Disclaimer: The comments in this blog are my personal opinion and may or may not reflect an adopted position of the city of Glendale and its city council.

You may have noted that at council voting meetings I often vote ‘no’ on a majority of city contracts. It is not on a whim but rather on principal. Contracts are legally binding documents. They are for goods or services specifying details and with a mutually agreed price. For instance, if you agree to buy 100 widgets at fifty cents each the supplier must provide that count of items at that price.

If the price of widgets goes up that is unfortunate for the supplier for it still must provide you your widgets at the contracted price. I suppose the supplier could renege on the contract but that would be a breach of the contract for which the supplier could be civilly sued. Or the supplier could come back to you and tell you its cost of widgets has gone up and it would like to renegotiate the contract. At that point you have the option of mutually voiding the contract or paying the new price.

That’s not quite how it works with governmental contracts. One can assume that since the contractor knows its bidding on government work, the price is already higher than the private sector would pay. A number of times the city has chosen to work with a private sector company to bid on and manage a project because the cost will come in lower if the job is done through the private sector. It happens all the time.

A majority of governmental contracts are for 5 years or more. Here are some recent examples:

  • “…for an initial term of one (1) year and to renew the agreement, at the City Manager’s discretion, for an additional four (4) one-year terms…”
  • “…and to authorize the City Manager, at the City Manager’s discretion, to renew the agreement for four (4) one-year terms not to extend beyond October 1, 2025.  The initial term of this agreement is from the date Council approves the agreement through October 1, 2021.”
  • “…and to authorize the City Manager to renew the agreement, at the City Manager’s discretion, for an additional five (5) years, renewable on an annual basis…”
  • “…and authorize the City Manager to renew the agreement, at his discretion, for an additional four (4) one-year renewals…”

Councilmembers have 4 year terms, not 5 year terms. Any councilmember may or may not be reelected. If an official is not reelected someone new with no history of a particular contract will be asked to approve or disapprove its renewal beyond 4 years. It becomes very difficult to provide a continuum of accountability to a councilmember when that contract becomes renewable.

Often during the term of the contract, council will be asked to approve or disapprove an amendment to a contract that usually involves a price hike in the contract. The contractor, knowing that it has a 5 year contract, will ask for greater compensation as a result of increased costs for the product or services. If a governmental agency, such as the city, has a justified reason to comply with the increased cost by showing that it is still a competitive price, council does not receive that information. Rarely, if ever, is an increase in price ever denied.

A better practice would be to disallow 5 year or longer contracts and instead to adopt a policy of using 3 year contracts or when a price increase is requested it automatically moves to an open rebidding process. In either case it motivates the contractor to bid at current fair market value.

As we all know the economy can fluctuate wildly in a 3 year period. Who could have predicted 3 years ago that the cost of lumber would triple? By rebidding contracts every 3 years it is always possible that the cost will go up but the same possibility of a price reduction is also valid. The ultimate goal is to ensure that whatever price is paid by a governmental agency for goods and services reflects fair market value.

© Joyce Clark, 2021       


This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such material. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.