CITIES AND TOWNS ‑- OPTIONAL MUNICIPAL CODE ‑- CONTRACTS ‑- INSURANCE ‑- PERSONAL SERVICES ‑- COMPETITIVE BIDS

CITIES AND TOWNS ‑- OPTIONAL MUNICIPAL CODE ‑- CONTRACTS ‑- INSURANCE ‑- PERSONAL SERVICES ‑- COMPETITIVE BIDS

Because of RCW 35A.40.200, the competitive bidding requirements of RCW 35.23.352 are applicable to contracts executed by a city operating under the optional municipal code when engaged in making public improvements or performing public works; however, these requirements are not applicable to the contracts of such a city for professional or personal services such as those of an insurance broker.

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                                                                October 25, 1972

Municipal Research Council
4719 Brooklyn Avenue N.E.
Seattle, Washington 98105

                                                                                                                 Cite as:  AGO 1972 No. 24

Attention:  !ttDr. Ernest H. Campbell

            Agent

Dear Sir:

            By letter previously acknowledged you have requested an opinion of this office on certain questions which we paraphrase as follows:

            (1) In view of RCW 35A.40.200, do the competitive bidding requirements of RCW 35.23.352 apply to a contract for the services of an insurance broker executed by a city operating under the optional municipal code?

            (2) If question (1) is answered in the affirmative, must the contract be let on a competitive bidding basis where, although in excess of $2,000, the broker's only compensation under the contract will come solely from commissions paid to him by the insurance carriers whose policies he procures for the city?

            We answer question (1) in the negative and thereby render consideration of question (2) unnecessary.

             [[Orig. Op. Page 2]]

                                                                     ANALYSIS

            RCW 35.23.352 is a statute which deals, expressly, with certain contracts executed by second, third and fourth class cities.  The competitive bidding requirements of this statute appear in two separate paragraphs, the first of which provides, in material part, as follows:

            "Any city or town of the second, third or fourth class may construct any public work or improvement by contract or day labor without calling for bids therefor whenever the estimated cost of such work or improvement, including cost of materials, supplies and equipment will not exceed the sum of five thousand dollars.  Whenever the cost of such public work or improvement, including materials, supplies and equipment, will exceed five thousand dollars, the same shall be done by contract.  All such contracts shall be let at public bidding upon posting notice calling for sealed bids upon the work. . . ."

            Then, after detailing the procedures to be followed in calling for and obtaining the required bids with respect to such public works projects as are governed by this portion of the statute, it goes on in a separate paragraph to provide that:

            "Anypurchase of supplies, material, equipment or services, except for public work or improvement, where the cost thereof exceeds two thousand dollars shall be made upon call for bids in the same method and under the same conditions as required herein on a call for bids for public work or improvement."  (Emphasis supplied.)

            In AGO 1970 No. 3 [[to Parry B. Woodall, State Senator on January 21, 1970]], copy enclosed, we advised that by virtue of the word "services" in this latter paragraph, a city or town of the second, third or fourth class is required to call for bids in the manner prescribed therein where such municipality seeks (a) to award a contract for liability and casualty insurance coverage, the anticipated annual premiums for which will exceed $2,000; or (b) to award a contract for the codification of municipal ordinances, the  [[Orig. Op. Page 3]] anticipated cost of which will exceed $2,000.  In so concluding we noted the general rule that contracts for personal services arenot ordinarily subject to bid laws,1/ however, because of the terminology of this particular competitive bidding statute we stated that the legislature, in enacting its provisions for second, third and fourth class cities, appears to have

            ". . . seen fit to modify the general rule with respect to the purchase of personal and professional services in the case of these municipalities ‑ and to require these municipalities to advertise for bids even as to these categories of purchases. . . ."

            Question (1):

            Your first question is based upon an acknowledgement of this conclusion and asks whether, in view of the reference to this statute in a section of the optional municipal code which has been codified as RCW 35A.40.200, the same requirement applies in the case of a contract for personal services (e.g., the services of an insurance broker) executed by a code city organized and operating under this code (now set forth in Title 35A RCW).  This section of the code provides as follows:

            "Every code city shall have the authority to make public improvements and to perform public works under authority provided by general law for any class of city and to make contracts in accordance with procedure and subject to the conditions provided therefor, including but not limited to the provisions of:  (1) Chapter 39.04 RCW, relating to public works; (2) RCW 35.23.352 relating to competitive bidding for public works, materials and supplies;  (3) RCW 9.18.120 and 9.18.150 relating to suppression of competitive bidding; (4) chapter 60.28 RCW relating to liens for materials and labor performed; (5) chapter 39.08 RCW relating to contractor's bonds; (6) chapters  [[Orig. Op. Page 4]] 39.12, 39.16, and 43.03 RCW relating to prevailing wages; (7) chapter 49.12 RCW relating to hours of labor; (8) chapter 51.12 RCW relating to workmen's compensation; (9) chapter 39.20 RCW relating to employment of certain aliens; (10) chapter 49.60 RCW relating to antidiscrimination in employment; (11) chapter 39.24 RCW relating to the use of Washington commodities; and (12) chapter 39.28 RCW relating to emergency public works."  (Emphasis supplied.)

            We have underscored the portions of this enactment which are particularly germane to your inquiry.  The specific matter to be considered is whether the omission from this statute of any reference to contracts for "services" as covered by RCW 35.23.352 should be taken to mean that, although the competitive bidding requirements of the latter are expressly made applicable to a code city's contracts for "public improvements and . . . public works," these requirements are not applicable to such a city's contracts for personal services.  In order to place this question in proper focus it is necessary first to indentify the nature of a code city and the scope of such a city's municipal powers.

            The optional municipal code was enacted by the legislature in 1967 following some one and one‑half years of study by the municipal code committee created by chapter 115, Laws of 1965, Ex. Sess.  That committee had been directed by § 2 of this 1965 act to

            ". . . prepare and submit to the fortieth legislature, in bill form, a code of laws for the government of cities and towns which shall include a form of statutory home rule. . . ."2/

             Under the code there are two basic classes of cities ‑ known, respectively, as "noncharter" code cities and "charter" code cities.  The first of these is defined by RCW 35A.01.020  [[Orig. Op. Page 5]] as being a city

            ". . . regardless of population, which has initially incorporated as a noncharter code city, subject to the provisions of this title, or is an incorporated municipality which has elected, under the procedure prescribed in this title, to be classified as a noncharter code city and to be governed according to the provisions of this title under one of the optional forms of government provided for noncharter code cities."

            A "charter" code city, on the other hand, is described by RCW 35A.01.030 as

            ". . . one having at least ten thousand inhabitants at the time of its organization or reorganization which has either initially incorporated as a charter code city and has adopted a charter under the procedure prescribed in this title; or which, as an incorporated municipality, has elected to be classified as a charter code city and to be governed according to the provisions of this title and of its adopted charter."

            You will note, however, that RCW 35A.40.200, supra, refers only to "code cites" ‑ and thus draws no distinction between those with charters and those without.  This is entirely appropriate for the essential difference between a noncharter code city and a charter code city, as pointed out in AGO 1970 No. 8 [[to William Conte, Department of Institution on March 10, 1969]](copy enclosed) relates to the unique ability of the latter to frame its own form of government by its charter, and not to the basic nature or source of its municipal powers.

            With respect to these powers in the case of either type of code city there are three separate sections of the code which must be noted and understood before returning to and analyzing the provisions of RCW 35A.40.200, supra, in the light of your question.  The first of these is RCW 35A.01.010 (§ 1 of the code) which sets forth the purpose and policy of the optional municipal code as follows:

             [[Orig. Op. Page 6]]

            "The purpose and policy of this title is to confer upon two optional classes of cities created herebythe broadest powers of local self-government consistent with the Constitution of this state.  Any specific enumeration of municipal powers contained in this title or in any other general law shall not be construed in any way to limit the general description of power contained in this title, and any such specifically enumerated powers shall be construed as in addition and supplementary to the powers conferred in general terms by this title.  All grants of municipal power to municipalities electing to be governed under the provisions of this title, whether the grant is in specific terms or in general terms,shall be liberally construed in favor of the municipality."  (Emphasis supplied.)

            Manifestly, the purpose of the underscored portion of this section is to confer upon code cities powers which would otherwise be available only to cities entitled to frame home rule charters.  See note 2,supra.  Consistent therewith, the next section to be noted, RCW 35A.21.160, provides that:

            "A code city organized or reorganized under this title shall have all of the powers which any city of any class may have and shall be governed in matters of state concern by statutes applicable to such cities in connection with such powers to the extent to which such laws are appropriate and are not in conflict with the provisions specifically applicable to code cities."

            The third of these three sections of the code dealing with the powers of a city organized and operating thereunder, RCW 35A.11.020, is also of the same import, providing as follows:

            ". . .  The legislative body of each code city shall have all powers possible for a city or town to have under the Constitution  [[Orig. Op. Page 7]] of this state, and not specifically denied to code cities by law. . . .  In addition and not in limitation, the legislative body of each code city shall have any authority ever given to any class of municipality or to all municipalities of this state before or after the enactment of this title, such authority to be exercised in the manner provided, if any, by the granting statute, when not in conflict with this title. . . ."

            The critical point to be drawn from these statutes is that by electing to come under the optional municipal code a city ceases to be governed by the traditional rules of delegated powers.  See, e.g.,Lauterbach v. Centralia, 49 Wn.2d 550, 554-555, 304 P.2d 656 (1956);Town of Othello v. Harder, 46 Wn.2d 747, 752, 284 P.2d 1099 (1955); and authorities cited therein for the proposition that cities and towns to which these rules apply have only such powers as have been expressly granted to them by the legislature or as are to be necessarily implied from such granted powers.3/   Instead, a city so opting thereby becomes possessed of all powers which either have been specifically granted by the legislature to any class of city (RCW 35A.21.160,supra) or which could be granted by the legislature (RCW 35A.01.010 and 35A.11.020,supra), subject only to such restrictions or limitations as are contained in the statutes themselves or within the state Constitution; which is but another way of saying that the optional municipal code entitles cities operating thereunder to the equivalent of the home rule powers otherwise available only to first class charter cities.  Those powers are expressed in the now-classic "Winkenwerder rule," as follows:

            ". . . the only limitation on the power of cities of the first class is that their action cannot contravene any constitutional provision or any legislative enactment. . . . a city of the first class has as broad legislative powers as the state, except when restricted by enactments of the state legislature."  Winkenwerder v. Yakima, 52 Wn.2d 617, 622, 328 P.2d 873 (1958).

             [[Orig. Op. Page 8]]

            With this concept in mind, we may now place the provisions of RCW 35A.40.200,supra, in proper perspective.  Repeated for ease of reference, this section of the optional municipal code provides (in material part) that:

            "Every code city shall have the authority to make public improvements and to perform public works under authority provided by general law for any class of city and to make contracts in accordance with procedure and subject to the conditions provided therefor, including but not limited to the provisions of: . . . (2)RCW 35.23.352 relating to competitive bidding for public works, materials and supplies;. . ."  (Emphasis supplied.)

            While the opening clause of this statute on its face purports to be agrant of authority to make public improvements and to perform public works, it is now to be seen from the nature of a code city and of its municipal powers, as discussed above, that such a "grant" would be wholly redundant.  The power to make public improvements or perform public works and to contract therefor inheres in any code city simply by virture of its establishment as such, without any necessity for further delegation of this authority by the legislature ‑ as, likewise, does its power to contract for personal or professional services.  Accord, RCW 35A.01.010; RCW 35A.11.020; and RCW 35A.21.160, supra.  From this it follows, in our judgment, that the proper approach to RCW 35A.40.200 is to read and analyze the provisions of this section solely as limitations upon the exercise of these powers and not as grants thereof.

            Thus read, the earlier noted absence of any reference to contracts for "services" in RCW 35A.40.200 acquires great significance.  Because of this absence, the provisions ofthis statute simply do not reach and limit the authority of a code city to execute such contracts, even though the powers of second through fourth class cities are so limited.  Instead, these limiting provisions (in this case, the requirement of competitive bidding) only apply to the extent that a code city is engaged in making public improvements or performing public works.

            It is notable in this regard, and we think decisive, that the phrase "or services," upon which we relied for our conclusion in AGO 1970 No. 3, appears in a paragraph of RCW 35.23.352 which is applicable to purchases "except for public work or  [[Orig. Op. Page 9]] improvement" (emphasis supplied), while the portion of this competitive bidding statute which does relate to "public work or improvement"does not contain that phrase.  And, from the fact that RCW 35A.40.200 is in express terms applicable only to "public improvements and . . . public works," it follows that only so much of RCW 35.23.352 as relates to these activities is to be deemed to serve as a limitation upon the otherwise untrammeled discretion of a code city to contract.  Therefore, when executing a contract for professional services not constituting a public work or improvement ‑ as in the case of the employment of an insurance broker ‑ such a city need not follow the procedures set forth in this competitive bidding statute because its authority to execute such a contract is not limited by the provisions thereof.

            Accordingly, we may answer your first question, as paraphrased in the negative.  This answer, of course, renders any consideration of your second question unnecessary.

            We trust the foregoing will be of assistance to you.