CITIES AND TOWNS ‑- OPTIONAL MUNICIPAL CODE ‑- CONTRACTS ‑- PUBLIC WORKS AND IMPROVEMENTS ‑- PURCHASERS ‑- COMPETITIVE BIDS

CITIES AND TOWNS ‑- OPTIONAL MUNICIPAL CODE ‑- CONTRACTS ‑- PUBLIC WORKS AND IMPROVEMENTS ‑- PURCHASERS ‑- COMPETITIVE BIDS

(1) Under the provisions of RCW 35.23.352, as amended by § 1, Chapter 41, Laws of 1977, Ex.Sess., a second, third or fourth class city may still construct a public work or improvement having an estimated cost in excess of $5,000 through the use of its own labor force where the city has first called for bids but no responsive bids have been received; however, such a city may no longer construct a public work or improvement having an estimated cost in excess of $5,000 through the use of its own labor force where bids have been received but all such bids have been rejected.

(2) Because code cities are governed by the same legal rules as apply to second, third and fourth class cities in the construction of public works or improvements, the foregoing conclusions are equally applicable to the ability of a code city to construct a public work or improvement through the use of its own labor force.

(3) For the same reason a code city, after calling for bids and rejecting them, may not negotiate a contract for a public work or improvement without any further call for bids.

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                                                              September 26, 1977

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

                                                                                                                 Cite as:  AGO 1977 No. 18

ATTN:  !ttErnest H. Campbell,

            Agent

Gentlemen:

            By recent letter you made reference to a certain amendment to RCW 35.23.352 which is contained in § 1, Chapter 41, Laws of 1977, Ex.Sess., and then asked for our opinion on three questions arising out of that amendment.  We paraphrase those questions as follows:

             [[Orig. Op. Page 2]]

            (1) Under the provisions of RCW 35.23.352, as amended by § 1, Chapter 41, Laws of 1977, Ex.Sess., may a second, third or fourth class city construct a public work or improvement having an estimated cost in excess of $5,000 through the use of its own labor force under either of the following circumstances:

            (a) Where the city has first called for bids but no responsive bids have been received;

            (b) Where bids have been received but all such bids have been rejected?

            (2) Would the same answer, or answers, be equally applicable to the construction of a similar public work or improvement by the labor force of a code city (i.e., a city operating under the optional municipal code)?

            (3) May a code city, after calling for bids and rejecting them, negotiate a contract for a public work or improvement project without a further call for bids?

            We answer question (1) in the manner set forth in our analysis, question (2) in the affirmative and question (3) in the negative.

                                                                     ANALYSIS

            Question (1):

            Set forth in bill form for ease of understanding, § 1, Chapter 41, Laws of 1977, Ex.Sess., amends the first full paragraph of RCW 35.23.352 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  [[Orig. Op. Page 3]] 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.  Such notice thereof shall be posted in a public place in the city or town and by publication in the official newspaper once each week for two consecutive weeks before the date fixed for opening the bids.  The notice shall generaaly state the nature of the work to be done that plans and specifications therefor shall then be on file in the city hall for public inspections, and require that bids be sealed and filed with the council or commission within the time specified therein.  Each bid shall be accompanied by a bid proposal deposit in the form of a cashier's check, postal money order, or surety bond to the council or commission for a sum of not less than five percent of the amount of the bid, and no bid shall be considered unless accompanied by such bid proposal deposit.  If there is no official newspaper the notice shall be published in a newspaper published or of general circulation in the city or town.  The city council or commission of the city or town shall let the contract to the lowest responsible bidder or shall have power by resolution to reject any or all bids and to make further calls for bids in the same manner as the original call ((, or if in its judgment the improvement or work, including the purchase of supplies, material and equipment, can be done by the city at less cost than the lowest bid submitted it may do so without making a further call for bids or awarding any contract therefor and in such case all such bid proposal deposits shall be returned to the bidder, but if)).  When the contract is let then all bid proposal deposits shall be returned to the bidders except that of the successful bidder which shall be retained until a contract is entered into and a bond to perform the work furnished, with surety satisfactory to the council or commission, in the full amount of the contract price.  If the bidder fails to enter into  [[Orig. Op. Page 4]] the contract in accordance with his bid and furnish such bond within ten days from the date at which he is notified that he is the successful bidder, the check or postal money order and the amount thereof shall be forfeited to the council or commission or the council or commission shall recover the amount of the surety bond.  If no bid is received on the first call the city council or commission may readvertise and make a second call, or may enter into a contract without any further call or may purchase the supplies, material or equipment and perform such work or improvement by day labor."

            Clearly, the legislature must be deemed by the foregoing amendment to have intended to effectuate a change in the law.  Home Indem. Co. v. McClellan Motors, 77 Wn.2d 1, 459 P.2d 389 (1969), and cases cited therein.  Bearing that in mind let us note the three separate situations under which second, third and fourth class cities were authorized to construct public works or improvement through the use of their own labor forces before the amendment.  They were as follows:

            (1) Where the public work or improvement in question had an estimated cost of $5,000 or less.

            (2) Where, in the case of a public work or improvement having an estimated cost of more than $5,000, bids were called for and received but all such bids were rejected because the governing body determined that the work or improvement could be done at less cost by force account.

            (3) Where, in a similar case, bids were called for but no responsive1/ bids were received.

             [[Orig. Op. Page 5]]

            Clearly, the first of these three situations has not been altered by the legislature's 1977 amendment to the statute.  Nor, by the same token, has the third category of cases in which a public improvement may be constructed by force account in a second, third or fourth class city been altered in any way.  On the other hand, quite obviously, the second of the three situations above listed has been eliminated from the statute through the deletion of the following language from the prior law:

            ". . . ((, or if in its judgment the improvement or work, including the purchase of supplies, material and equipment, can be done by the city at less cost than the lowest bid submitted it may do so without making a further call for bids or awarding any contract therefor and in such case all such bid proposal deposits shall be returned to the bidder, but if)) . . ."

            For that reason we believe that the first part of your opening question, as above paraphrased, remains answerable in the affirmative while the second portion of that question, dealing with the situation in which responsive bids have been received but rejected, is now answerable in the negative.

            Question (2):

            Your second question, in essence, inquires as to the applicability of the foregoing conclusions in the case of cities operating under the optional municipal code;i.e., code cities.

            Although RCW 35.23.352,supra, is not by its express terms applicable to code cities, it nevertheless comes into play because of the following language or RCW 35A.40.200:

            "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  [[Orig. Op. Page 6]] 39.04 RCW, relating to public works; (2)RCW 35.23.352 relating to competitive bidding for public works, materials and supplies; . . ."  (Emphasis supplied)

            Because of that section of the optional code we earlier concluded, in AGO 1972 No. 24 [[to Municipal Research Council on October 25, 1972]](copy enclosed) that the competitive bidding requirements of RCW 35.23.352 are applicable to contracts executed by code cities ". . . when engaged in making public improvements or performing public works . . ." although not when contracting for personal services in view of the absence of any reference to personal service contracts in RCW 35A.40.200 itself.  And similarly, in AGO 1977 No. 4 [[to Municipal Research Council, on January 13, 1977]](copy enclosed) we concluded that while a code city is governed by RCW 35.23.352 when contracting for public works it is not so governed when purchasing supplies, materials and equipment which are not being procured in connection with a public work or improvement ‑ again because RCW 35A.40.200 only ties a code city into RCW 35.23.200 when the project involved constitutes such a public work or improvement.

            But obviously, turning to your second question, that is precisely what would there be involved.  In short, your question assumes the construction of a public work or improvement by a code city.  And therefore, since the authority of a code city to make public improvements and to perform public works is statutorily subject to the same procedures and limitations as govern in the case of second, third and fourth class cities under RCW 35.23.352, our answer to your second question must be the same as was our earlier answer to your first question.  A code city likewise remains free to construct a public work or improvement through the use of its own labor force in the case of those projects having an estimated cost of $5,000 or less.  In addition, a code city may do so in those instances in which bids were called for but no responsive bids were received ‑ as sanctioned by the final sentence of the first paragraph of RCW 35.23.352.  But just as a second, third or fourth class city may no longer reject all bids and construct a public work or improvement having an estimated cost in excess of $5,000 through the use of its own labor force in those instances in which bids have been called forand received ‑ so also is a code city now subject to this same limitation upon its authority.

             [[Orig. Op. Page 7]]

            Question (3):

            Finally you have asked:

            May a code city, after calling for bids and rejecting them, negotiate a contract for a public work or improvement project?

            Once again, we must turn to the provisions of RCW 35.23.352, supra, insofar as it is applicable to code cities by reason of RCW 35A.40.200.  Because of the interrelationship between those two statutes we have seen already that the same legal rules apply to code cities as govern in the case of second, third and fourth class cities ‑ insofar as public works or improvements are concerned.  But in accordance with those rules the only instance in which a second, third or fourth class city may negotiate a contract for a public works or improvement project having an estimated cost in excess of $5,000 is that provided for by the final sentence of the first paragraph of RCW 35.23.352, supra.  Repeated for ease of reference, that sentence of the statute reads as follows:

            "If no bid is received on the first call the city council or commission may readvertise and make a second call, or may enter into a contract without any further call or may purchase the supplies, material or equipment and perform such work or improvement by day labor."  (Emphasis supplied)

            Therefore, applying the same rule of law to the case of a code city we must answer your third question in the negative.  While a code city may negotiate a contract for a public work or improvement without a further call for bids in those cases in which bids have been called for but none have been received it may not do so where, instead, bids have been received but all such bids have been rejected.  In such a case the city's only recourse will be to call for further bids.

            We trust that the foregoing will be of some assistance to you.

Very truly yours,

SLADE GORTON
Attorney General