Page 36 - AASBO EDGE Summer 2023 WEB

PROCUREMENT

BY GARY BARKMAN AND BILL MUNCH
Multiterm Contracts – 5 Years and Beyond

Gary Barkman Bill Munch

On an on-going basis, we receive several questions Why do we point this out? The reason is twofold. This
regarding the use of contracts that extend beyond the rule is one that applies to the SCHOOL DISTRICT
five-year term. Can we use them? Are they compliant? procurement folks when they write a formal solicitation
Well, let’s look at what the rules say. for their respective Districts. What this rule does not
say is that contracts can only be for five years.
First, R7-2-1093 Multiterm Contracts is the rule
that applies. Having said that, let’s break it down by Let’s look at this from another viewpoint. What if
individual point. Paragraph A indicates that, “Unless someone would like to utilize a cooperative contract
otherwise provided by law, multiterm contracts for that was written for more than five years? Can it be
materials or services and contracts for job-order- used?
contracting construction services may be entered
into if the duration of the contract and the conditions The rule clearly says that we have to get approval from our
of renewal or extension, if any, are included in the Governing Board to go beyond the five years BEFORE
invitation for bids or the request for proposals and if the procurement goes out. The rule fails to address
monies are available for the first fiscal period at the cooperative procurements. So districts are interpreting
time the contract is executed. The duration of contracts the rule one of three ways that we have come across.
for materials or services and contracts for job-order- First, they're saying as long as they do the determination
contracting construction services shall be limited or seek Governing Board approval before they make
to no more than five years UNLESS the governing the purchase from a cooperative contract they're still
board determines in writing before the procurement in compliance. Second, they are using the contract up
solicitation is issued that a contract of longer duration to 5 years and they feel they’re compliant. Third, they
would be advantageous to the school district. Payment don't believe they can use the contract at all because
and performance obligations for succeeding fiscal they can't do the determination before the cooperative
periods are subject to the availability and appropriation solicitation is issued. Hence, because of the ambiguity
of monies.” of the rule as it relates to cooperative purchases you're
going to run across multiple interpretations of the rule.
Notice the upper-case letters applied to one word above,
“UNLESS”. That’s right, and this deserves repeating. Here’s where we will halt our opinion and first give you
“The duration of contracts for materials or services our well-known disclaimer: “Anything in this article is
and contracts for job-order-contracting construction not meant to be construed as legal advice, but rather best
services shall be limited to no more than five years practice recommendations, based upon our experience
UNLESS the governing board determines in writing as certified public procurement officials.” Having made
before the procurement solicitation is issued that a this clear, we will continue with what we believe to be
contract of longer duration would be advantageous to correct based on our knowledge and reading what the
the school district. “ rule does say.
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36 THE EDGE SUMMER 2023