Mr. John L. David OpinionNo. C-788

CountyAttorney Dallam County Re: Questions relating to the Dalhart, Texas authority of a county commissioners court to include certain provisions in the bid proposal and purchase agreement in Dear Mr. David: purchasing road machinery.

In a recent letter to this office you enclosed copies of the Guaranteed Bid Proposal and Purchase Agreement which the Commissioner's Court of DallamCounty desires to use in connection with the purchase of roadmachinery by the county. You have requested our opinionas to the legality of Items 4 and 6 of the Guaranteed Bid Proposal.

We are setting out in full such Guaranteed Bid Proposal.
DALLAM COUNTY GUARANTEED BID PROPOSAL

. Bid Opening Date
FOR ITEM#l

ITEM# 2

ITEM # 3 ITEM# 4 complete as

per attached specificationsdated $ Allowance on trade-inof $ Model (subtract) Difference $ Guaranteed repurchaseprice at end of 10,000 hours or 5 years, whichever comes first (subtract) (outright cash purchase - not trade-in allowance on new machine) $ -3782-Mr. John L. David,page 2 (c-788)

ITEM # 5 ITBM# 6

ITEM # 7 Difference $

"GuaranteedTotal Cost of Parts" for 10,000hours or 5 years of operation,whichever comes first,per attached specificationswill not exceed (add) $ Total cost toDallam County (Item5 plus Item 6) $ Bidder shall quote on all items. Dallam County will pay only amount of Item# 3. The Bidder shall be required to furnish a performancebond, before the awarding of the bid, that.

shall be equal to the sum thatappears in Item # 4 above, plus twentyfivepercent (25%) of the sum that appears in Item# 1 above. Said bond shall bemade in favor of Dallam County-and ~shall be condi-~.~ tioned for the benefit of Dallam County. This bond shall be for the use and benefit of DallamCounty should the bidder fail to repurchase the equipment if so requested, and/or should the cost of theparts exceed the amount thatappears in Item# 6 above and should the bidder fail in thisperformance. The machine performance will be subject to Dallam County approval and acceptanceat the time of delivery. Dallam County reserves the right to reject any or all bids, or to accept the low bid thatmeets all specifications and requirements stipulated in the "Notice of Receiving Bids" and "Instructions to Bidders."
DEALER
BY
TITLE
DATE This "Guaranteed'BidProposal" is and shall be considered a part of the "Noticeof Receiving Bids." -3?t33-Mr. John L. David,page 3 (c-788)

In determining the legality of Items 4 and 6 above mentioned we must look to Section 2b of Article 2368a, Vernon's Civil Statutes,which provides as follows:

'Sec. 2b. Contracts for the ,purchaseof machinery for the constructionand/or maintenance of roads and/or streets,may bemade by the governing bodies of all counties and cities within the State in accordance with theprovisions of this Section. The order for purchase and notice for bids shall provide full specification of themachinery desired and contracts for the purchase thereof shall be let to the lowest and best bidder." This statute clearly provides that contracts for the, purchase of roadmachinery shall be let to the bidder submitting the lowest and best bid for themachinery itself. It must therefore be determinedwhether the sums whichmay be submitted by the bidder on Item 4 and Item 6 may legi'timately be allowed to affect the final determinationas to the lowest and best bid. It is noted in theGuaranteedBid Proposal that "Bidder shall quote on all items. Dallam County will pay only amount of Item # 3."

In Sterrettv. Bell, 240 S.W.2d 516~ (Tex.Civ.App., 1951, no history), the courtmade the following observation regarding competitive biddingat page 520:

"Itspurpose is to stimulate competition, prevent favoritismand secure the best work and materials at the lowestpracticable price, for the best interestsand benefit of the taxpayers and property owners. There can be no competitive bidding in a legal sense where the terms of the letting of the contractprevent or restrict competition, favor a contractor or materialman, or increase the cost of thework or of thematerial or other item going into the project."
In Waralson v. City of Dallas, 14. S.W.2d 345 (Tex. Civ.App., 1929, error dism.,), it was held that the governing body advertising for bidshad the authority to specifymaterials best suited to the use required; 348: the court statedat page 347-

"The trial court found, with ample evidence to sustain the finding that the chemicalanalysis test did not stifle competition, that the success- -3784-. .

Mr. John L. David, page 4 (c-788)

ful bidderwas not the onlymanufacturer in the United States that was able and willing to perform the work and furnishpipe in accordance with the specifications,and this is conclusively established by the fact that there were six bids for the entire job that contemplatedthe use of cast-iron pipe fulfilling the chemicalanalysis test.. The object of theauthorities inprescribing this test was to secure a high grade of cast iron, absolutely necessary, in view of thepurposeand use to be served. It was imperativethat iron pipe of minimum brittleness be used to guard against sudden breaks and resultant breakdownsof water supply, and the requirementwas made only after a thorough investigation of the subjectby the city engineer. He consulted scientificworks, engineers, and waterworks men, north and east, includingarmy engineers, the Bureau of WaterSupply forWashington, D.C., and engineers of other cities, notably, of Providence, P&ode Island,New York, Boston; Baltimore, and Milwaukee, thesecities having prescribed the same chemical test for cast-ironpipes for their water supply. "The city authoritieswere, under the law, chargedwith the duty of securing the kind and character of pipes andmaterial best suited for thisproject, and, having acted~in good faith, it is not for this court, or any other court, to substitute its opinion for theirs in determining such a matter." (Emphasisadded)
In construing theprovisions of Article 2368a, it was held inAttorney General'sOpinion v-1565 (1962):

"Article2368a requires that the contract be let 'to the lowest responsiblebidder'. The phrase 'lowestresponsiblebidderthas a well definedmeaning. For a collectionof cases see 25 Words and Phrases ( Per-m. Ed. 1940) 714. In determining the lowest responsiblebidder the commissioners'court is not performinga mere ministerialduty but is exercising a duty which is deliberativeand discretionary. Att'y Uen. Op. v-1536 (1952). The commissioners' court may take into considerationthe quality of theproduct, theadaptability to theparticular use required,and theability, capacity,experience,efficiency and integrity of the biddersas well as their financialresponsibility. Mitchellv. Walden Motor Company, 235 -3785-. . .

Mr. John L. David, page 5 (c-788)

Kelling v. Edwards, 116 People v. Kent, 160 Picone v. City of New Hodgemanv. City of 128 P. 2 412 (1942)."
In view of the foregoingauthorities,~ it is our opinion that the commissioners court, in the exercise of its discretion, has the authority to determine the quality and type of machinery which is best suited to the particular use for which it is to be purchased. Therefore, such specificationsmay be placed in the bid proposalas will insure the submission of bids upon the quality and type of machinery desired. When it comes to the award of the contract to the lowest and best bidder, the commissioners court may take into consideration the ability, capacity and efficiency of the bidder.

Considering the bid proposal before us as a whole, it cannot be said as a matter of law that the Commissioners Court of Dallam County has abused its discretion in requiring that the bidders specifya guaranteed repurchaseprice and maximum parts replacementcost. The inclusion of this information in the bid proposal would, in our opinion, be relevant to the determination of the qualityand performance of themachine to be purchased, as well as theability, experience and integrity of the bidder. Thus, it is our opinion that the inclusion of Items 4 and 6 in the specificationsquoted above is for the determination of the commissionerscourt, and If the court determines that the inclusion of such items will be advantageous to the interests of the county in securing the desiredmachinery, and such determination is made in good faith and not for thepurpose of restricting competition, the commissioners court has acted within its authority. SUMMARY ------- Pursuant to the provisions of Article 2368a, Vernon's Civil Statutes, the commissionerscourt may requirebidders on the nurchase of roadmachinery to submit as a part of their bid, a guaranteed repurchaseprice and a guaranteedmaximum cost of parts,provided the commissioners court in the exercise of its discretion determines that such specificationsis for the best interest of the county in securing the machinery desired, and is not made for thepurpose of restricting competition. Your5 very truly,
WAGGONER CARR Attorney General of Texas -3786-. . .

Mr. John L. David, page 6 (C-788)

By: , .

. Bohn Reeves Assistant Attorney General JR:mh
APPROVED: OPINION COMMITTEE

w. 0. Shultz, Chairman Pat Bailey Malcolm Quick James C. McCoy Ralph Rash