,

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MARKWHITE Attorney General 

# The Attorney’ General ofTexas

Nsrch 5, 1961
Honorable Peyton McKnight Chairman Subcommittee onNominations Senate ofthe State ofTexas Austin, Texas 78711 De& Senator McKnight: Opinion No. Hz96 Re: Whether negotiation of contract terms prior to acceptance of bid violated article 2368a, V.T.C.S.
Early in 1980,the city of Grand Saline advertised for competitive bids onacontract to complete asewerage 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, whosubmitted a revised bid which the city found acceptable. The Department ofWater Resources hasquestioned the validity of this procedure inlight 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 inpertinent part asfollows:

.

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 beenforceable inanycourt. .. .

. . . . Section ?a. . . . .ln the event it becomes necesje? to make changes ir, the plans or cpecifications after performance of a contract has been

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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 ofcertain public works contracts. Niles v.Harris County Fresh Water SuppIy District No.lA, 336S.W.2d637(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 bybidders would form the basis for negotiating acontract. 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 ofcontract. In upholding the trial court’s judgment infavor of the district, the court of civil appeeals emphasized that the competitive bidding process is designed to stimulate competition, andthat compliance with statutory bidding requirements ismandatory. 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). 336S.W.2dat 638-39. In Overstreet v. Houston County 365SW. 2d409(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 inthe 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. --, 208S.W.213(Tex. Civ. App. - Dallas 1918,writ dism’d).

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These cases suggest that the critical inquiry iswhether 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). Ifenough changes are made, the revised plans will be treated as anewproposal, 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:

‘dueadvertisement, giving opportunity to bid, and contemplates

a bidding on the same undertaking upon each of the same material items covered bythe 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 ofSteel Importers, Inc., 372 S.W. 2d 525, 527 (Tex. 19631,quoting Sterrett v. Bell, 240S.W. 2d516,520 (Tex. Civ. App.- Dallas 1951,no writ). In this instance, the city did not accept any of the bids. Section 26of article 23680 does not apply. The only question iswhether the manner in which this contract was awarded comported with the competitive bidding statutes. Even ifweassume that the proper test is whether the revised plans are substantially similar to the original ones, webelieve we must answer this question in the negative.. Morethen 35changes .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. Wethink these changes were substantial enough that the revised plans constituted anew proposal, upon which new bids mustbesolicited. 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 inthis instance, where the facts indicate that leas than $1,000separated 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 onthe original contract and then invited bids on the revised plans, and its failure todosodefeated the objectives ofthe competitive bidding process.

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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 ofTexas JOHN W.FAINTER, JR. First Assistant Attorney General RlCHARDE.GRAYlB Executive Assistant Attorney General Prepared byJon 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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