Series 52: 3.1.2. Competitive Bid Authorization

3.1.2.  Competitive Bid Authorization

Competitive bidding is usually (but not always) associated with GO bonds. Some states require by law that underwriters of GO bonds be chosen through a competitive bid. Since the bidding process cannot begin until after the bonds are authorized, the issuer itself must oversee the preparation of the preliminary materials and present them to the governing body for a decision. When the governing body of the issuer approves the proposal, it will authorize the issue by signing a bond resolution.

Drafted by the bond counsel, the bond resolution describes:

• • The project
• • Its estimated cost
• • The financing plan

It also:

• • Lays out the issuer’s duties to the bondholder
• • Pledges the full faith and credit of the issuing authority

If the bonds are GO bonds, the bond resolution is then brought befor