September 10, 2024
Part 1

School Contracts with Vendors, Construction Companies, & Architects

Education Law WASDA Conference Vendor Contracts

This past April, Kirk Strang brought the latest information regarding school contracts to the WASDA New Superintendents Academy.

In this 3-part series, we’ll be reviewing all of the main topics Kirk shared at the conference. Here’s a quick overview:

PART 1

  • Legal Capacity to Contract
  • Negotiations
  • Contracting Requirements in Wisconsin

PART 2

  • Contract Clauses

PART 3

  • Issues, Traps, and Pitfalls
  • Contracting Methods, Issues, and Practices

Let’s begin with Part 1 …

Legal Capacity to Contract

CONTRACT BASICS

When is there a contract?

  • Sometimes a contract entered into by a school official is binding because of enabling policy or delegated authority.
  • Sometimes a “contract” creates damages liability because of, e.g., “apparent authority.”
  • “Contracts” at least functionally exist where there is an offer, acceptance, and performance.

Who can enter into a contract?

  • Question: State law has several provisions authorizing school boards to enter into specific types of contracts. Does this mean that any school official can consummate other types of contracts?
  • Answer: No. However, at the very least, any school official can create a contract dispute.

Consider this key recommendation:

  • Board policy should state that only the school board has the authority to enter into contracts unless the board or board policy specifically provides otherwise.
  • Every would-be contractor should be made aware of this policy. 

Negotiations

FACTORS TO KEEP IN MIND

Throughout the negotiation process, be aware of the following:

  • Installation and other capacities that can/cannot be duplicated;
  • Capacity to decline to enter into a contract;
  • Value of the contract to the would-be vendor;
  • The market share that the vendor controls; and
  • Multinationals that are the only game in town versus a variety of relatively local and competitive vendors.

Contracting Requirements in Wisconsin

LEGAL REQUIREMENTS

  1. School districts are not generally required to choose contractors through bidding processes, unless a specific statute or board policy requires.
    1. Some of these statutory exceptions include: 
      1. Energy savings performance contracts
      2. Group health care benefits providers
  2. School districts do have a general obligation to act with due diligence in contracting.
  3. School officials have to avoid conflicts of interest or violation of the code of ethics for public officials.
  4. School officials may need annual or special meeting approval.
  5. Schools may require specific board majorities to approve certain contracts by law or policy.

BIDDING ESSENTIALS

  1. Reserve the right to reject any and all bids and advise that there shall be no obligation to accept a particular bid.
    1. Wisconsin statutes generally provide that public construction projects must be competitively bid and awarded to the “lowest responsible bidder.” School districts, however, are exempt from this requirement. 
    2. A school district should not hesitate to reject bids from an irresponsible bidder, e.g., the bidder has a history of poor-quality work and costly delays.
  2. Mandate that bidders provide specific pricing.
  3. Ensure that any bidder who will be awarded a contract has submitted the “bidder’s certificate” required by Wis. Stat. 66.0901(7). If this has not taken place, any subsequent contract is void.
  4. Advise of consequences of bid rejection policy under public records law. 

RECENT LEGISLATIVE ACTION

  • Senate Bill 688 (vetoed)

    On March 29, 2024, Governor Evers vetoed Senate Bill 688. The bill would have, in part, required school districts to competitively bid any contract exceeding $150,000 that was for the construction, repair, remodeling, or improvement of a public school building or for the furnishing of supplies or materials.

    In his veto message, Governor Evers wrote:

    I object to undermining the local decision of a school board to choose voluntary collaboration with local contractors to build the best value projects to support students. School boards under current law may use competitive bidding if they deem it appropriate. School districts currently choose different methods to provide the best projects for their students and communities, and the state should not interfere in this local decision making.

This brings us to the end of Part 1 of this series. Next up, in Part 2, we’ll continue diving into school contracts, this time with a focus on contract clauses.

In the meantime, if you found this article informative, you may also like:

© 2022, Strang Law LLC