HOA BIDDING Ethics

Started by AugustS1 • 6 replies • 1703 views

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AugustS1 (Louisiana)
Posts: 2

Posted:

During our 2008 annual hoa meeting I mention to the Hoa treasurer that I would like to submitt abid for cleaning the pool rest rooms he told me that was a good idea, but don't think the board will open bids to the residents, due to they may not be committed to the job. Well, two months later at a commuication committee meating I spoke to the vice president of the board and ask if the pool company that service our pool is contract to clean the rest rooms. To my unbelief he told me that the treasurer wife submitted she bid and got the rest job. ( conflict of interest or what, not to mention personal gain)
I was out done. I than requested from the board for me to review how they advertised to the public that hey were accepting bids, I also requested to see all who submitted bids and the amount of each bid. Do i need to say I have yet to hear from the board. I believe that this was unethically and what Can I do?

JohnK3 (Pennsylvania)
Posts: 967

Posted:

August,

Our ByLaws allow for vendor contracts with people/firms connected to Board members as long as the relationship is disclosed and the interested Board member does not vote at the Board meeting on the approval of the contract; provided, however, that Board member can be counted for quorum purposes.

We have no formal guidelines as to how contracts are bid, though for our 2009 landscaping contract, we'll seek at least 5 proposals.

This process is not open to the public. The Board chooses to whom we will offer the opportunity to bid.

DonnaS (Tennessee)
Posts: 5,671

Posted:

August,

John has told you what is the normal for the bidding process. As long as the Board member who is related or has any financial interest in the proposal does excuse themselves from the vote, then the proposed contract can be contracted between the HOA and that party.

Even tho you want to see the other proposals and bids, you have no rights to review them. That is strictly Board business. Chances are that this is definitely a favortism issue. Unethical??, Close but I would just move on because to beat this to death will only make you look less favorable. It's too bad that some of these Boards don't do things exactly honest and open but they do.

MicheleD (Kentucky)
Posts: 4,491

Posted:

I totally agree.

You got bamboozled and, in my opinion, based on what you have here, it appears to be unethical behavior.

However, unethical and illegal are two different things.

By the way, I wholeheartedly disagree with the treasurer's alleged statement that a homeowner doing the work may not be committed to the job. That goes against common sense.

The homeowner has a vested interest (his own property) in making sure he does a good job!

Oh well.

In our HOA the bids would be available for review by homeowners if asked, but we would not allow them to be removed from the property and not during the bidding process.

SusanW1 (Michigan)
Posts: 5,202

Posted:

HOW that person got the job is of interest to me.

Were there bids requested? I doubt it, since this is not really a "stand-alone" job i.e. not performed outside a larger contracted job; instead it usually is included within a contract. Besides, who would think that there would be interest in this job of cleaning bathrooms?

Ask to see the minutes where this person was accepted as the contractor. (Or it could have been under the responsiblity of the manager just to find someone.) The contract should state the beginning and end-date. Write a letter to the Board asking to be included in the next round of bids for this job. (You should not tell a Board member, verbally, about your interest for anything. You should have approached the Board thru a letter or personal visit to a meeting.)

Perhaps this other person has a business and is insured. That's another issue the Board would consider for liability purposes.

KirkW1 (Texas)
Posts: 1,665

Posted:

I will go out on a limb and say that the treasurer may have breached his fiduciary responsibility.

While the bidding process is closed to the residents, the fact remains that the treasurer used his position on the board to further the direct benefit of himself. (If he lives with his wife then burden that he did not benefit would be upon him.) The problem is not that the contract was given to his wife. The problem is that he told another resident that the board did not accept bids from other sources.

Having said this, proving that the conversation took place is near impossible unless it was in email or written. But the person should write a letter to the board telling them she wanted to be included but was led to believe that the board didn't accept bids from residents. Then request to be allowed to bid in the future. I would then drop the matter entirely. IF someone asks, then answer questions, but don't go after anyone.

If the board chooses to let next year's contract go by without rebidding then I would bring the issue up in an annual meeting. I would specifically request to know what the policy is and state that some in the neighborhood would like to be able to bid for services.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Whether or not a conflict of interest occurred is unknown. Unless you were at the meeting when the decision was made on who would get the bid -- if there were even bids on the job, you probably will never know. In AZ if a conflict of interest occurs the person with the conflict must announce it to the board and excuse himself from the vote. We don't know what the state laws are in this particular case and we also don't know exactly what took place.

But I certainly do agree the way it appears to have been handled is highly unethical and raises many questions. These are the type of actions that give HOA boards a bad name.

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