, 

. 

MARK WHITE 

Attorney General 

The Attorney’ General of Texas 

Nsrch 5, 1961 

Honorable Peyton McKnight 

Chairman 

Subcommittee on Nominations 

Senate of the State of Texas 

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 

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 cpecifications after performance of a contract has been 

p. 945 
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). 

p. 946 
I 

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 
* 

‘ 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 

- 

p. 948