The Rolling Stones warned us decades ago that You Can't Always Get What You Want. (For the hideously uninformed the Gen Z and millennials crowd, the Rolling Stones is an iconic band made up of Keith Richards and Mick Jagger, with great music such as I Can’t Get No) Satisfaction, Jumpin’ Jack Flash and a new album that Karen Haase thinks is really good) In Official Opinion No. 26-03, AG Marty Jackley did his best Jagger impersonation, telling school districts that they can’t always get what they want - if what they want is to use a cooperative purchasing agreement as a shortcut around procurement laws related to public improvements.
AG Jackley’s opinion reported that some school districts in South Dakota have entered into contracts with out-of-state sports construction firms to build facilities on public school properties without soliciting competitive bids and proposals and following the other steps South Dakota state law requires for public construction. The cooperative purchasing companies hold themselves out as complying because South Dakota permits school districts to enter into agreements to participate in cooperative purchasing contracts. However, not all spending and procurement is governed the same way. Cooperative purchasing under SDCL 5-18A-37 lets a purchasing agency join with other agencies for "the purchase of supplies or contractual services." The fight is whether that same statute stretches to cover the construction of a public improvement — a new building, a gym, an athletic complex. Under South Dakota law, a “public improvement” is “the process of building, altering, repairing, improving, or demolishing any public infrastructure facility, including any utility infrastructure, structure, building, or other improvements of any kind to real property, the cost of which is payable from taxes or other funds under the control of the purchasing agency, and includes any local improvement for which a special assessment is to be levied.” (Super broad!)
So what does a district do instead? Any public improvement of $100,000 or more must be advertised and bid unless a specific statute authorizes another route (SDCL 5-18A-14), with competitive sealed bidding as the default (SDCL 5-18A-4, -5). Districts may also determine that competitive sealed bidding is not practicable or advantageous for a project; it can procure by competitive sealed proposals instead (SDCL 5-18A-6, -7), awarding not to the lowest price but to the responsible offeror whose proposal is most advantageous on the evaluation factors the district states up front in its RFP. Meaning the school board can develop a rubric that weighs qualifications, experience, schedule, and price together. Schools may also have to satisfy the conditions of design-build (SDCL 5-18B-20) and construction-manager-at-risk (SDCL 5-18B-39 to -44) when pursuing these delivery methods.
Ok, you may be wondering “what should I do now?”
Don't panic about finished projects. If the building's up, a court won’t make you tear it down. (But a court may halt something that is half-built!)
Take a hard look at anything in progress. If you have an active construction project running through a cooperative, call your school attorney now.
Do your own homework. If you're leaning toward the design-build path, your district, not the cooperative's website, has to establish and publish the required procedures and document why design-build serves the public interest. Also, these companies may not be as familiar with South Dakota’s requirements, so it’s crucial that you look into the processes yourself with your school attorney.
Mind the preferences. Resident-bidder and South Dakota supplier preferences don't disappear just because you used a cooperative. The cooperative's process may not build those in automatically.
Call your lawyer before you sign. Every one of these situations turns on the specific facts and the specific contract. LONG before you’re discussing contract terms for ANY project, make sure you’ve discussed it with your lawyer. The stakes are too high!
The Rolling Stones classic sums this whole topic up best: “You can’t always get what you want. But if you try sometimes, you just might find, you get what you need.” And if what you need is to complete a construction project that is lawful, KSB can help.
Let's Talk Construction — August 7
Good news: you don't have to sort this out alone. We're presenting on construction-related legal issues at the ASBSD/SASD joint conference on August 7. We'll be digging into the broader landscape schools have to navigate on any building project, the bidding and procurement rules, required hearings and notices, the finance side, and the traps that turn a straightforward project into a headache. If your district is building, planning to build, or just trying not to end up as the subject of the next AG opinion, this is the session for you.
Questions? Reach out at ksb@ksbschoollaw.com or 402-804-8000 — and we'll see you on August 7.