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Updates and training on the laws on contracts in Arkansas: Never ending tasks

By Mark Whitmore
AAC Chief Legal Counsel

Over the years the County Judges’ Association of Arkansas (CJAA) and the AAC have worked continuously with members of the General Assembly to update various laws on contracting. This article will note some counties’ recent amendments to contract laws that impact our counties and other state and local jurisdictions. This article also will set forth some areas of these laws that are ripe for consideration by the CJAA for seeking legislation. These laws include provisions of the Arkansas Code for the purchase of commodities and other services, selling county property, construction law, and procurement of professional and personal services. The CJAA soon will commence its efforts to determine the needs for amending legislation in these areas.

In many instances the amendment of the Arkansas Code has a motivating situation. In several instances the amendment of laws in these areas arise from attempts to modernize a law and make it more efficient. In most instances, those persons that operate under or administer a set of laws are best able to propose amendments. The CJAA is perpetually training on these laws. We conduct training of these laws during the regular meetings of the CJAA each year, during new-elect school, and during the CJAA Road Seminar. A preacher who routinely reads the Bible is most often better versed than a preacher that reads the Word only on occasion. During the CJAA Road Seminar, held Oct. 24-26, the CJAA learned and updated construction laws in Arkansas: County Judges Jimmy Hart and Rusty McMillon presented along with Dave Tierney and yours truly. The judges and county road foremen also had an entire morning of training on county road law from Mike Rainwater and myself. Rainwater preaches the law like the Gospel. UCLA basketball Coach John Wooden won 10 NCAA national championships. He was an educator. He taught traits of success. Wooden taught: “It’s what you learn after you know it all that counts!” Over time county judges come to know road law in Arkansas. These laws require repeat training events. Periodic training is necessary to keep up with amendments and to more deeply imbed the legal principles and provisions.

These laws are anchored to the duties and powers of the county judge under the Constitution and laws of Arkansas.

Amendment 55, § 3 of the Arkansas Constitution and Ark. Code § 14-14-1101 provide: Powers of county judge generally.

(a) Arkansas Constitution, Amendment 55, § 3, established the following executive powers to be administered by the county judge:

(1) To preside over the county quorum court, without a vote but with the power of veto;

(2) To authorize and approve disbursement of appropriated county funds;

(3) To operate the system of county roads;

(4) To administer ordinances enacted by the quorum court; (5) To have custody of county property; and

(6) To hire county employees, except those persons employed by other elected officials of the county.

(b) In the performance of such executive duties, the county judge shall be bonded in the manner provided by law, as required in Arkansas Constitution, Amendment 55, § 6.

Ark. Code § 14-14-1102 further provides: Exercise of powers of county judge.

(b)(C)(ii) The county judge shall have the authority to enter into necessary contracts or other agreements to obligate county funds and to approve expenditure of county funds appropriated therefore in the manner provided by law.

Finally, ACA 14-22-112 deals with contracts. Order of approval.

(a) No contract shall be awarded or any purchase made until it has been approved by the county court (county judge), and no contract shall be binding on any county until the court shall have issued its order of approval.

(b) The order of the court shall be properly docketed. All documents and bids pertaining to the solicitation of bids and awarding of contracts under the purchasing procedure of this chapter shall be filed with the county clerk, together with the order of the court, which shall be filed by the clerk.

(c) No claim filed with the county for payment of any commodity, the purchase of which is regulated by this chapter, shall be paid; or no warrant shall be issued by the county clerk for the payment of it until the order of the court approving it shall have been issued and filed with the clerk. This is the fundamental framework of the county judge’s duties and powers in contracting for the county.

Among some of the notable recent changes in the law was House Bill (HB) 1595, Act 725 of 2017, sponsored by Rep. Mike Holcomb, a former Jefferson County judge, and Sen. Ronald Caldwell. The purpose of Act 725 was to update the construction laws for public works projects in Arkansas. Act 725 of 2017 amended Ark. Code § 22-9-202, 203 and 209 in order to raise the threshold for competitive bidding of construction contracts from $20,000 set in 2001 to $35,000 (to account for 16 years of inflation). Many minor repairs or improvements to buildings these days cost in excess of $20,000. The increased bid threshold of $35,000 will save significant costs to the contractors and the taxing units in the bid process and advertising. The bid threshold under Act 725 applies to cities, counties, school districts and state agencies (except the Arkansas Department of Transportation). Construction inflation justified a higher increase so a few members of the committee of the General Assembly preferred an increase to $35,000 but agreed to consideration of an increase to $50,000 at a future date.

An increase to $50,000 at a future date will be plainly justified due to construction inflation. Also, an increase to $50,000 will be in line with the $50,000 threshold for requiring a contractor’s license adopted under Act 1048 of 2015, Senate Bill (SB) 631 sponsored by Sen. Bart Hester. Such legislation also will further save on bid and publication costs. On a similar note, the CJAA should consider legislation to increase the trigger for use of a civil engineer, which currently is $25,000. Mississippi and Tennessee use a more reasonable threshold for requiring a civil engineer: $50,000.

HB 1383 sponsored by Rep. John Vines and Sen. David Wyatt, now deceased, was adopted as Act 494 of 2013. The Act amended Ark. Code § 22-9-202 to provide that county public works projects are authorized through separate procurement of labor, materials, professional services (architect or agency construction manager) and construction work from one or more separate contractors under separate invoice. This process avoids the need for a general contractor and may result in substantial savings in the cost of labor and materials. A county may purchase materials for less or with mark-up by a general contractor. Also, by using separate contractors the work may be done with county labor and equipment or with local contractors that expense fewer costs for mobilization. In many instances project needs can be acquired separately, expeditiously and less costly.

Many bills filed in the area of construction law are not borne from request by the counties. Sen. Hester and Rep. Jim Dotson sponsored SB 601 (now Act 1068 of 2017) to repeal the Arkansas prevailing wage. The Arkansas prevailing wage tied the contractor’s payment to their laborers for wages to a regional wage for construction workers set by the state of Arkansas, rather than wages tied to the market. The federal minimum wage, state minimum wage and Federal Davis Act were not repealed by the Act and may apply to the project. Act 1068 of 2017 and repeal of the Arkansas prevailing wage should result in significant savings to the county, cities and the contractors for their public works capital improvement projects.

The laws on selling county property have been updated on numerous occasions. A notable change is from Acts 614 and 1014 of 2011, which amended Ark. Code § 14-16-105 and Ark. Code § 14-16-106. Both amended sections of the code authorizing conducting sales over the internet. Ark. Code § 14-16-105 also was updated to exempt conveying an easement (such as a utility easement for a public utility or a road easement for a city or the state). Ark. Code § 14-16-105 also was amended to address situations in which a county hospital has been vacant and abandoned for more than 120 days. Ark. Code § 14-16-105 was amended to provide that there’s no need for a vote of the people to sell a hospital that has been vacant or abandoned for the requisite 120 days under the Act.

The CJAA, along with the other affiliate organizations, need to consider further updating Ark. Code § 14-16-105. The current law references a board of approval whereby the sheriff, treasurer and circuit clerk constitute the board of approval and county judge the ex-officio chair. Also, the law provides for a different process depending on if the appraised value is less than or more than $2,000. The CJAA and AAC might consider seeking simplification of this law. Many counties more often sell property by a less complicated manner, as per Ark. Code § 14-16-106 — sale by public auction.

Act 98 of 2015 (sponsored by Rep. Mark McElroy) amended Ark. Code 14-16–116, which allows counties to exchange properties, real or personal, with other counties, municipalities, community colleges or institutions of higher education. This section of the Arkansas Code allows various local and state government entities to exchange real or personal property so that one entity may fulfill a need and the other may convey their surplus property. The law previously authorized an exchange but was not clear on whether an exchange was required or what type of consideration was legal. Act 98 of 2015 made clear the law does not require an exchange of property, but plainly allows consideration in the form of an agreement for services, legal tender or other consideration. The Act also added community colleges or institutions of higher education to the eligible entities to participate in an exchange or transfer. Note the law requires approval by ordinance of the quorum court.

HB 1278, sponsored by Rep. Dan Douglas, provided for single source purchases by counties. Now Act 465 of 2013, it amended Ark. Code § 14-22-106 to provide an exemption from the formal bid process in which goods or services are available only from a single source. The Act provides that to attain single source status the purchase be supported with:

(i) Documentation concerning the exclusivity of the single source; and
(ii) A county court order filed with the county clerk that sets forth the basis for the single source procurement.

The county purchase laws were further amended by Act 561 of 2015 (SB 319) sponsored by Sen. Bruce Maloch. Act 561 of 2015 amended the definition of used or second-hand motor vehicles, equipment and machinery from two years to one year; from 10,000 miles to 5,000 miles; and from 500 working hours to 250 working hours (Ark. Code § 14-22- 101 and 106).

The categories of laws briefly touched on above just scratch the surface. Other categories of laws in this realm include procurement of professional services, procurement of personal services, state procurement, and cooperative purchasing and purchasing under Amendment 78, etc. Also, there’s a body of case law and body of Attorney General opinions on this realm of the law. County judges must continually learn and update these laws.

Each legislative session these laws are subject to bills seeking to amend their fundamental content. In many instances legislators who did not have any prior discussion with their county officials or AAC staff introduce these bills. We hope you will ask your legislators about their intentions for the next legislative session. Our county officials have first-hand knowledge of how these laws operate and work in the real world. Let’s avoid the conflicts created by legislators filing bills on laws you use routinely without seeking your input and the input of AAC staff.

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