101, et seq., only applies to contracts for “making any public improvements or constructing any public building or making repairs to or performing maintenance on the same” and by its terms does not apply to professional service contracts. The Oklahoma Court of Appeals held in McMaster Construction, Inc. v. Board of Regents of Oklahoma Colleges, 1997 OK 23, 934 P.2d 335, that the Public Competitive Bidding Act did not apply to contracts for professional services. In McMaster, the University of Central Oklahoma (“UCO”) submitted newspaper advertisements and solicited proposals for construction management services for capital improvements to the university. UCO received seven proposals and awarded two contracts. Plaintiff sued alleging in part that the construction management contracts were subject to competitive bidding because they are contracts for the purpose of making a public improvement or constructing a public building and the statute was not followed. UCO argued that contracts for management services were not “public construction contracts” within the meaning of the act. In holding that the contracts were for professional services and not subject to competitive bidding, the court stated: The purpose of the Act is to obtain the best results at the lowest cost, the greatest value for the fewest dollars. Competitive bidding statutes are to be construed to give effect to the apparent legislative policy. The Act is intended to require a contract to be awarded to the lowest bidder when work or materials must conform to specifications so that accurate comparisons can be objectively made. When a contract involves professional judgment or scientific knowledge, the legislature does not require the lowest price to be the determining factor. A contract for personal services, such as services of architects, engineers, and surveyors, is not subject to competitive bidding statutes because the services are not subject to uniform specifications. Because the Flintco and Sverdrup contracts are for a personal service and call for professional judgment, they are not subject to the Act. The Central Purchasing Act contains an exemption for professional services. 74 Okla. Stat §85.7. In defining the professional services exempted from competitive bidding, §85.7 specifically references, in addition to actuarial, architectural, engineering and legal services, “other professional services as such term is defined in Section 803 of Title 18 of the Oklahoma Statutes.” Section 803 of Title 18, Oklahoma Statutes (the version below going into effect on 11/01/2012), defines “professional service” as the personal service rendered by: a. a physician, surgeon or doctor of medicine.... b. an osteopathic physician or surgeon.... c. a chiropractic physician.... d. a podiatric physician.... e. an optometrist.... f. a veterinarian.... g. an architect.... h. an attorney.... I. a dentist.... j. a certified public accountant or a public accountant.... k. a psychologist.... l. a physical therapist.... m. a registered nurse.... n. a professional engineer.... o. a land surveyor.... p. an occupational therapist.... q. a speech pathologist or speech therapist.... r. an audiologist.... s. a registered pharmacist.... t. a licensed perfusionist.... u. a licensed professional counselor.... v. a licensed marital and family therapist.... w. a dietitian.... x. a social worker.... y. a licensed alcohol and drug counselor..., or z. a licensed behavioral practitioner.... The question that presents itself is whether a contract for professional services would be excluded under the competitive bidding requirements for public trusts set forth in 60 Okla. Stat. §176(h). As noted in one treatise, “contracts for services, particularly for professional services and other services requiring special training and skill, are generally not contemplated by provisions requiring public contracts for work to be let upon competitive bidding.” 64 Am. Jur. 2d Public Works and Contracts § 32. If the professional services exemption is viewed as a common law rule, then arguably professional services need not be competitively bid under §176(h) even though there is not an express exemption. Hope this helps. Jonathan E. Miller City Attorney City of Mustang 1501 N. Mustang Road Mustang, Oklahoma 73064 Telephone: (405) 376-7746 Facsimile: (405) 376-7721 This email is sent by the City Attorney and may contain information that is privileged or confidential. If you received this email in error, please notify the sender by reply email and delete the email and any attachments. If you are a and officer, employee or agent of the City of Mustang, you should not share this email with others. Sharing this email may result in a loss of the attorney-client privilege. From: John R. Andrew <andrejr@poncacityok.gov> Sent: Monday, August 16, 2021 3:49 PM To: oama@lists.imla.org Subject: [Oama] Competitive Bidding Act, Sole Source Exemption? All, Our Information Services department is working on expanding our Broadband utility, and they are building Network Operation Centers to service our expansion. They do not want to have a diff All, Our Information Services department is working on expanding our Broadband utility, and they are building Network Operation Centers to service our expansion. They do not want to have a different contractor to construct or put together these facilities because they need for the system to be compatible. While there is a sole source exemption in the Central Purchasing Act for the state, I wasn’t seeing anything like this in the Competitive Bidding Act. Is there another way to make sure that our facilities are all compatible using the same system, other than just specifying in the bid packet that the facilities MUST be set up in a particular way to match what’s been done before? Thanks, John R. Andrew, J.D., M.P.A. City Attorney, City of Ponca City, OK PO Box 1450 Ponca City, OK 74602-1450 (580) 767-0337 andrejr@poncacityok.gov<mailto:andrejr@poncacityok.gov>