The Devil is in the Details

By Randall A. Pentiuk

        Cooperative Boards, in discharging their fiduciary duties, usually award contracts to low bids. They also try to cut corners in entering into contracts with bidders.  Obviously, the motivation is to keep costs down for the benefit of their members. That is what they perceive as their job, and they are correct – in part.

But the rest of the story needs to be told. Sometimes the low bidder is not an established, reputable businessperson. Sometimes, the low bid means cutting corners.  Sometimes, it spells disaster for the Cooperative.

The point of this article is to encourage Boards to be circumspect and knowledgeable in making decisions on bids. It is not to dissuade Boards from taking advantage of good deals and awarding contracts to the low bidder. Quite to contrary: the goal here is to equip Boards to do their due diligence and take steps to protect themselves.

While it is impossible to provide a comprehensive list of rules, the following is an attempt to identify some common concerns that Boards should consider with each contract. It is not a replacement for involving the Cooperative’s professionals – management and legal.

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