Assembly Bill 723 May Require School Districts to Conduct Competitive Bidding

In December 2023, the Wisconsin Assembly introduced Assembly Bill 723 (“AB 723”), which, if passed, will require Wisconsin school districts to conduct competitive bidding procedures for certain expenditures exceeding $150,000.  The Bill was referred to the Committee on Local Government on December 6, 2023, and is awaiting further action.

Under current law, “political subdivisions” are subject to competitive bidding requirements when the anticipated expenditure exceeds a certain threshold amount. (e.g., Wis. Stat. § 60.47, where Townships must perform bidding requirements for public contracts exceeding $25,000).  The definition of “political subdivision” in Wis. Stat. Ch. 66 includes cities, towns, villages, and counties.  When the anticipated amount exceeds the statutory threshold, the political subdivision must follow the specified competitive bidding procedures.  Competitive bidding first requires sealed competitive bids (preceded by public notice).  Second, the contract must be awarded to the lowest responsible bidder.  And finally, political subdivisions are forbidden from considering criteria “other than the lowest responsible bidder in awarding the contract” unless such consideration is required to receive federal funding.  (Wis. Stat. § 66.0901(1m)(b)).

Wisconsin school districts are excluded from this definition of “political subdivision” and therefore, are not currently required to comply with the competitive bidding requirements under Chapter 66.  (Wis. Stat. § 66.0901(1)(bm)).  Instead, school districts are vested with general spending and decision-making authority under Wis. Stat. Ch. 120.  AB 723 would amend the authority of school districts under Chapter 120 by requiring school districts to conduct competitive bidding procedures in accordance with Chapter 66 when the anticipated expenditure for capital projects or supplies exceeds $150,000.

Substantive Changes of Current Law—Under Chapter 120 of the Wisconsin Statutes, school districts are vested with “powers” and “duties”. School board “duties” include nondiscretionary responsibilities.  School board “duties” are distinct from school board “powers” under Chapter 120.  “Powers” refer to the school board’s legal authority to act in a discretionary manner.  Importantly, AB 723 changes the language under school board “duties” to include competitive bidding requirements when the anticipated expenditure exceeds $150,000.  As a “duty”, school districts must follow the competitive bidding requirements when criteria for its application exists.

The conditions necessary to trigger competitive bidding for a school district are explicit in AB 723’s language.  Specifically, the conditions are based on the cost of the anticipated expenditure and the type of anticipated expense.  AB 723 states, “before entering a contract for the construction, repair, remodeling, or improvement of a public school building or public school facilities or for the furnishing of supplies or materials…with an estimated cost exceeding $150,000…the school board shall let a public contract…to the lowest responsible bidder.”  AB 723 further states that Chapter 66 applies to contracts described herein.  Therefore, under the proposed Bill most school districts soliciting capital projects or supply contracts exceeding $150,000 must comply with the competitive bidding requirements under Chapter 66 to ensure the contract’s validity.

Exceptions—AB 723 includes narrow exceptions to the competitive bidding requirements.  First, in times of emergency the competitive bidding requirements are not mandatory.  Specifically, AB 723 states that competitive bidding requirements are “not mandatory for the repair or reconstruction of a public school building or public school facilities when damage or threatened damage creates an emergency, as determined by resolution of the school board, in which the public health or welfare of the school district is endangered.”  Second, AB 723 provides that the competitive bidding requirements do not apply to the construction, repair, remodeling, or improvement of a public school building or facility when the materials and supplies are donated, or if the labor is provided by volunteers.  Lastly, AB 723 provides an exception to AB 723’s competitive bidding requirements if, by a three-fourths vote, the board determines the capital project will be completed directly by the school district.

Conclusion—AB 723 is not yet law.  AB 723 remains in the early stages of the legislative process and needs majority approval by the Committee on Local Government, the Assembly, the Senate, and the Governor before it becomes law.  However, if AB 723 becomes law, it will fundamentally change the way school districts solicit and enter into high-expenditure contracts.