This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

PUBLIC CONTRACTS -- Bidding Monetary Threshold (computation of for fuel oil)

GENERAL MUNICIPAL LAW, §103: If it is known or may be reasonably anticipated that a political subdivision will spend in the aggregate over $5,000 for the purchase of fuel oil during a fiscal year, the political subdivision must competitively bid the purchase of that commodity unless an exception to competitive bidding requirements is applicable.

We are in receipt of your letter asking what monetary threshold applies to the purchase of fuel oil by a fire district. You state that the district has budgeted $5,000 for fuel oil and usually does not expend over $5000 for this item.

General Municipal Law, §103 provides that, except as otherwise expressly provided by act of the Legislature or by local law adopted prior to September 1, 1953, all purchase contracts involving an expenditure of more than $5,000, and all contracts for public works involving an expenditure in excess of $7,000, shall be awarded to the lowest responsible bidder after public advertisement for sealed bids in the manner provided by section 103. Since it is well-established that bidding statutes may not be avoided by artificially breaking up contracts into lesser agreements for sums below the monetary threshold (see, e.g., Walton v Mayor, 26 App Div 76, 49 NYS 615; 1A Antieau, Municipal Corporation Law, §10.31; cf. Swift v Mayor, 83 NY 528; Jones v City of Binghamton, 26 AD2d 710, 271 NYS2d 507, affd 20 NY2d 808, 284 NYS2d 702; Lance v City of New York, 88 Misc 2d 119, 387 NYS2d 32), this Office has consistently taken the position that competitive bidding is required when it is known or may be reasonably anticipated that the aggregate amount to be spent for the purchase of the same or similar commodities will exceed $5,000 over the course of a fiscal year (1987 Opns St Comp No. 87-4, p 6; 23 Opns St Comp, 1967, p 866; 11 Opns St Comp, 1955, p 79; 9 Opns St Comp, 1953, p 421).

Therefore, if it may be reasonably anticipated that the district will expend over $5,000 for fuel oil during the fiscal year, the district must competitively bid the purchase of that commodity unless an exception to section 103 is applicable. In this regard, we note that General Municipal Law, §104 provides an exception to the competitive bidding requirements of section 103 for purchases made under State contracts through the Office of General Services. Section 103(3) contains a similar exception for purchases under county contracts made available by the county to political subdivisions, including fire districts, within the county (see also County Law, §408-a[2]).

In determining whether it may be reasonably anticipated that purchases of an item will exceed $5,000, in the aggregate, over the course of a fiscal year, the district should carefully consider all relevant facts, including analyzing the total amounts expended for the item in prior years (33 Opns St Comp, 1977, p 123). In addition, where past experience has shown that district has expended an amount close to $5,000 for an item, potential upward market fluctuations and fluctuations as to the district's needs should be especially considered. The determination of whether it may be reasonably anticipated that the district will spend in excess of the $5,000 threshold for a particular item must be made, in the first instance, by the appropriate fire district officials, after consideration of the pertinent factors.

Finally, we note that, even if it is determined that competitive bidding is not required for the procurement of fuel oil, district officials still have an obligation to assure that fire district moneys are expended prudently and economically and that all contracts are awarded in the best interest of their taxpayers (see, e.g., 1986 Opns St Comp No. 86-25, p 41). Therefore, even when formal competitive bidding is not required because the aggregate amount to be expended for the purchase of a commodity is below the monetary threshold, it is advisable that the fire district seek price quotations prior to awarding a contract.

September 13, 1990
Gerald Callahan, Secretary/Treasurer
Pocantico Hills Fire District