June 25, 1986

All Purchasing Agents and 
Business Officers for Political 
Subdivisons in South Dakota

Official Opinion No. 86-23

Exemption from bid requirements pursuant to SDCL 5-18-18

To Whom it May Concern:

During the time that has elapsed since passage by the 1986 Legislature of House Bill 1143, my Office has received numerous requests from various business officers of political subdivisions concerning the formalities that must be followed in order to take advantage of the exemption from bid requirements relating to items bid by another public entity found in SDCL 5-18-18.  While  not having received a formal request for an official opinion, I believe that this issue is one of statewide importance and accordingly, render this opinion.

SDCL 5-18-18 provides in pertinent part: 

The provisions of § §  5-18-1 to 5-18-17, inclusive, may not be construed to regulate or apply to contracts entered into and purchases made by . . . 

(Numerous exemptions not relevant here) . . . 

or to the purchase by one local government entity from the lowest responsible bidder of an item competitively bid by another local government entity or the state at the accepted bid price [underscored material added by the 1986 Legislature].

The exemption from the bid law requirements set out above existed in the statute for some time.  Prior to July 1, 1986, application of this exemption was limited to items competitively bid by another 'local government entity' and did not apply to items bid by the State.  Now that the items bid by the State have been included in this exemption, some guidance regarding the formalities to be followed by a governmental entity's governing body in taking advantage of this exemption appears to be in order.

In the case of purchases from contracts bid by another governmental entity it is my opinion the governing body should adopt a resolution directing the business officer of the governmental entity to purchase the item desired from a willing seller based upon the price established through the bid process of an  identified governmental entity.  For example, the action of the governing body could read as follows: 

Moved by Smith, seconded by Jones that the business manager be directed to purchase a widget from the XYZ Widget Company at the bid price accepted by the ABC School District at its meeting of June 3, 1986.  All voted aye.

The adoption of a motion in essentially the form set out above will serve the dual purpose of informing the citizens of the action taken by the governing board and provide an audit trail to account for the expenditure of funds.  In the case of purchases from contracts bid by the State, essentially the same process should be followed.  Rather than identifying a particular date when the bid was accepted by the State, the Auditor General recommends that the 'source document' of the contract involved be identified by number. In other words, the motion or resolution of the governing body would identify by number the State contract in which the price of the desired object was set.

Of course, in these situations the carrying out of this process depends upon the willingness of the seller to enter into a contract to sell another item with the same specifications for the same price at which a bid was awarded by another local government entity or by the Bureau of Administration Office of Purchasing and Printing in the case of State contracts.

Action by associations of governmental entities within this State of publicizing the bid amounts for items accepted by members or by the State could  be extremely useful in reducing the cost of government through a reduction in costs associated with the drawing of specs and publishing of notice for bid requirements.  Actions of this sort are encouraged and information necessary for implementing these actions can be received from the Bureau of Administration Division of Purchasing and Printing.

Respectfully submitted,

Mark V. Meierhenry
Attorney General