Agencies and Annual Maintenance Contracts

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Agencies and Annual Maintenance Contracts

By Anthony (Tony) Morelli, Southwestern Regional Compliance Manager. -

Recently I observed a Public Work’s Director proposing to his City Council, the extension of a contractor’s $300,000 contract for the City’s annual sidewalk, curb, gutter and driveway repair or replacement maintenance contract. In looking at the background information, my concern was whether the project was ever formally put out to bid. Upon further investigation, I was able to determine that this was actually going to be the eighth extension with the same contractor! How can they do that you ask?Tony Morelli, Southwestern Regional Compliance Manager

Well, Public Agencies do have the flexibility to utilize annual maintenance contracts for regular, repetitive, routine or recurring maintenance. We see annual contracts being used for; landscaping, tree trimming, fire sprinkler service and testing, building maintenance or sidewalk, curb, gutter and driveway repair or replacement.

There are several components that an agency must include in utilizing the annual maintenance contract procurement method.

  • The agency must still follow the California Public Contract Code (PCC) laws, so initially the annual maintenance contract for the project must be formally bid out.
  • The Agency must follow the definitions as outlined in PCC 22002, (Maintenance) Which is defined as; Routine, recurring and usual work for the preservation or protection of any publicly owned or publicly operated facility for its intended purposes.
  • In the original contact, the agency can stipulate the term, usually one-year, (I have also seen three to five year contracts) usually with a clause that allows the agency to extend the contract one (or more) years at a time, if both parties agree and the governmental board or city council votes to approve the extension. There may also be clause included that allows either party to terminate the contract, as well.
  • The Agency (at their option, but not very likely) may also include or allow the contractor a minimal unit price increase, as long as it follows the Consumer Price Index (CPI) and as long as this clause and details are included in the extension agreement.

So back to my concern with the above agency’s awarding the eighth-year renewal contract extension to the contractor. I made a formal Public Records Act request to see the original contract between the City and the contractor. Upon reviewing the contract, it did in fact have all of the required components, so the City was legally within their right to extend the contract. I suggested that perhaps they should at least consider re-bidding it out after no more than three years, believing that the City was more likely to obtain favorable pricing by utilizing the competitive bidding process.

-Bottom line… You can lead a horse to water, but you can’t make him drink!


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