Competition Matters
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Five Common Mistakes Public Purchasers Make

The articles featured in “Competition Matters” often advise public purchasing agents on suspicious bidding behaviors that can harm the competitive process. Typically, these articles focus on the behavior of vendors, but the behavior of public purchasers also can influence the competition of bidding activity. Here we outline five common pitfalls that public purchasers should avoid in order to ensure that they get the most out of the competitive bidding process.

Common Mistakes to Avoid:

1. Readily volunteering the list of prospective bidders. While it may be tempting to distribute a list of companies that received invitations to bid or picked up bid packets, sharing this information could foster collusion among bidders. If a prospective bidder becomes aware of the identity of other bidders, it becomes easier for potential bidders to form a conspiracy to engage in illegal activity. Keeping the list of bidders private helps ensure that bidders make independent decisions about bid prices, which helps maximize competition. However, public purchasers should be careful to comply with Ohio’s public records laws and may be required to disclose bidder lists in response to a public records request for this information.

2. Setting overly specific or restrictive bid specifications (when unnecessary). A public purchaser’s job includes tailoring bid specifications to the needs of individual projects. But while bid specifications generally should be clear and detailed, they should not be drafted with the intent of awarding a specific bidder. Overly restrictive bid specifications tend to undermine the competitive process and can result in higher costs to the public because they often effectively shut other competitors out of the process. To observe best practices, public purchasers should not copy specifications from a manufacturer’s website or literature and should not use brand names in specifications unless clearly stating “or equivalent.” Note, however, that there is an important exception to this rule for public projects that call for special skills or enhanced abilities based on safety or health-related concerns that only specific vendors or manufacturers can fulfill.

3. Using contract extensions to continue purchasing from a vendor after a contract expires. When public purchasers use contract extensions to maintain existing partnerships beyond the initial term, they may be circumventing the competitive bidding process. Contract extensions foreclose would-be competitors from offering alternative (and possibly lower) bids after a contract would otherwise expire. Thus, avoiding contract extensions can help decrease local governments’ and taxpayers’ costs.

4. Awarding open-ended contracts that have no usage or time limits. Contracts for public projects that do not contain a time frame for completion or an estimate of usage unnecessarily risk extending the contract beyond what the project requires. Without such terms, public purchasers may be forced into a continuing relationship with a vendor that could increase costs. On the other hand, carefully defining the scope of the project by including such terms can allow public purchasers to contract with vendors based on the needs of the project and get the full benefit of healthy competition.

5. Breaking a contract into smaller amounts to avoid the bidding process. As a general rule, similar products and services purchased from the same vendor should constitute one contract. When the purchaser breaks a contract down into smaller amounts to avoid publicly bidding the project, this thwarts the competitive bidding process and may violate Ohio’s competitive bidding statutes. While there may be valid justifications for splitting a contract into several smaller ones, the desire to avoid the hassle of competitive bidding is not one of them.