,
    .




                       The Attorney’ General of Texas
                                                Nsrch 5, 1961
MARK WHITE
Attorney General
                   Honorable Peyton McKnight                        Opinion No. Hz96
                   Chairman
                   Subcommittee on Nominations                      Re: Whether negotiation      of con-
                   Senate of the State of Texas                     tract terms prior to acceptance of
                   Austin, Texas 78711                              bid violated article 2368a, V.T.C.S.

                   De& Senator McKnight:

                          Early in 1980, the city of Grand Saline advertised for competitive bids
                   on a contract   to complete a sewerage treatment plant. Each of the five bids
                   submitted exceeded the funds available for the project.      In order to reduce
                   project costs, the city altered its plans; however,. it only presented these
                   revisions to the original low bidder, who submitted a revised bid which the
                   city found acceptable.     The Department of Water Resources has questioned
                   the validity of this procedure in light of state competitive bidding laws, and
                   it has declined to certify the award of the contract to the Environmental
                   Protection Agency pending resolution of this question by this office.       You
                   have requested our opinion on this matter.

                         Articles 2368a &d 2368a.3, V.T.C.S., are relevant in this inquiry. -The
                   former provides in pertinent part as follows:          .

                                       Section 2.         (a). . . no city. . . shall. . . make
                                   any contract      calling for. . . the expenditure      of. . .
                                   Three Thousand Dollars . . or more. . . without first
                                   submitting    such proposed contract to competitive
                                   bids. . . . [S] aid contract shall be let to the lowest
                                   responsible bidder.

                                   . . . .

                                   (d) . . ., all . . contracts. . . made.. . without
                                   complying with the terms of this Section, shall be
                                   void and shall not be enforceable in any court. . . .

                                   . . . .

                                       Section ?a.      . . . .ln the event     it  becomes
                                   necesje?    to make changes ir, the plans or cpecifica-
                                   tions after    performance     of a contract    has been




                                                        p. 945
L   Honorable Peyton McKnight     - Page Two




               commenced. . . the. . . governing body shall be authorized to
               apprd;e change orders effecting such changes. . . . (Emphasis
                      .

    The latter, which applies to incorporated      cities, among other entities, sets    forth
    specific requirements pertaining to the bidding of certain public works contracts.

           Niles v. Harris County Fresh Water SuppIy District No. lA, 336 S.W. 2d 637 (Tex.
    Civ. App. - Waco 1960, writ ref’d), involved similar facts. The district invited bids for
    6 sewerage treatment plant, sewer lines, and a storage tank. The notice stated that
    plans, specifications   and bid documents would ba furnished, and that the data
    submitted by bidders would form the basis for negotiating a contract.      All of the bids
    submitted exceeded available funds; however, the district initiated negotiations with
    Niles, who submitted the lowest bid, to reduce the extent of the work.               These
    negotiations   resulted in new plans and specifications     and a proposal by Niles for a
    reduced contract price.      The district’s board first accepted the proposal, but later
    rejected it, and Niles filed suit alleging breach of contract.

          In upholding the trial court’s judgment in favor of the district, the court of civil
    appeeals emphasized that the competitive      bidding process is designed to stimulate
    competition, and that compliance with statutory bidding requirements is mandatory.       It
    further stated that:

                The alleged contract. . . cannot be said to have been submitted
                to competitive     bidding. . . . Although the total reduction in
                cost, as negotiated, was within 25% of appellant’s original bid,
                there was far more here than a mere reduction in quantity;
                There is not simply 6 modification.        There was 6 complete
                revision of plans and specifications.      The proposal for which
                competitive   bids were called was not substantially    similer to
                that on which appellant’s action was based, nor was there
                substantial comoliance with the statute. (Emphasis added).

    336 S.W. 2d at 638-39.

           In Overstreet v. Houston County 365 SW. 2d 409 (Tex. Civ. App. - Houston 1963,
     writ reTd n.r.e.1, the county awarded in air conditioning contract to Craddock. When
     Craddock discovered that he was unable to comply with the original plans, the
     commissioners court    authorized him to deviate from those plans. In 6 subsequent
     lawsuit, the court of civil appeals held that article 2368a, section 2a (see above),
     authorized the commissioners court to make such changes without having to invite bids
     on the modified plans. However, two crucial factors in the court’s reasoning were that
     work on the contract had already begun, which made section 2a applicable. and that
     the modifications  did not necessitate any change in the contract price.        The facts
     which you have submitted indicate that neither of thesf ‘actors exists here. See also
     Ashbv v. J&ir.es. ‘226 S.K. 722 iTes. Civ. A?>. - .\rs::::o   1O:Q. no x:::I; iieaelee  v.
     --,   208 S.W. 213 (Tex. Civ. App. - Dallas 1918, writ dism’d).




                                             p. 946
I
    c   ’ Honorable Peyton McKnight     - Page Three




                  These cases suggest that the critical inquiry is whether the revisions arc material
          and substantial, or in other words, whether the revised plans are substantially similar
          to the original ones. See Attorney General Opinion V-981 (1949). If enough changes are
          made, the revised plans will be treated as a new proposal, and new bids will have to be
          solicited in order to prevent the objectives of the bidding statutes            from being
          defeeted.     With respect to those objectives, our courts have stated that bidding
          presupposes:

                      ‘due advertisement,   giving opportunity to bid, and contemplates
                      a bidding on the same undertaking upon each of the same
                      material items covered by the contract; upon the same thing. It
                      requires that all bidders be placed upon the same plane of
                      equality and that they each bid upon the same terms end
                      conditions involved in all the items and parts of the contract,
                      and that the proposal specify as to all bide the same or
                      substantially similar specifications.’

          Texas Highway Commission v. Texas Association of Steel Importers, Inc., 372 S.W. 2d
          525, 527 (Tex. 19631, quoting Sterrett v. Bell, 240 S.W. 2d 516, 520 (Tex. Civ. App. -
          Dallas 1951, no writ).

                  In this instance, the city did not accept any of the bids. Section 26 of article
            23680 does not apply. The only question is whether the manner in which this contract
            was awarded comported with the competitive bidding statutes.    Even if we assume that
            the proper test is whether the revised plans are substantially similar to the original
            ones, we believe we must answer this question in the negative.. More then 35 changes
          .in the original plans were mode, which changes resulted in a revised bid which was
            approximately 25% lees than the original $1,209,000 amount. We think these changes
            were substantial enough that the revised plans constituted a new proposal, upon which
            new bids must be solicited.

                  The competitive bidding statutes require that all bidders hove an opportunity to
          bid on the same undertaking.        Such an opportunity cannot exist when plans are
          substantially altered after bids are received, but only one bidder is afforded a chance
          to submit a revised bid based upon the modified plans. And this process cannot be
          justified by contending that the original low bidder would likely have been the low
          bidder on the revised project; another bidder, or perhaps someone who did not
          originally bid, might well hove underbid the low bidder had a new opportunity been
          afforded. This is particularly  true in this instance, where the facts indicate that leas
          than $1,000 separated the two lowest bids.

                 For the foregoing reasons, we conclude that the manner in which this contract
           was awarded violated articles 2368a and 2368a.3. The city should have rejected all
           bids on the original contract and then invited bids on the revised plans, and its failure
           to do so defeated the objectives of the competitive bidding process.




                                                   p., 947
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    ‘       Honorable Peyton McKnight - Page Four




                                                SUMMARY

                           The manner in which the city of Grand Seline awarded this
                       contract for the completion of 6 sewerage treatment     plant
                       violated articles 2368a and 23686.3, V.T.C.S.

                                                       k?m.%a%?m?.d&



                                                         MARK        WHITE
                                                         Attorney   General of Texas

            JOHN W. FAINTER, JR.
            First Assistant Attorney General

            RlCHARDE.GRAYlB
            Executive Assistant Attorney   General

            Prepared by Jon Bible
            Assistant Attorney General

            APPROVED:
            OPlNlON COMMlTTEE

            Susan L. Garrison, Chairman         -
            James Allison
            Jon Bible
            Rick Gilpin
            Robert T. Lewis
            Bruce Youngblood




                                                     p. 948

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