Court Opinion

ID: 9568693
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:06:41.328795+00
Date Added: 2024-06-11T10:56:06.645422
License: Public Domain

*619Neill, J.
Two taxpayers, through declaratory judgment proceedings against the State of Washington and its Director of the Department of General Administration, attack the validity of a state purchase contract. The contract contains an option provision whereby the state may extend the duration of the purchase agreement for successive 1-year periods to a maximum of 3 additional years beyond the basic 1-year term.1
This is a companion case to Miller v. State, 73 Wn.2d 790, 440 P.2d 840 (1968). The cases were consolidated on appeal for purposes of argument. We affirmed the decree of the trial court in Miller, thereby determining that under current conditions the purchase of electric light bulbs by the state is to be by competitive bid pursuant to RCW 43.19.1906. The instant case is an outgrowth of those proceedings.
Upon entry of the decree by the trial court in Miller, enjoining the state from negotiating a renewal of the 1-year electric lamp purchase contract of February 1, 1958, the state did call for bids and awarded a new contract to the lowest bidder, Platt Electric Supply, Inc., for the furnishing to the state of electric lamps and starters. The sole contention of plaintiffs is that the option to extend the contract term is a violation of the competitive bid statute. The trial court agreed and entered summary judgment declaring the option provision void and unlawful and enjoined defendants from exercising the option. The defendants appeal.
The state has administratively determined that it is in its best interests to contract for the purchase of lamps and starters under a 1-year purchase agreement, together with *620the right in the state to extend the agreement annually, at the sole option of the state, for up to an additional 3 years. The salutary purpose of a governmental unit using a competitive bid procedure for the acquisition of its materials and supplies is not here in question since the state has, in fact, awarded the subject contract after full compliance with statutory dictates. Rather, the issue before us is limited to whether the state was required to specify the absolute time period of the purchase contract or whether it could, as done herein, advertise for and award a contract for a 1, 2, 3, or 4-year period, the length of which would be at the option of the state.
This second contract does not create the same issue which prevailed under the 1958 contract. That contract, effective February 1, 1958, ran for 1 year and the state thereafter negotiated a renewal thereof, being in essence a new contract without bidding thereon. In the instant case, the call for bids was for a contract of a 1, 2, 3, or 4-year duration—at the sole option of the state—and is not a matter of negotiation at the end of each annual term.
This purchase agreement giving the state an option to extend the duration of the contract, under the same terms and condition, for limited, specified periods does not create successive new contracts but, rather, merely extends the duration of a single existing contract. See, Helena Light & Ry. v. Northern Pac. Ry., 57 Mont. 93, 186 Pac. 702 (1920); cf., State ex rel. Preston v. Ferguson, 170 Ohio St. 450, 166 N.E.2d 365 (1960). As stated in 17A C.J.S. Contracts § 449 (1963):
Generally an option to renew a contract is the right to require the execution of a new contract while an option to extend the term merely operates to extend the term of the original agreement. Whether a party has an option to renew depends on the provisions of the contract and their construction.
The contract before us clearly provides for an extension of the duration of the purchase agreement rather than a renewal and execution of a new contract.
*621There is no statutory requirement limiting the time or duration of a purchase contract. If the legislature had intended that all purchase contracts be limited to a specific duration without option it could well have so stated.
As succinctly stated in 10 McQuillin, Municipal Corporations (3d ed. 1966) § 29.29, p. 321, competitive bid statutes are “for the purpose of inviting competition, to guard against favoritism, improvidence, extravagance, fraud and corruption, and to secure the best work or supplies at the lowest price practicable, and they are enacted for the benefit of . . . taxpayers, and not for the benefit or enrichment of bidders . . . .” Edwards v. Renton, 67 Wn.2d 598, 602, 409 P.2d 153 (1965). Unless specifically prohibited by statute and subject to judicial review as to reasonableness (Deaconess Hosp. v. State Highway Comm’n, 66 Wn.2d 378, 405, 403 P.2d 54 (1965), administrative agencies are free to exercise discretion and judgment. See Beverly Sewerage Authority v. Delanco Sewerage Authority, 65 N.J. Super. 86, 167 A.2d 46 (1961). The Department of General Administration herein has determined that the best interests of the state and the taxpayers he in protecting against a price increase by obtaining a limited, specific option to extend the 1-year contract. AU bidders had an equal opportunity to compete. This court has recognized this right as to selection of the duration of a contract in Washington Fruit & Produce Co. v. Yakima, 3 Wn.2d 152, 163, 100 P.2d 8; 103 P.2d 1106 128 A.L.R. 159 (1940). Also see Townsend Gas & Elec. Co. v. Port Townsend, 19 Wash. 407, 53 Pac. 551 (1898).
There is no contention made herein that a maximum possibility of 4 years is an unreasonable length of time for the state to contract for its lamp and starter needs. Rather, it is contended that a firm 1-year contract with an option to extend constitutes a negotiation and is not competitive. We do not agree with this contention, as the duration of a contract is as much a term of the agreement as is price, description of the subject matter, and the myriad of other provisions which may properly be included in a purchase contract. These essential terms must be left to *622the determination of the administrative agency invested with this governmental responsibility.
Statutory bidding requirements do not restrict the administrator’s power to make decisions with respect to the particular terms, conditions and specifications to be included in a purchase contract except insofar as the statute stipulates restrictions as a matter of legislative policy. Rather, bidding statutes require that once the state, acting through its administrator, has made those decisions, all qualified suppliers must be given the opportunity to make proposals on the particular terms resulting from those administrative decisions and that the qualified, responsible bidder with the lowest bid (sometimes “lowest and best” or other similar term) be awarded the contract.
All bidders had an equal opportunity to respond to the department’s invitation to bid on the terms specified and it can hardly be termed “a negotiation” to comply with one of the basic elements of the specifications. However, the reasonableness of the duration of a purchase contract is subject to judicial review in the same manner and under the same principles as are other discretionary decisions of administrative agencies. Our holding herein is not a carte blanche approval of unlimited extension provisions, but as pointed out above, the action of the department is not challenged as constituting an abuse of administrative discretion.
Plaintiffs suggest in their brief that this contract violates RCW 43.88.130 “No agency shall expend or contract to expend any money or incur any liability in excess of the amounts appropriated for that purpose: . . . Any contract made in violation of this section shall be null and void.” However, there is no suggestion that the purchase of lamps or any other goods or supplies falls within the bar of this statute ipso facto. See Marble v. Town of Clinton, 298 Mass. 87, 9 N.E.2d 522, 111 A.L.R. 1101 (1937), and McBean v. Fresno, 112 Cal. 159, 44 Pac. 358 (1896). The very option of which plaintiffs complain permits the state to view its available funds as well as its needs and *623price levels in making the administrative business decision each year as to whether or not it will extend the contract.
Accordingly, the judgment is reversed.
Hill, Finley, Hamilton, and McGovern, JJ., concur.

Contract Dates: “This contract shall be íor a period commencing on the 1st day of January, 1966, and terminated on the 31st day of December, 1966.”
Extensions: “Bidder and Division of Purchasing covenant and agree that this contract may, at the sole option of the State of Washington, be extended under the same terms and conditions of this contract for a period not to exceed one additional year, and said option to extend this contract for a one year period shall be in effect for each year thereafter for a total period not to exceed three additional years.”