Business Office

I. Purchasing: Legal Requirements

The legal requirements controlling the purchase of materials, supplies and equipment for use in public schools throughout the Commonwealth of Pennsylvania are established by the:

A. Uniform Commercial Code

B. State laws

C. Federal regulations.

A. Uniform Commercial Code
Article 2 of the Uniform Commercial Code establishes the legal requirements for the form, formation and readjustment of contracts for the sale of goods including general obligations under the contract, passing of title, performance, breach of contracts and remedies in the breach of contracts.

B. State Laws
1. 24 Pa. Stat. Ann. § 5-508 – Majority Vote Required
a. A majority vote of the board of school directors is required when action is taken in certain listed instances, including but not limited to, entering into contracts for supplies over one hundred dollars ($100.00). See also supra section 1.2 (II) The Law of Agency

b. Action taken without the required approval of the board of school directors is void and unenforceable.

2. 24 Pa. Stat. Ann. § 8-807.1 - Purchase of Supplies
This section of the Public School Code of 1949, as amended, establishes the primary legal requirements to be followed in the purchase of materials, supplies and equipment for use in public schools in the Commonwealth. That section is as follows:

a. All furniture, equipment, textbooks, school supplies and other appliances for the use of the public schools, costing at or greater than State required bid thresholds, shall be purchased by the board of school directors only after due advertisement as hereinafter provided. Supplies costing at or greater than State required bid thresholds, shall be purchased by the board of school directors only after public notice has been given by advertisement once a week for three (3) weeks in not less than two (2) newspapers of general circulation. In any district where no newspaper is published, said notice may, in lieu of such publication, be posted in at least five (5) public places.

b. Written or telephonic price quotations from at least three (3) qualified and responsible vendors shall be requested by the board of school directors for all purchases of supplies that exceed State quote thresholds but are less than State bid thresholds that require competitive bidding, or in lieu of price quotations, a memorandum shall be kept on file showing that fewer than three (3) qualified contractors exist in the market area within which it is practicable to obtain quotations. A written record of telephonic price quotations shall be made and shall contain at least the date of the quotation, the name of the vendor and the vendor’s representative, the supplies which were the subject of the quotation, and the price of the supplies. Written price quotations, written records of telephonic price quotations and memoranda shall be retained for a period of three (3) years.

c. The board of school directors shall accept the bid of the lowest responsible bidder, kind, quality and material being equal, but shall have the right to reject any and all bids, or select a single item from any bid. The board of school directors in any district may authorize or appoint the secretary of the board or other executive as purchasing agent for the district with authority to purchase supplies costing less than State quotation thresholds.

d. The following shall be exempt from the above provisions: maps, music, globes, charts, educational films, filmstrips, prepared transparencies and slides, pre-recorded magnetic tapes and disc recordings, textbooks, games, toys, prepared kits, flannel board materials, flash cards, models, projectuals and teacher demonstration devices necessary for school use.

e. No board of school directors shall evade the provisions of this section as to advertising for bids or purchasing materials piecemeal for the purpose of obtaining prices under State bid thresholds upon transactions which should, in the exercise of reasonable discretion and prudence, be conducted as one transaction amounting to more than State bid thresholds. This provision is intended to make unlawful the practice of evading advertising requirements by making a series of purchases or contracts, each for less than the advertising requirement price, or by making several simultaneous purchases or contracts each below the said price, when, in either case, the transaction involved should have been made as one transaction for one price.

3. 24 Pa. Stat. Ann. § 7-751: Work To Be Done Under Construction Contract Let On Bid
This section of the Public School Code of 1949, as amended, establishes the primary legal requirements to be followed in contracting for construction, reconstruction, repairs, maintenance or work of any nature, including the introduction of plumbing, heating and ventilating or lighting systems upon any school building or school property. The major topics in this section are as follows:

a. Competitive bids are required if costs shall exceed State bid thresholds (24 Pa. Stat. Ann. § 7-751a). Multiple price quotations are required if costs shall exceed State quote thresholds, but are less than State bid thresholds.
(24 Pa. Stat. Ann. § 7-751a.1).

b. School district maintenance personnel may be used to perform any construction, reconstruction, repairs or work of any nature where the entire cost is less than $5,000. Otherwise, the board of school directors may authorize the use of multiple price quotations to award a contract that is less than State bid thresholds (24 Pa. Stat. Ann. § 7-751b).

c. Restriction on use of foreign steel in construction contracts (P.L.6, No. 3 of 3/3/78) (24 Pa. Stat. Ann. § 7-751c).

d. Use of school district maintenance personnel to perform “maintenance” work without restrictions as to cost (24 Pa. Stat. Ann. § 7-751d).

e. Restrictions on the manner in which school district employees may be compensated for contracted construction or consulting work (24 Pa. Stat. Ann. § 7-751e).

f. Restrictions on the fragmentation of the cost for construction contracts to avoid the sealed bidding provisions (24 Pa. Stat. Ann. § 7-751f).

4. Act 31 of July 1971 - Cooperative Purchasing Act (71 Pa. Stat. Ann. § 633)
This Act allows local public school districts to participate in and purchase from state contracts established by the Department of General Services of the Commonwealth of Pennsylvania.

a.The board of school directors of the school district desiring to participate in cooperative purchasing through state contracts must pass a resolution requesting permission to participate in the Commonwealth of Pennsylvania Cooperative Purchasing Program.

b.The Commonwealth of Pennsylvania Cooperative Purchasing Program eliminates the requirement for school districts to separately issue sealed bids for the purchase of materials with a value in excess of State bid thresholds.

5. Act of 2000 - Educational Empowerment Act
The Education Empowerment Act (Act 16 of 2000) allows school districts to apply to the Department of Education for a waiver from state mandates. Waiver applications will be approved if the waiver will enable the school district to improve its instructional program or operate in a more effective, efficient or economical manner. Act 16 also identifies several specific provisions in the Public School Code which may not be waived by the Department. The Department has adopted an application form and process for review of waiver applications. The process is initiated by the School Board adopting a resolution at a regularly scheduled meeting authorizing the filing of the application. Under Act 16, all waiver applications will be deemed approved unless the Department either disapproves or requests modifications within 60 days.

C.Federal Regulations

The Code of Federal Regulations, Title 34 (CFR-34) Part 80.36, establishes the legal requirements for procurement procedures and restrictions for the expenditure of federal grant funds by local school districts.

II. Law of Agency

A. The Legal Powers of Purchasing Agents
An agent (i.e. Purchasing Agent) is a party who is authorized to act under the control of and for the benefit of another who is called his/her principal (i.e. school district) in transactions with third parties (i.e. vendors). The acts of the Purchasing Agent obligate his/her school district to the third parties and give the school district rights against the third parties.

1. The Purchasing Agent must be aware of his/her legal power
a. General Agent has authority over all of the school district’s business related to procurement.

b. Special Agent has limited authority to act for the school district in only one definite business transaction or one series of business transactions.

2.Scope of Authority
a. The purchasing agent must receive approval of a majority of the board of school directors to enter into contracts for supplies over one hundred dollars ($100.00) (Pa. Stat. Ann. § 5-508).

b. Where a purchasing agent enters into a contract above $100.00 before board approval, he/she takes a risk that the contract will not get approved.

3. Creation of Agency Authority
a. Express authority is created when the school board instructs the Purchasing Agent to perform any procurement acts, which have been approved by a majority vote of the board (Pa. Stat. Ann. § 5-508).

b. Apparent authority is created when the school board allows any person to operate in such a fashion that third parties dealing with that person reasonably believe that the person is an authorized agent of the school district.

c. The agent (any person) with proper authority (be it expressed or apparent) may make a contract with a third party which binds the school district. Moreover, the agent is not a party to the contract – the contract is between the school district and the third party.

4. Duties of Third Parties
a. A third party contracts with the district at its peril. A third party must know the extent of power of the district’s officers (See School District of Philadelphia vs. Framlau Corp., 328A.2d 866 (Pa. 1974)

b. If the school district becomes aware of an agent (any employee or other inpidual) with apparent authority, other than authorized Purchasing Agents, then the school district should take steps immediately to remedy that situation and to notify all vendors that the party with whom they have done business has no authority to bind the school district in negotiations.