On October 24, 2024, the competitive bidding threshold affecting Ohio public school districts will increase from $50,000 to $75,000. The new limit will not last long because the $75,000 threshold will receive a slight increase of 3% each calendar year. This change marks the first increase to the bidding threshold for school districts since the threshold increased from $25,000 to $50,000 in 2017.
The increase in the bidding threshold arose out of the many changes stemming from Ohio Senate Bill (SB) 168 from the 135th General Assembly (GA). . In particular, SB 168 removed the existing bidding threshold amount in Ohio Revised Code Section (ORC) 3313.46 and replaced it with a cross-reference to the amount specified in ORC 9.17.
ORC 9.17 is a newer statute that arose in 2023 out of Ohio House Bill (HB) 33, also of the 135th GA. Importantly, ORC 9.17 provides that the $75,000 bidding threshold will only apply for approximately two months through calendar year 2024. Beginning January 1, 2025, the threshold will increase by 3% each year. These legislative changes are intended to align the bidding threshold for schools with other political subdivisions in the state. This change will also likely reduce the number of projects falling within the scope of ORC 3313.46 for which bidding will be necessary.
While other statutes and federal laws affect bidding in other circumstances, ORC 3313.46 specifically addresses circumstances when a “board determines to build, repair, enlarge, improve, or demolish any school building.” Many school board policies on this topic include a specific reference to the $50,000 bidding threshold. As a result, policy revisions will be necessary to accommodate the new threshold and its annual 3% increase.
The Ohio Revised Code provides for various exceptions to the competitive bidding requirements. One exception that continues to gain in popularity is the use of cooperative or joint purchasing programs authorized under ORC 9.48.
Although joint purchasing programs can be convenient, you should still proceed carefully if you are considering a joint purchasing program to obtain construction services.
In 2019, the Ohio Attorney General issued opinion 2019 Op. Att’y Gen. No. 2019-028 to conclude that ORC 9.48 could not be used to acquire “construction” or “construction services.” This was despite the fact that ORC 9.48 states cooperative purchasing arrangements can be used to purchase “equipment, material, supplies, or services.” The Attorney General opined that if “construction services” were to be included as an allowable purchase under ORC 9.48, then the Ohio General Assembly would have included the phrase in the statute. And because neither “construction” nor “construction services” appears in the list of items that may be the subject of a joint purchasing program under ORC 9.48, then joint purchasing programs cannot be used to obtain such services.
This spring, the Ohio Attorney General issued opinion 2024 Op. Att’y Gen. No. 2024-003 to provide some nuance to his prior position. In the new opinion, the Attorney General distinguished the terms “construction” from “services” using various dictionary definitions. In regard to “services,” he found the term pertains to work done for someone else and typically entails “installation, maintenance, and repair” work, even on buildings. In contrast, he found that “construction” is the “act of building; erection; act of devising and forming; fabrication composition; also, a thing constructed; a structure.”
This conclusion narrows the application of the 2019 opinion to a degree because some services that are commonly considered “construction work” may not necessarily fall under the category of “construction” as that term is used in Attorney General opinions. Unfortunately, the Attorney General did not elaborate on specific situations or provide examples. Thus, the final determination of whether a purchase is for “installation, maintenance, and repair” work instead of “construction services” will depend on the facts and circumstances of each situation.
As a result, it is advisable to seek legal counsel before using a joint purchasing program to obtain something that could be considered construction. Although Ohio Attorney General opinions are not the law, they are persuasive legal authority. When in doubt, traditional competitive bidding remains the gold standard.
Finally, many school boards have adopted policy language requiring administrations to obtain quotes even in circumstances when competitive bidding is not otherwise required. The need to now amend policy language to accommodate the new bidding threshold creates a good opportunity to review your policies and procedures on bidding and quotes to ensure they alignnot only with the legal standards, but also with your current district practices.