April 26, 1977
Mr. G. L. Smith, Superintendent
Milbank School District No. 25-4
Milbank, South Dakota 57252
Official Opinion No. 77-36
Whether a school board may increase contract beyond required bid maximum
Dear Mr. Smith:
With reference to the current construction of your new school building, you have requested an opinion on the following question:
QUESTION:
Can our school board increase the total construction contract by the addition of additional cabinetry beyond the required $2,500 bid maximum?
SDCL 5-18-2 reads as follows:
All contracts of any public corporation, whether for the construction of public improvements or contracts for the purchase of materials, supplies or equipment, when such contracts involve an expenditure equal to or in excess of fifteen hundred dollars (amended to twenty-five hundred effective July 1, 1977), must be let to the lowest responsible bidder. The governing body shall have the right to reject any and all bids and to readvertise for proposals if none of the bids are satisfactory, or if they believe any agreement has been entered into by the bidders to prevent competition.
SDCL 5-18-3 reads in part as follows:
Whenever any contract of any public corporation, whether for the construction of a public improvement or for the purchase of materials, supplies or equipment involving the expenditure of a sum equal to or in excess of twenty-five hundred dollars, is to be entered into, the governing body of such public corporation shall cause advertisement of bids therefor. . . .
SDCL 5-18-19 reads as follows:
It shall be unlawful for any public corporation or its officers to enter into any contract in violation of the terms of this chapter or chapter 5-21, and any such contract entered into shall be null and void and of no force and effect.
Seim v. Ind. Dist. of Monroe, 70 S.D. 315, 17 N.W.2d 342, was an action by plaintiff to recover from the defendant school district the contract price for labor and materials furnished to the district. The plaintiff in response to notice to bidders submitted a bid for construction of a schoolhouse according to plans and specifications on file. Specifications called for bids upon the basis of a base bid and three alternates. Contractors were instructed as alternate one to
give the amount to be deducted from the base bid if the stage is omitted and the gymnasium is constructed as per alternate design on the plans.
Plaintiff was the lowest qualified bidder on the basis of selection of this alternate and agreed to furnish all of the materials and perform labor for $33,975 being a difference between the base bid of $36,700 and the alternate one deduction of $2,725. The defendant, before the schoolhouse was completed, concluded to construct a stage opening. The defendant did not advertise for bids and no competitive bids for the stage opening were received by the Board. A bid was submitted by the plaintiff which was accepted by the Board, and the school minutes show that the plaintiff submitted a bid of $1,761 for the construction work necessary to provide the stage opening.
The plaintiff sought to sustain the validity of his claim upon the theory that he came within the terms of the contract which authorized changes in the work to be performed and the materials to be furnished. The court in stating that such provisions were not unusual in construction contracts for school districts and other local subdivisions stated “they may permit changes incidental to the complete execution of the work described in the contract, but cannot authorize supplemental contracts for distinct and independent work.” The court further cited the case of Cook County v. Harms, 108 Ill. 151, in which the court stated:
We think any material departure from the plans and specifications with reference to which the contract was made, which resulted in a new and substantially different undertaking, can not be regarded as within the meaning of this language. We think it was only intended to describe and provide against those ordinary and comparatively unimportant departures from the details in the plans and specifications which, during the progress of the work, might become necessary, or at least convenient, to effectually complete the work as it is contemplated by the plans and specifications, it should be completed, and which could not, at the date of making the contract, have been certainly anticipated, and therefore provided against.
The court went on and stated that the specifications in the present case called for alternate proposals.
The contract was awarded to respondent for the amount of his base bid less the alternate deduction of $2,725. The contention that the work for which claim is made was performed under the terms of the original contract cannot be sustained. The construction of the stage opening was a portion of the work definitely eliminated from such contract and was distinct work not contracted for. The work was performed under a contract not awarded as the result of competitive bidding. The good faith of the contracting parties and the inconvenience that possibly would have arisen from awarding the work to another contractor did not warrant a departure from the requirements of the statute. Morris v. City of Boston, supra.
The court further stated:
It is well settled that when by statute the mode and manner in which contracts of a school district or other local subdivision may be entered into is limited and any other manner of entering into a contract or obligation is expressly or impliedly forbidden a contract not made in compliance therewith is invalid and cannot ordinarily be ratified.
The requirement of competitive bidding in the letting of municipal contracts is uniformly construed as mandatory and jurisdictional and nonobservance will render the contract void and unenforceable.
The statutes cited above are basically the same as they were at the time of the Seim decision of our supreme court except the dollar amount requiring bids was $500 instead of $2,500.
The answer to your question depends on the facts involved. If the “additional” cabinets are in addition to those originally planned and competitively bid, then the Seim case would say they must be bid. If, however, the additional cabinet work is in the nature of a change in structure or arrangement of cabinets that were bid, then I believe the change could be made without going through competitive bids. From the facts presented, it appears that you are contemplating adding cabinetry, not just redesigning or rearranging the area originally contemplated. If this is your intent and purpose here, then I believe the law would require that the project be bid competitively. Any other result would be contrary to the rationale of the Seim case.
Respectfully submitted,
William J. Janklow
Attorney General
WJJ:GOH:pk
