Conflicts of Interest – Lite

As a community association manager, I recently had a situation come up with one of the boards which I serve that was a little different than most common conflicts of interests. The association and I had solicited bids for the repair of a 100- foot section of a perimeter wall in a townhouse complex. The Board was inclined to go with the least expensive bid which was for $75,000.00 (sound familiar?) when one of the board members who was in the process of getting his contractors' license remarked that he thought the lowest bid was still too high. He stated that he would check with other contractors he knew to see if their bids would be less. Of course, since he knew what the lowest price bid was, the contractor he contacted came in at $70,000.00. Well, the board decided to accept this additional bid. When the contractor started the job, he came back with a change order of an additional $15,000.00 because of an additional 25-foot length of the wall he said needed to be repaired. The Board had no choice at this point and approved the additional expense.

A month later, the Resident Manager working under me solicited bids to have some balcony and wood repairs done prior to the painting of the buildings. Once again, this board member remarked that he felt the bids were too high and that the work could be done for less. At this point, one of the other board members spoke up and said that he felt it was not fair as this board member knew the lowest bid amount and was sharing this information with other contractors. The board agreed with these concerns and decided to go with the bids they had already received.

Even though this board member did not get any money for getting a contractor he knew to bid and genuinely felt he did this in the best interest of the association, this situation could be perceived as a conflict of interest by some because he knew of the lowest price and shared this information with his friends. Technically speaking, was there a conflict of interest? Perhaps not.

Sometimes, the intent of the heart may be right, but it's the perception that others may have that is a determining factor in these types of situations. If the contractors he knew had bid when all the other contractors bid, it probably would have been ok. By sharing this information with others outside of the Board, his behavior was arguably unethical - - even if it didn't meet the strictest definition of a conflict. Either way, the reputation of the association and the Board were placed at risk. A lesson learned for future bids.