              THE      ATTORNEY      GENERAI.
                          Oti TEXL-LS


                           April 1, 1988




Honorable  Mike Driscoll                   Opinion    No.   JM-881
Harris County Attorney
1001 Preston, Suite 634                    Re:    Whether Harris County
Houston, Texas 77702                       may   require     in   its     bid
                                           specifications        for     con-
                                           struction   contracts     that    a
                                           minimum of     25    percent    of
                                           the work    be    performed     by
                                           the contractor8s       employees
                                           (RQ-1230)

Dear   Mr.    Driscoll:

       Your    ask   our opinion   about     the   following   question:

             May Harris County include a provision       in
         its    bid    specifications       for     county
         construction  contracts which requires that a
         minimum of twenty-five     percent of the    work
         be performed  by the contractor's    employees?

We conclude that          the county is not permitted  to   include
such a provision          in bid   specifications for construction
contracts.

      Construction   contracts     entered     into by   the   county
requiring   an expenditure    exceeding    $5,000 must comply with
the County Building Authority       Act, the County      Certificate
of   Obligations    Act,   and    the   County    Purchasing     Act,
chapters   293, 271, and 262      of the Local Government       Code,
see also Acts     198.7, 70th   beg., ch. 722,       55; Acts   1987,
70th Leg., ch. 785, 91; and Acts 1987, 70th Leg., ch. 802,
51   (amending    article     2368a.5,    V.T.C.S.,     the    County
Purchasing   Act, subsequent    to the repeal and       codification
of the article in the Local Government          Code).

     Section 262.025 of the Local Government   Code provides
that a "competitive  bidding  notice" must be published     in
the public press prior to the deadline   for the   acceptance
of bids.   The notice must contain:




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            (1) the  snecifications   describing    the
        item to be purchased   or a statement  of where
        the specifications   may be obtained;

            (2) the time and place for receiving                        and
        opening bids and   the name  and position                        of
        the county official or employee to whom                         the
        bids are to be sent:

            (3) whether the  bidder             should     use        lump-
        sum or unit pricing:

              (4) the method       of payment     by the         county:
        and

            (5) the   type   of bond            required         by     the
        bidder.    (Emphasis added.)


Local   Gov't   Code   5262.025.    Nothing               in  this    section
authorizes   the inclusion   of a provision              in  specifications
limiting the amount of     work which may                be performed   by    a
subcontractor   of a successful   bidder.                                             -,
      The Local Government    Code requires a county to either
award a contract     "to the resnonsible     bidder who   submits
the lowest    and best   bid"   or to   "reject all   bids"    and
solicit   for   new   ones.     Local   Gov't    Code   5262.027.
However,

        [a] contract may not be awarded to a bidder
        who is not the lowest dollar bidder         meeting
        specifications      unless,    before  the   award,
        each lower    bidder is     given notice    of   the
        proposed   award and     is given an   opportunity
        to appear before the commissioners       Court and
        present    evidence      concerning    the     lower
        bidder's   responsibility.

Local Gov't  Code         5262.027.    As one   appeals                 court   has
noted, the statute        has one paramount   objective:

        [T]o stimulate          competition,   prevent  favorit-
        ism and secure          the   best work and    materials
        at the   lowest          practicable   price,   for   the
        best interests          and benefit of the     taxpayers




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    Honorable    Mike   Driscoll    - Page     3   (JM-881)




             and   property     owners.     There   can  be     no
             competitive    bidding in     a legal sense    where
             the terms    of the     letting of   the   contract
             prevent or     restrict    competition,    favor    a
             contractor   or material man, or increase        the
             cost of    the work     or   of the  materials     or
             other items going into the project.

    Sterrett v. Bell, 240        S.W.2d 516, 520        (Tex. Civ. App.          -
    Dallas 1951,     no writ).       The   Supreme Court        quoted       this
    language with     approval     in Texas      Hiahwav     Commission        v.
    Texa   Association     of Steel Imnorters.       Inc., 372 S.W.2d 525
    (Texs 1963).     In this case, the court considered             a highway
    department   rule that     restricted     bids to      those bids        from
    contractors    furnishing    construction     materials     manufactured
    only in the United States.           The court rejected that             rule
    as a violation    of a competitive       bidding statute        (V.T.C.S.
    art. 6674h), similar       to the     statute under        consideration
    here.    The    court    stated    that    an    administrative          body
    subject to a competitive       bidding statute must act only               to
    promote    the   unmistakable       legislative      policy      favoring
    unrestricted    competition     for public contracts.          372 S.W.Zd
    at 529.     See   Attorney General        Opinions      MW-439      (1982):
    MW-344,    MW-296     (1981),    MW-139     (1980):     H-1219      (1978);
    H-1086, H-972 (1977).        a    Attorney General Opinion JM-712
     (1987) (legislature     may vary policy      of Strict      Competition
    by providing    exceptions     to key     principle     of   competitive
    bidding statute.)

          The county thus has no power to limit the competition
    generated   by bidding.   Nor may it reject a bid by imposing
    a condition   for   the selection   of   the lowest   responsible
    bidder when the condition     could    not be used to limit    the
    solicitation    of   the  bid.     Attorney   General    Opinions
    H-1219; H-1086.

          of course, the county is not required to accept a bid
    merely    because    it   is the     lowest.       The   statute     only
    requires that the       county accept the       lowest and best       bid
    proffered.     The county may make an informed,          non-arbitrary
    decision based on the facts that a particular             bid is not a
    responsible    one.   Corbin    v. Collin Countv        commissioner's
    Court, 651 S.W.2d 55 (Tex.         APP. - Dallas 1983, no         writ).
    This does     not mean    that the     county may      determine     that
    contractors    who intend to subcontract        some   of the work due
    under a contract cannot        submit responsible       bids.    Such    a
    determination     would    be   flatly     illegal,     either    as   an
    advance disqualification       for   bids or as      a rationale      for
    rejecting   a lower bid      in favor of a higher one.           But    if




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                                                                              .




the commissioners     have an objective    reason, supportable   by
facts fairly     known    to  them, that    a particular    bidder        -
cannot    perform    responsibly   because     of   some objective
impediment,    they may consider rejecting      that bid, and   the
rejection   would not     be an abuse   of discretion.     Corbin,
sunra.

                              SUMMARY
            The     County        Building       Authority,
        Certificate     of    Obligation,      and    County
        Purchasing   Acts, chapters     293, 271, and      262
        of the Local Government       Code, require that a
        county award certain construction          contracts
        by   a    process    of    competitive      bidding.
        Solicitations     for bids may not be limited by
        requiring   that    bidders promise     to   perform
        work using their own employees.         The    county
        may make an informed,      non-arbitrary    decision
        that a particular     bid    is not a responsible
        one.




                                           JIM      MATTOX
                                           Attorney  General   of Texas

MARY KELLER
First Assistant     Attorney    General

LOU MCCREARY
Executive  Assistant     Attorney     General

JUDGE ZOLLIE STEAKLKY
Special Assistant  Attorney         General

RICK GILPIN
Chairman,  Opinion     Committee

Prepared by Don Bustion
Assistant Attorney General




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