Gateview Bidding Policy

Introduction

The goal of the Gateview Board of Directors and all HOA volunteers is to ensure that expenditures of HOA funds are done in a manner such that the best available value is achieved to benefit the homeowners of the Association. The guidance below is intended to delineate the powers of authority of committee chairs, officers and the board of directors and to provide guidance in making financial decisions as well as support the board’s goal of financial transparency in communicating with homeowners.

No document can provide absolute direction for every circumstance. Important watchwords in overseeing expenditures of HOA funds are common sense and prudence. The guidance in this document is intended to provide an outline of required procedures and recommended decision factors. It is also recognized that circumstances may arise that require quick decision making. Nothing in this document is intended to prevent officers and board members from responding in a timely manner to unusual or emergency situations in order to serve the best interests of the HOA.

Expenditure Matrix

The following matrix is provided as a means of categorizing HOA expenditures and determining what

processes should be followed and what approvals are needed to authorize an expenditure. If there

is doubt about which category a consulted:

proposed purchase falls into, the President or Treasurer should be

Notes:

1. Bids not required when only one vendor is available.

For clarification, this matrix is to designate the process for approval of an expenditure, as opposed to the review of invoices for previously authorized expenditures. Invoice payment authorization is normally done by the appropriate officers, with secondary approval by Management.

Contract Authority

The matrix below shows who has authority to execute a contract.

Contract Authority

Vendor Selection Considerations

The process diligence and criteria for selecting any vendor varies greatly depending on the value of the expenditure. Common sense suggests that routine purchases of items generally available from a variety of sources does not require much consideration or effort. Conversely, higher value purchases and procurement of services and products where expertise and technical considerations are important require proportionally more diligence and effort. The following criteria should be considered:

Bidding Procedures

When bidding is required, common sense dictates the level of care, detail and consideration that should be exerted in soliciting bids for products and services. The intent of this section is to provide general guidance to Management or committee managing a bidding process. Those individuals, committees or the board overseeing transactions involving bids are charged with insuring the appropriate level of preparation, detail and due diligence have been met.

An RFI is the formal means of getting general information from vendors. It's usually the first step in the vendor selection process. An RFI is typically the first and most broadly cast of a series of requests intended to narrow down a list of candidates. An RFI is a casual first date in vendor management. Questions should be open ended and high level.

A Request for Proposal (RFP) is a request for a vendor’s total service cost and often used for larger projects when Management or the Board doesn’t know how to solve a problem. In their proposal vendors should highlight pertinent information like: what measures are to be done, the estimated cost of labor and materials and other management fees, technical specifications, scheduling considerations and limitations, and the total project cost.

Because of the scale, vendors providing the service or building the final product may approach them in radically different ways, leading to a different final product or service. RFPs tend to become very detailed because they often specify the following: number of pages in the proposal, number of illustrations, employee qualifications, time and materials breakdown, and state laws to be upheld, among many others points. An RFP may lead to an RFQ if proposals aren’t comparable (apples-to- apples) before a final decision is made.

Preparation of an RFQ should provide the prospective vendors an appropriate level of information to bid accurately on a cost or product price. Items to include:

12. Who is responsible for pulling any required permits and their cost.

In general, at least three bids should be obtained for expenditures where bidding is required by
the matrix. In the case of extenuating circumstances, expenditures based on fewer than three bids may be authorized by the board providing the reasons are documented before an expenditure is approved and the actual number of bids is noted wherever approval of the contract is recorded.

The process of choosing a winning bid will vary depending on the nature of the work to be performed and the value of the expenditure. The key concept is proportional due diligence. Recognizing that the HOA is run by volunteer homeowners, this policy is intended to insure appropriate review and decision making without requiring senseless conformance to arbitrary guidelines.

Criteria to be considered in selecting vendors include:

The final selection of a vendor needs to reflect a common sense consideration of all these criteria. While cost is frequently a very important factor in vendor decisions, many circumstances may exist when there are good reasons to assign greater importance to other criteria. As a general guideline, the more technically difficult or risky the job, the more emphasis should be placed on previous experience, quality and continuity of services. In cases where cost is not the deciding factor, these other considerations should be noted wherever approval of the contract is recorded.

The HOA purchases certain services on an evergreen or ongoing basis. Examples might include landscape, maintenance or cleaning services. When viable competitors are available, such services should be reviewed and put out for bid at least once every five years.

F. Delivery of Bids

The delivery of bids in a timely manner is essential to facilitate project scheduling and planning of capital expenditures. It ensures a smooth overall workflow, fair competition, and avoids the perception of bias inherent with open-ended deadlines whereby a preferred company is able to respond last, leaving other suppliers without the ability to respond, or forced to submit subpar proposals. Inefficient bidding can create a real burden on vendors and create additional HOA costs.

If all required bids are not delivered within thirty (30) days of a request by the President or Board of Directors, Management should provide a brief report which includes the RFP/RFQ (if applicable), vendors contacted, vendor responses, and a proposed plan-of-action to move forward. It’s expected whenever Management determines, for any reason, it cannot respond in a timely manner it should inform the Board of Directors and provide a reason, estimation of the total time to provide the bid(s), and alternative options to proceed if those are deemed necessary to deliver bids within the following thirty (30) days.

Contract Considerations

In accordance with the Association CC&Rs, Gateview intends to follow prudent purchasing procedures in authorizing all expenditures. This is particularly important when contracts for goods or services are signed on behalf of the HOA. The existence of a contract generally signals that the proposed vendor will receive either a higher value purchase order or longer-term agreement. Proposed contracts need to reflect a level of due diligence and care in proportion to the value and term of the transaction. The following is a list of considerations that should be reviewed and spelled out in contracts:

In addition to the above considerations, HOA personnel participating in contract review should be aware of common mistakes or problems in such contracts:

If a Contract cost exceeds $50,000, Management or the Board of Directors should seek attorney review of the agreement to ensure appropriate safeguards are in place to protect the Association.

Doing Business with HOA Homeowners:

As a general policy, the HOA should not do business with property owners of the association due to potential conflict of interest. However, it is possible that occasionally owners may have particular skills, which combined with knowledge of specific HOA needs, or offers of discounts, make it advantageous to the HOA to do business with owners.

If such circumstances arise, any proposed expenditure for products or services from an HOA owner must be specifically approved by the Board of Directors. As part of the approval process, proposals for such services or products must also be obtained from outside sources following the general guidance used for approving long term contracts. Any such business done with property owners shall be reported on the annual financial report to Gateview homeowners along with the amount paid.

Vendor Disqualification:

Gateview shall maintain a list of vendors which the association will not do business with due to past poor performance or other valid reasons. The purpose of the list is to ensure that in the HOA situation where volunteers may change frequently, new board and committee members may be aware of previous bad experiences.

Reasons for inclusion on the list include late performance of deliveries or services, poor quality, failure to make good on warranties, or other valid reasons. Input from other nearby HOAs may be considered. Additions to the exclusion list must be approved by the Board of Directors. Any decision to remove a vendor from the exclusion list must also be approved by the Board.

Definitions:

Summary: