Co-op, condo, and HOA boards across the country are made up of volunteers who are committed to the governance of their community. Among their most important duties is selecting vendors to provide goods or services—everything from lawn care to roof repair; surveillance to extermination. Often these volunteers have little to no direct expertise in the industries and occupations related to their properties, so the task of even finding qualified vendors—let alone evaluating and choosing the best one for the job—can be daunting. By understanding the process and keeping a few caveats in mind, however, boards can make solid choices for their communities while steering clear of conflicts.
Let Your Manager Manage
Your first and likely best resource in navigating the bidding process is, of course, your property manager, says Steven R. Wagner, principal at law firm Wagner Berkow in New York and also president of his own Manhattan co-op. “You need somebody who’s familiar with building systems to be able to help you cover what needs to be done,” he advises. A competent manager is a professional who knows the ins and outs of the industry, has contacts and relationships with a broad range of companies, and is experienced in contract negotiations and procurement. He or she also acts as an intermediary between the board and the third parties they engage. Ideally, your manager will be involved with all selections of third-party suppliers from the very beginning of the process.
And just what is that process? First comes a needs assessment. Whether the gym needs new equipment, or the boiler needs repair, or the windows need replacing, the first step is for the board and its relevant advisors to determine the parameters or expectations of the deliverable; do they want to totally overhaul and upgrade the gym, or just install a couple of new stationary bikes? Do they want to purchase the equipment, or lease it? Have residents who use the gym been requesting specific features or items? All of this might go into what’s called a statement/scope of work, or SOW. Using this as a guide, the manager will produce a request for proposal (RFP) and distribute it to a list of qualified bidders.
How many bidders get the RFP depends on the nature of the work. For some jobs, there might be only a couple of vendors who provide a particular service, while for other categories like painters or insurance providers, there could be hundreds. Either way, it’s a good idea to solicit more bids than might seem necessary, because some vendors may turn out to not meet requirements, some may not be available in the time-frame needed, and others may not respond to the RFP at all.
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. Because as Claudine Gruen, Vice President Director of Operations for Garthchester Realty in Queens, notes, “Perception is reality, especially in this business.”