Page 13 - NJ Cooperator Spring 2020

NJCOOPERATOR.COM THE NEW JERSEY COOPERATOR — SPRING 2020 13 Avoid Conflict Regardless of the type of job, one of the most important things to get right in the bidding process is avoiding conflicts of interest—in both fact and appearance. Be- cause as Claudine Gruen, Vice President Director of Operations for Garthchester Realty in Queens, notes, “Perception is re- ality, especially in this business.” That means that while having a board member who happens to be a plumber definitely helps when deciding what to do about a recurring leak, hiring that same board member to fix it would be a defi- nite conflict. Not only would it raise ques- tions about self-dealing on the board, such a move would also need to be disclosed to every association member or shareholder (at least in New York as of January 1, 2018, when Business Corporation Law \\\[BCL\\\] 727 went into effect), and would require the board member- plumber to recuse him- or herself from any discussion or votes involving that contract. According to the pros, the ben- efit of having a sea- soned professional on the board’s side to advise on a proj- ect without the bur- den of recusal far outweighs whatever savings they might get from hiring an ‘inside’ contractor to carry it out. Seal the Deal To ensure fairness and impartiality, an RFP should stipulate a deadline for sub- missions, after which no other bids will be considered. Once all the responses are col- lected, they're delivered back to the board/ manager in a sealed format, and all opened at the same time. (Opening bids as they come in could give an early bidder an ad- vantage – or allow other bidders to adjust their proposals to undercut the known bid.) “While price is not the sole factor in de- termining which vendor the board selects,” says Attorney Hubert Cutolo, founding partner of Newark, New Jersey-based law firm of Cutolo Mandel, LLC, “the process of bidding under seal ensures that the vendors submitting bids will offer the most com- petitive prices. Without soliciting multiple bids, the board and its management may not be able to reasonably determine if a bid is in line with market forces.” Some boards elect to unseal bids at a regularly scheduled board meeting. Others, like those managed by Gruen, limit it to the manager and the board president (and the engineer or other professional if involved), who coordinate the unsealing together ac- cording to their schedules and then share with the rest of the board online. Regard- less, at least two people should be charged with unsealing the bids together, for the benefit of transparency and accountability. Stay on the Level Once the bids are open, a process of eval- uation and elimination begins – which is another area where the manager’s expertise comes into play. He or she, along with any relevant professional advisers, will create what is called a bid leveling sheet. If the ini- tial RFP was thorough and well-composed, and the responses adhered to the requested formats and inclusions, the leveling process is pretty straightforward. But often there are variables that the RFP might not have con- sidered, or idiosyncracies among vendors that cannot be captured within the format specified. In those circumstances, bid level- ing is even more important in order to help a board make a fully- informed, prudent de- cision. If a project is espe- cially complex or be- yond the expertise of the property manager, Wagner advises invest- ing in an owner’s rep. An owner's rep is a dedicated manager with particular knowledge of a specific project, who can distill the proposals and align the variables so that they are easier to capture and com- pare. There may still be discrepancies that preclude direct one-to-one comparison be- tween bidders, but the basic elements for weighing each proposal evenly are there. Any remaining questions can be addressed in the next step, which is inviting select bid- ders for an interview with the board. Before and after the bid leveling, the manager or owner’s rep might go back to each bidder and ask them to “sharpen their pencils”—a common euphemism for ad- justing their proposals to a more favorable price or offering. This is also a good time to leverage future projects, or suggest bulk purchasing or other efficiencies. Gruen, for example, manages multiple properties and can negotiate favorable prices when buying large quantities of necessities like snow melt that can be shared among the properties. Tread carefully here, though: if this cost-cutting measure is not adequately communicated to the boards in question, they might be concerned that some sort of skimming or kickback were occurring when they see the purchase order that ex- ceeds their needs. Don’t Forget the Past This brings us to an important caveat. It may seem like a distant memory to most of us (if it was on our radar at all), but to- continued on page 18 Your Association is in Good Hands with Homestead Management Services. Responsible Property Management that responds to your needs • Personal, responsive customer care with 24/7 emergency call service • Modern, fully intergrated databased network for quick response to problems and solutions • Live, expert staff of experienced management personel A complete financial package: • Complete Monthly Financial Statement •Accounts Payable • Accounts Receivable •Deliquency Report •Annual Reports www.homesteadmgmt.org Family owned with over 35 years years of experience 328 Changebridge Rd. Pinebrook, NJ 07058 973-797-1444 284 Rt. 206 South, Hillsborough, NJ 08844 908-874-6991 © AAMC ACCREDITED ASSOCIATION MANAGEMENT COMPANY “The process of bidding under seal ensures that the ven- dors submitting bids will offer the most competitive prices.” — Hubert Cutolo