§ 3.1 Purpose and Philosophy
The Sommerset procurement process is built around value engineering — the discipline of defining the minimum scope of work that achieves the Association's quality and durability objectives, soliciting competitive bids against that scope, verifying performance against documented acceptance criteria, and paying only for work that meets those criteria. The process is sequential. Each phase has a single owner and produces a defined deliverable. Money does not move until the chain of preceding deliverables is complete.
§ 3.2 The Seven Phases of the Procurement Cycle
| # | Phase | Owner | Deliverables | Approval Lives |
|---|---|---|---|---|
| 1 | Need identification and validation | RML or FLI Subcommittee (or the SMD they designate) | Written statement of the problem to be solved, with photos and the failure mode. Validated need-memo filed with the Subcommittee record and the Management Company. | Subcommittee |
| 2 | Scope specification (value engineering) | RML or FLI Subcommittee, drafted by the SMD | Written Scope Document with acceptance criteria and KPIs. Identifies what the Association is asking for, what it is not asking for, and what would constitute satisfactory completion. | Subcommittee |
| 3 | Vendor recruitment and bidding | Subcommittee with Management Company support | Bid package distributed to qualified vendors (number of bidders set by § 3.3 tier). Bid receipt, tabulation, and Subcommittee Bid Memo recommending an award. | Subcommittee |
| 4 | Award decision and contract execution | Per § 3.4 authority matrix | Approval at the level corresponding to the contract amount; signed contract executed by the President; insurance and license verification on file. | § 3.4 matrix |
| 5 | Performance oversight and KPI monitoring | SMD owning the domain | On-site inspections; written direction on deviations from scope; change orders within cap, or escalation; tracking against KPIs in the Scope Document. | SMD (within cap); Subcommittee (above) |
| 6 | Acceptance of work (or rework) | SMD owning the domain | Written acceptance memo — or, if work is non-conforming, a written rework directive with cure period. Acceptance memo is a precondition to Phase 7. | SMD |
| 7 | Invoice approval and payment authorization (two separate acts) | SMD signs invoice; Treasury authorizes payment | (a) SMD sign-off for scope match, performance, and quality. (b) Separate Treasury authorization to release funds under the Money Transfer Resolution. Bank confirmation filed with the Board record. | SMD + Treasury |
3.2.1 Notes on Phase Ownership
- Why RML/FLI owns Phases 1–3. Need-validation, scope, and bidding are where the Association's knowledge of the building, the trades, the prior history, and the relevant standards matters most. The Management Company supports (bid distribution, vendor contact lists, prior-cost references) but does not set scope or recommend award.
- Why a single SMD owns Phases 5–6. Oversight and acceptance benefit from continuity — the same individual who saw the work begin should see it end.
- Why Phase 7 is split. Invoice approval (substantive) and payment authorization (financial) are intentionally separate acts performed by different people. The SMD confirms the work was done; Treasury confirms the funds are available and the disbursement is in order. Splitting the two enforces the internal control that should be present on every payment.
§ 3.3 Bidding Thresholds by Contract Amount
| Tier | Contract Amount | Bids Required | Approval | Documentation |
|---|---|---|---|---|
| 1 | Up to $2,500/incident; up to $5,000/month per SMD | One quote (SMD verifies pricing). | Single SMD approval. No Subcommittee or Board action required. | SMD note in the Subcommittee record; SMD sign-off on invoice. |
| 2 | $2,500.01 – $10,000 | Two bids; both filed with the Subcommittee record. | Subcommittee approval (both members concur). Reported to the Board at the next regular meeting. | Bid tabulation memo; Subcommittee minute; SMD sign-off on invoice. |
| 3 | $10,000.01 – $50,000 | Three bids against the same written Scope Document. Subcommittee Bid Memo circulated to all directors before the meeting. | Full Board approval at a duly noticed meeting. SMD remains the day-to-day administrator. | Bid documents; Bid Memo; Board motion; signed contract. |
| 4 | Over $50,000 | Formal RFP. Minimum three responsive proposals. Reserve impact reviewed by FLI. | Full Board approval at a duly noticed meeting, with Bid Memo, reserve impact memo, and proposed contract circulated in advance. | RFP package; proposals; Bid Memo; reserve memo; Board motion; signed contract; vendor insurance and license verification. |
| EM | Emergency (any amount) | Single bid acceptable where time does not permit competitive bidding and bodily injury or significant property damage is imminent. | Authorized by the President in consultation with the relevant SMD. Documented in writing and ratified at the next Board meeting per Civ. Code § 4923. | Written President memo within 48 hours; ratification motion at the next meeting. |
§ 3.4 Contract Approval Authority Matrix
| Action | SMD alone | Subcommittee | Full Board | Membership |
|---|---|---|---|---|
| New scope under existing contract, ≤$2,500/incident, ≤$5,000/mo | ✓ | Notify | Report | — |
| Approve invoice within Board-approved budget line | ✓ | Notify | Report | — |
| Change order on existing contract — within SMD cap | ✓ | Notify | Report | — |
| Change order on existing contract — above SMD cap, within Subcommittee tier | — | ✓ | Report | — |
| New contract Tier 1 (≤$2,500) | ✓ | Notify | Report | — |
| New contract Tier 2 ($2,500.01–$10,000) | — | ✓ | Report | — |
| New contract Tier 3 ($10,000.01–$50,000) | — | Recommend | ✓ | — |
| New contract Tier 4 (>$50,000) | — | Recommend | ✓ | Notify (reserves) |
| Intra-Association cash transfer ≤$100,000 / 90-day cap | — | Treasury ✓ | Report | — |
| Intra-Association cash transfer >$100,000 or >cap | — | Recommend | ✓ | — |
| Engagement of new attorney / auditor / tax preparer / reserve study preparer | — | Recommend | ✓ | — |
| Emergency action (Civ. Code § 4923) | — | — | President + SMD; ratified next mtg | — |
§ 3.5 Detailed Subcommittee Responsibilities in Each Phase
The table in § 3.2 maps phases to owners; this Section spells out, in narrative form, what each Subcommittee actually does at each phase of a procurement managed by that Subcommittee. The Subcommittee with subject-matter responsibility for a given engagement is referenced as “the Subcommittee.”
3.5.1 Phase 1 — Need Identification and Validation
The Subcommittee receives notice of a possible need from an SMD, the Management Company, a director, an Owner, or its own inspection. The Subcommittee validates whether there is in fact a need to be addressed, the urgency of the need, and whether the need is properly an Association responsibility under the CC&Rs and Maintenance Matrix. The output is a written Need Memo filed with the Subcommittee record.
3.5.2 Phase 2 — Scope Specification (Value Engineering)
The SMD drafts a written Scope Document that identifies the work to be performed, the materials and methods that meet the Association's quality standard, exclusions, the schedule, the warranty expectation, and the acceptance criteria — including measurable Key Performance Indicators where applicable. The Subcommittee reviews the Scope Document and either approves it for bid distribution or returns it for revision.
3.5.3 Phase 3 — Vendor Recruitment and Bidding
The Subcommittee, with Management Company support on distribution and follow-up, solicits proposals from qualified vendors per § 3.3 tier requirements. The Subcommittee produces a written Bid Memo summarizing the bids and recommending an award. The Bid Memo identifies any single-bid exception.
3.5.4 Phase 4 — Award and Contract Execution
Approval is taken at the level required by the § 3.4 matrix. Contract execution is by the President; contract administration is by the SMD.
3.5.5 Phase 5 — Performance Oversight and KPI Monitoring
The SMD inspects work in progress, monitors against the KPIs in the Scope Document, and addresses deviations in writing. Change orders within the SMD's cap may be authorized by the SMD; above the SMD's cap but within the Subcommittee's tier are authorized by the Subcommittee; above the Subcommittee's tier are escalated to the Board. A change order is a substantive expansion of scope, not a routine clarification.
3.5.6 Phase 6 — Acceptance or Rework
On completion, the SMD inspects against the acceptance criteria in the Scope Document. If conforming, the SMD signs a written acceptance memo. If substantially complete but with correctable defects, the SMD documents them on a punch list, gives the vendor a written cure period (typically 14 days), and withholds invoice approval until cure. If non-conforming, the SMD directs rework at the vendor's cost; for remediation cost exceeding $2,500, escalation to the Subcommittee. The SMD's acceptance signature is a substantive sign-off, not a clerical formality.
3.5.7 Phase 7 — Invoice Approval and Payment Authorization (Two Separate Acts)
- Invoice approval is the SMD's substantive sign-off — confirming scope match, performance, and quality against the Scope Document and the acceptance memo. The SMD may approve, reject, withhold, or reduce the invoice; direct backcharge or retention; or escalate.
- Payment authorization is the Treasury Subcommittee's separate act releasing funds pursuant to the 5/8/26 Money Transfer Resolution. Treasury verifies (i) SMD sign-off, (ii) approved budget line/contract/prior Board action, (iii) within Treasury's $100,000 / $100,000-90-day caps. Treasury releases the payment and files the bank confirmation.
§ 3.6 Documentation and the Vendor File
For every engagement above Tier 1, the Subcommittee maintains a Vendor File: the Need Memo, the Scope Document, the bid solicitation, all bid responses, the Bid Memo, the executed contract, all change orders, inspection notes, the acceptance memo (or rework directive and cure documentation), the signed invoice, and the bank-issued payment confirmation. The Vendor File is a record of the Association subject to Civil Code §§ 5200 et seq.
§ 3.7 Reporting Back to the Board
- Tier 1 actions appear on the Consent Calendar as part of the SMD's report.
- Tier 2 actions appear on the Consent Calendar as part of the Subcommittee Report.
- Tier 3 and Tier 4 actions are voted on at a regular Board meeting in the ordinary course; the Subcommittee Bid Memo is the proposing document.
- Emergency actions are ratified at the next regular Board meeting under Civil Code § 4923.
- Acceptance and payment under § 3.5.7 are reported in the Subcommittee Report and reflected in the Association's financial statements.
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This Board Procedures Manual, including its structure, organization, drafting, language, and accompanying materials, is the proprietary work product of the Sommerset Homeowners Association, a California nonprofit mutual benefit corporation. It is intended solely for the internal use of the Association's Board of Directors, its committees and Subject-Matter Directors, the Association's contracted Management Company (acting on the Association's behalf and only with respect to the Association), the Association's members, and the Association's professional advisors.
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