Untitled Texas Attorney General Opinion ( 1981 )

,
.
The Attorney’ General of Texas
Nsrch 5, 1961
MARK WHITE
Attorney General
Honorable Peyton McKnight Opinion No. Hz96
Chairman
Subcommittee on Nominations Re: Whether negotiation of con-
Senate of the State of Texas tract terms prior to acceptance of
Austin, Texas 78711 bid violated article 2368a, V.T.C.S.
De& Senator McKnight:
Early in 1980, the city of Grand Saline advertised for competitive bids
on a contract to complete a sewerage treatment plant. Each of the five bids
submitted exceeded the funds available for the project. In order to reduce
project costs, the city altered its plans; however,. it only presented these
revisions to the original low bidder, who submitted a revised bid which the
city found acceptable. The Department of Water Resources has questioned
the validity of this procedure in light of state competitive bidding laws, and
it has declined to certify the award of the contract to the Environmental
Protection Agency pending resolution of this question by this office. You
have requested our opinion on this matter.
Articles 2368a &d 2368a.3, V.T.C.S., are relevant in this inquiry. -The
former provides in pertinent part as follows: .
Section 2. (a). . . no city. . . shall. . . make
any contract calling for. . . the expenditure of. . .
Three Thousand Dollars . . or more. . . without first
submitting such proposed contract to competitive
bids. . . . [S] aid contract shall be let to the lowest
responsible bidder.
. . . .
(d) . . ., all . . contracts. . . made.. . without
complying with the terms of this Section, shall be
void and shall not be enforceable in any court. . . .
. . . .
Section ?a. . . . .ln the event it becomes
necesje? to make changes ir, the plans or cpecifica-
tions after performance of a contract has been
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L Honorable Peyton McKnight - Page Two
commenced. . . the. . . governing body shall be authorized to
apprd;e change orders effecting such changes. . . . (Emphasis
.
The latter, which applies to incorporated cities, among other entities, sets forth
specific requirements pertaining to the bidding of certain public works contracts.
Niles v. Harris County Fresh Water SuppIy District No. lA, 336 S.W.2d 637 (Tex.
Civ. App. - Waco 1960, writ ref’d), involved similar facts. The district invited bids for
6 sewerage treatment plant, sewer lines, and a storage tank. The notice stated that
plans, specifications and bid documents would ba furnished, and that the data
submitted by bidders would form the basis for negotiating a contract. All of the bids
submitted exceeded available funds; however, the district initiated negotiations with
Niles, who submitted the lowest bid, to reduce the extent of the work. These
negotiations resulted in new plans and specifications and a proposal by Niles for a
reduced contract price. The district’s board first accepted the proposal, but later
rejected it, and Niles filed suit alleging breach of contract.
In upholding the trial court’s judgment in favor of the district, the court of civil
appeeals emphasized that the competitive bidding process is designed to stimulate
competition, and that compliance with statutory bidding requirements is mandatory. It
further stated that:
The alleged contract. . . cannot be said to have been submitted
to competitive bidding. . . . Although the total reduction in
cost, as negotiated, was within 25% of appellant’s original bid,
there was far more here than a mere reduction in quantity;
There is not simply 6 modification. There was 6 complete
revision of plans and specifications. The proposal for which
competitive bids were called was not substantially similer to
that on which appellant’s action was based, nor was there
substantial comoliance with the statute. (Emphasis added).
336 S.W.2d at 638-39.
In Overstreet v. Houston County 365 SW. 2d 409 (Tex. Civ. App. - Houston 1963,
writ reTd n.r.e.1, the county awarded in air conditioning contract to Craddock. When
Craddock discovered that he was unable to comply with the original plans, the
commissioners court authorized him to deviate from those plans. In 6 subsequent
lawsuit, the court of civil appeals held that article 2368a, section 2a (see above),
authorized the commissioners court to make such changes without having to invite bids
on the modified plans. However, two crucial factors in the court’s reasoning were that
work on the contract had already begun, which made section 2a applicable. and that
the modifications did not necessitate any change in the contract price. The facts
which you have submitted indicate that neither of thesf ‘actors exists here. See also
Ashbv v. J&ir.es. ‘226 S.K. 722 iTes. Civ. A?>. - .\rs::::o 1O:Q. no x:::I; iieaelee v.
--, 208 S.W. 213 (Tex. Civ. App. - Dallas 1918, writ dism’d).
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c ’ Honorable Peyton McKnight - Page Three
These cases suggest that the critical inquiry is whether the revisions arc material
and substantial, or in other words, whether the revised plans are substantially similar
to the original ones. See Attorney General Opinion V-981 (1949). If enough changes are
made, the revised plans will be treated as a new proposal, and new bids will have to be
solicited in order to prevent the objectives of the bidding statutes from being
defeeted. With respect to those objectives, our courts have stated that bidding
presupposes:
‘due advertisement, giving opportunity to bid, and contemplates
a bidding on the same undertaking upon each of the same
material items covered by the contract; upon the same thing. It
requires that all bidders be placed upon the same plane of
equality and that they each bid upon the same terms end
conditions involved in all the items and parts of the contract,
and that the proposal specify as to all bide the same or
substantially similar specifications.’
Texas Highway Commission v. Texas Association of Steel Importers, Inc., 372 S.W.2d
525, 527 (Tex. 19631, quoting Sterrett v. Bell, 240 S.W.2d 516, 520 (Tex. Civ. App. -
Dallas 1951, no writ).
In this instance, the city did not accept any of the bids. Section 26 of article
23680 does not apply. The only question is whether the manner in which this contract
was awarded comported with the competitive bidding statutes. Even if we assume that
the proper test is whether the revised plans are substantially similar to the original
ones, we believe we must answer this question in the negative.. More then 35 changes
.in the original plans were mode, which changes resulted in a revised bid which was
approximately 25% lees than the original $1,209,000 amount. We think these changes
were substantial enough that the revised plans constituted a new proposal, upon which
new bids must be solicited.
The competitive bidding statutes require that all bidders hove an opportunity to
bid on the same undertaking. Such an opportunity cannot exist when plans are
substantially altered after bids are received, but only one bidder is afforded a chance
to submit a revised bid based upon the modified plans. And this process cannot be
justified by contending that the original low bidder would likely have been the low
bidder on the revised project; another bidder, or perhaps someone who did not
originally bid, might well hove underbid the low bidder had a new opportunity been
afforded. This is particularly true in this instance, where the facts indicate that leas
than $1,000 separated the two lowest bids.
For the foregoing reasons, we conclude that the manner in which this contract
was awarded violated articles 2368a and 2368a.3. The city should have rejected all
bids on the original contract and then invited bids on the revised plans, and its failure
to do so defeated the objectives of the competitive bidding process.
p., 947
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‘ Honorable Peyton McKnight - Page Four
SUMMARY
The manner in which the city of Grand Seline awarded this
contract for the completion of 6 sewerage treatment plant
violated articles 2368a and 23686.3, V.T.C.S.
k?m.%a%?m?.d&
MARK WHITE
Attorney General of Texas
JOHN W. FAINTER, JR.
First Assistant Attorney General
RlCHARDE.GRAYlB
Executive Assistant Attorney General
Prepared by Jon Bible
Assistant Attorney General
APPROVED:
OPlNlON COMMlTTEE
Susan L. Garrison, Chairman -
James Allison
Jon Bible
Rick Gilpin
Robert T. Lewis
Bruce Youngblood
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