     The Attorney           General of. Texas
                 November    7,   1977




Honorable Randall L. Sherrod             Opinion No. H-1086
Criminal District Attorney
Randall County                           Re: Whether a county
Canyon, Texas 79015                      can reject a low bid
                                         on the sole ground that
                                         the bidder is not a res-
                                         ,ident of the county.
Dear Mr. Sherrod:

     You have requested our opinion concerning the following
question:

          Whether a county may award a contract
          to one not a low bidder on the sole
          basis that the said bidder is a local
          merchant or businessman and the low
          bidder is not a local merchant or
          businessman.

     Section 2 of article 2368a, V.T.C.S., provides in part:

          No county . . . shall hereafter make any
          contract calling for or requiring the ex-
          penditure of payment of Three Thousand
          Dollars ($3,000.00) or more . . . without
          first submitting such proposed contract
          to competitive bids . . . and said con-
          tract shall be let to the lowest resoon-
          sible bidder. The Court and/or government
          body shall have the right to reject any
          and all bids . . . .

(Emphasis added).  You have directed our attention to
                                                   -..the -
court's opinion in A & A Construction Co., Inc. v. City   Ol'
Corpus Christi, 527 S:W.Zd 833 (Tex. Civ. App. -- Corpus
Christi 1975. no writ). The case involved the right of
a low bidder'to an injunction prohibiting the city from
contracting with another bidder. The court noted the por-
tion of article 2368a emphasized above and stated:      '




                             P. 4460
Honorable Randall L. Sherrod    - Page 2   (~-1086)


          [T]he city by statute had the discretion to
          reject appellant's bid and it did so. Con-
          sequently, the appellant has no right, prob-
          able or vested, to the award of the contract.

Id. at 835. Apparently the city had rejected the plaintiff's
bid due to its late submission. The court did not address the
question of sufficiency of the cause for rejection but disposed
of the claim in the above unqualified language.

     In Texas Highway Comm'n v. Texas Ass'n of Steel Importers,
&,     372 S.W.Zd 525 (Tex. 1963) the court dealt with a Highway
Department rule restricting bids'to those with a provision that
materials furnished would be manufactured in the United States,
its territories and possessions.   The court held that the rule
was illegal as a violation of the competitive bidding statute,
article 667431, V.T.C.S., quoting with approval a statement re-
garding competitive bidding in Sterrett v. Bell, 240 S.W.Zd 516,
520 (Tex. Civ. App. -- Dallas 1951, no writ):

          Its purpose is to stimulate competition,
          prevent favoritism and secure the best
          work and materials at the lowest practi-
          cable price, for the best interests and
          benefit of the taxpayers and the 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 materialman, or increase the cost of
          the work or of the materials or other
          items going into the project.

372 S.W.Zd at 527.

     We believe it clear that since'the Highway Department could
not limit bids in such a manner, it likewise could not reject a
bid solely upon the same grounds, notwithstanding the authority
of the Department "to reject any and all . . . bids." V.T.C.S.
art. 6674i. Thus, this language which is also contained in
article 2368a does not provide a contracting authority with un-
limited discretion to reject bids.
     The Texas Supreme Court has held that a limitation regard-
ing the source of materials would be an illegal restriction upon
competition; in our view the same would be true of a requirement
that a bidder be located within the county. Texas Highway Comm'n
v. Texas Ass'n of Steel Importers, Inc., supra. See 10 McQuillin,
The Law of Municipal Corporations 5 29.49 (3d ed.1949).    Accord-
ingly , in our opinion, a county may, as a general matter, not




                               p. 4461
Honorable Randall L. Sherrod       - Page 3 (H-1086)



award a contract to one not a low bidder on the sole basis
that the said bidder is a local merchant or businessman and the
low bidder is not a local merchant or businessman.   Of course
there may exist circumstances in which the proximity of the
bidders relates to the determination of the "lowest res onsible
bidder," which determination is within the reasonable-7ikzmin
of the contracting authority.

                         SUMMARY

            A county may not reject a low bid solely
            because the bidder is not a local merchant
            or businessman.

                                   Very truly yours,




                             ! ,Attorney General of Texas

APPROVED:                   c/




C. ROBERT HEATH, Chairman
Opinion Committee

jst




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