Laura J. Bowman, Mark Evans PE, Brock Miskimen, Casey Rieth and Leah Thorsen | Bricker Graydon
Effective October 3, 2023, the threshold amount for rejecting bids when they exceed the original construction estimate will increase for certain Ohio public entities. Previously, Ohio Revised Code (ORC)153.12 specified that no public owner, including the State of Ohio (State), could award a contract to a bidder whose bid exceeded 10% of the construction estimate. Effective October 3, 2023, only the State must reject bids that exceed 10% of the estimated contract amount, while a “county, township, municipal corporation, school district, special purpose district, or other political subdivision or a public board, commission, authority, or instrumentality of the political subdivision” must reject bids that exceed 20% of the estimated contract amount. This change in the law does not impact ORC Chapter 5525 regarding bids that exceed 5% for road improvements or the authority of the Director of the Department of Transportation.
Additionally, the competitive bidding threshold for certain Ohio political subdivisions including public libraries, counties, and townships will increase from $50,000 to $75,000 through 2024, and will then increase by 3% annually. House Bill 33 created ORC 9.17, which sets a uniform monetary threshold for competitive bidding for several types of political subdivisions. Instead of including a numerical amount, the applicable bidding statutes will now specify that the bidding threshold will be “the amount specified in section 9.17 of the Revised Code.” ORC 9.17 provides for a $75,000 bidding threshold through calendar year 2024 with an increase of 3% for each calendar year thereafter, as determined and published by the Director of Commerce. House Bill 33 also explicitly prohibits certain political subdivisions from dividing projects in order to avoid the competitive bidding requirements.
Each type of political subdivision in Ohio has its own competitive bidding statute. The chart below summarizes the competitive bidding thresholds for various political subdivisions. However, this chart does not capture the full statutory requirements for each political subdivision, which are not the same. Additionally, there may be exceptions to competitive bidding requirements for specific political subdivisions. For example, the new law raises the estimated amount for when a county board of commissioners makes a determination that a real and present emergency exists from $100,000 to $125,000 as an exception to competitive bidding. Also note that different statutory procurement processes may be required to engage design professionals, construction managers at risk, and design-builders.
| Political Subdivision | Competitive Bidding Threshold | ORC Citation |
|---|---|---|
| Cities and Villages* | As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly), and $50,000 when entered into by the legislative authority of the village | §§ 735.05, 731.14, 731.141 |
| Counties* | As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly) | § 307.86 |
| County Sewer Districts | As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly) | §§ 6117.27, 307.86 |
| Hospitals, County* | As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly) | §§ 307.86, 307.92 |
| Hospitals, Joint Township Hospital Districts | No threshold requirements are found in the Ohio Revised Code. | |
| Hospitals, Municipal | $50,000 for construction projects subject to approval of the board of hospital trustees | § 749.26 |
| Public Libraries* | As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly) | § 3375.41 |
| Metropolitan Housing Authorities | All projects, regardless of cost, are subject to competitive bidding. | § 3735.36 |
| Municipal Utilities (Water, Sewer, Gas and Electric)* | As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly) | § 735.05 |
| Port Authorities | $150,000 | §§ 4582.12(A), 4582.31(A)(18)(b) |
| Public School Districts | $50,000 | § 3313.46(A) |
| Regional Airport Authority* | As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly) | § 308.13(A) |
| Regional Sewer Districts | As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly) | § 6119.10 |
| Regional Transit Authority | $100,000 | § 306.43(E)(3) |
| Soil and Conservation Districts | As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly) | §§ 940.06(H)(1), 307.86 |
| State of Ohio and its agencies | $250,000 (effective 1/19/2023; to be reviewed and adjusted every five years) | §§ 153.01; 153.53 |
| Townships* | As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly) for most projects, but requirements vary depending on the purpose of the contract | §§ 505.37, 511.12, 515.01, 515.07,521.05, 505.35, 505.50 |
* The law now explicitly prohibits this subdivision from dividing projects in order to avoid the competitive bidding requirements. However, it is implied and recommended practice for all public entities to refrain from doing so as well.
Each political subdivision should review the applicable statutory requirements and its own internal policies in consultation with legal counsel to determine the proper procedures for procurement, including bidding for construction contracts and other types of purchases.