STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL

May 22, 1972

Eldon Stoehr
Auditor General
Capitol Building
Pierre, South Dakota 57501

OFFICIAL OPINION NO. 72-27

Competitive bidding by public corporation when bid price exceeds $l500

Dear Mr. Stoehr:

You have asked my interpretation of a most interesting statutory question. Succinctly stated, your question is as follows:

Assuming that it is legal for one public corporation to dispose of surplus personal property, by either public auction, submission of sealed bids, or otherwise, can another "public corporation," within the definition of SDCL 5-18-1(1), submit a bid to purchase such surplus property, in excess of fifteen hundred dollars?

The basis for your inquiry arises from these statutes. The definition of a "public corporation," in SDCL 5-18-1 (1) embraces

... the state and all counties, cities, towns, public school corporations, and all officers, board or commissions empowered by law to enter into contracts for public improvements.

In SDCL 5-18-1 (2) "Public improvemen t" is defined as follows:

"Public improvement" is one the cost of which is payable from taxes or other funds under the control of the public corporation and also local improvements for which special assessments are to be levied.

SDCL 5-18-19 emphasizes that any contract entered into by any public corporation or its officers in violation of the terms of SDCL 5-18 or 5-21 (requiring performance bonds) shall be null and void and of no force and effect.

SDCL 5-18-2 provides: (Emphasis added)

All contracts of any public corporation, whether for the construction of public improvements or con tracts for the purchase of materials, supplies, or equipment, when such contracts involve an expenditure equal to or in excess of fifteen hundred dollars, must be let to the lowest responsible bidder. ...

There can be little doubt that in viewing the proceedings to dispose of surplus personalty, that the aim of such selling public corporation is to obtain the most in money for such property. This is the basis upon which statutes requiring honest appraisals, disposal at competitive bidding, or in certain cases, disposal without competition, and a realization of all or a large percentage of such appraised price before such sale is made.

Contrasted thereto is the policy that in obtaining personal property, a public corporation must obtain the same at the lowest possible price from a responsible bidder. This is the basis of laws requiring competitive bids to obtain materials, supplies and equipment for a public corporation.

There can be no question that there is conflict in the statutes, properly enacted by our Legislature, providing for the purchase of and the disposition of personal property by a public corporation.

Obtaining of property by means of public auction, submission of competitive or other bids, involves a contractual relationship. Property, even if surplus or used, still remains as "materials, supplies, or equipment."

Until the Legislature amends the existing laws to so provide, I must conclude that SDCL 5-18-2 prohibits any public corporation, encompassed within the definition thereof, from submitting a competitive or other bid, or bidding at an auction sale, to purchase "surplus" property of another governmental agency, in excess of fifteen hundred dollars. Any accepted bid in excess thereof would result in a contract violative of SDCL 5-18-19, of no force and effect whatever.

The answer to your specific question is NO.

One final thing should be pointed out; SDCL 5-23-32 provides for a transfer ot surplus property between state agencies. Therefore, this opinion is applicable only to transfers between public corporations and not to transfers between agencies or departments of the state government.

Respectfully submitted,

Gordon Mydland
Attorney General