STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL

December 30, 1972

Eldon Stoehr
Auditor General
Pierre, South Dakota 57501

OFFICIAL OPINION NO. 72-77

Public contracts; competitive bidding. Opening of bids and acceptance of a bid. Function of such requirements, SDCL 5-18-3; 5-18-7 and 5-18-8.

Dear Mr. Stoehr:

You have requested my official opinion in answer to the following submitted question:

Can bids be opened by someone other than the Board awarding a public contract at a time and place other than of a board meeting if such is stipulated in the advertising for competitive bidding in the award of a public contract in view of the provisions contained in SDCL 5-18-3 that: "such advertisement must state the time and place where bids will be opened and passed upon by the board, and in all such notices the board shall reserve the right to reject any and all bids"?

Specifically, your question is based upon the fact that there has been submitted to your office an advertisement for public competitive bidding which provided:

Bids will be received until 1 p.m., February 5, 1970, at which time bids will be opened, read aloud and tabulated. Bids will be considered by the board on February 9, 1970, at the regular monthly meeting which starts at 7 p.m.

You are asking whether or not this advertisement for competitive bidding, and the procedures therein set forth, is proper.

To answer your question, resort must be had to the entire statute requiring competitive bidding in the award of a public contract, rather than an isolated sentence taken from but one section of the entire statute.

The competitive bidding statutes that are under inquiry at: this time are contained in SDCL Ch. 5-18. Our court pointed out the purpose of and the importance of compliance with such statutes in Fonder v. City of South Sioux Falls. 76 S.D. 31, 71 N.W. 2d 618, 53 ALR 2d 493 in this language:

The object the legislature sought to accomplish through the requirement of competitive bidding in making contracts for public corporations is to guard against favoritism, improvidence, extravagance, fraud and corruption. (S.D. at 34)

The requirement for competitive bids contained in the cited statute constitutes a jurisdiction prerequisite to the exercise of the power of a public corporation to contract. (S.D. at 36)

Competitive bidding statutes involve three vital principles: (1) an offering to the public; (2) an opportunity for competition; and (3) a basis for exact: comparison of the bids. SDCL 5-18 is in conformity with these principles.

The law of competitive bidding is very definite in stating that the advertising for competitive bids on behalf of a public body is a mere proposal to enter into a contract. Such, of itself, creates no contractual obligation. The bids submitted, even after being opened and publicly announced and tabulated, constitute an offer to enter into a contract, and such bid of itself constitutes no contract. The contract between the offerer (the bidder) and the public body finally comes into fruition when the bid of one of such bidders is accepted by the public body.

The importance of these three elements-the invitation or advertisement for bids, the actual bids submitted, and the acceptance of one of such bids cannot be overemphasized. As Mr. Justice Blatchford of the United States Supreme Court pointed out in 1881 in his unanimous opinion of the Court in Harvey v. United States, 105 U.S. 671, 26 L. Ed. 1206, it is the written bid in connection with the advertisement for bids and the acceptance of that bid that constitutes the contract between the parties. The written contract, thereafter entered into, is intended by both parties to he conract as merely a reduction to form of the actual contract of the parties.

The requirements of not only SDCL 5-18-3 and 5-18-8 that the sealed bids shall not be opened until the time and place specified in the advertising thereof, but must be publicly opened and read at the specified time, does not exist as a part of awarding the public contract. (In contract law, such an award is the acceptance of the offer to enter into a contract). The purposes of such provision is to insure competition in the competitive bidding. It assures a final time in which proposals or offers to contract may be made, and a final time up to which any bidder may withdraw or modify his submitted bid. (See SDCL 5-18-8)

Without delving too deeply into the law regarding agency, may I advise that public bodies have authority to appoint agents to act on behalf of the appointing principal. Certain ministerial duties which might be performed by the principal, may validly be performed by the agent. It is my opinion that important as the requirements of setting a fixed time and place for opening bids, the reading of the same, and recording of such bids may be, the performance of such is delegable. I can see nothing illegal, or contradictory to the statutes, in the governing body of such public board appointing its agent to perform this ministerial task, even in the absence of all or any member of such governing body.

There is nothing in the competitive bidding statutes that requires that either one bid be accepted or all bids rejected contemporaneously with the ministrial duy of opening such bids. The statutes negative such notion. SDCL 5-18-7 in part provides ;

. . . and not more than thirty days shall elapse between the opening of the bids and either the acceptance of the bids of the lowest possible bidder or the rejection of all of the bids presented.

There is a thirty day period, permitted by the statute, between the opening of the bids and the acceptance of the bid, in which time the governing body must perform the third of the vital principles of competitive bidding; making the exact comparison of the bids to determine which is the bid of the lowest responsible bidder.

This office in 1959-60 AGR 380 held that in view of the requirements of the predecessor statutes to SDCL 5-18-7, that if the governing board waited past the designated time period, such was a rejection of all the bids submitted, and that this period of time, to accept a bid, could not be extended by the agreement of the lowest bidder and such governing board. (In certain exceptional circumstances, such as the requirement of the approval of an appropriate federal agency for a bid to be awarded, the stringent rule of the statute is waived. See 1963-64 AGR 49. The principle of law therein involved is not involved in the present factual situation.) I approve of these expressed opinions.

The duty to determine whether or not the bids submitted comply with the statutes, the determination of which bidders are or are not responsible, and the determination of the "lowest responsible bidder" must be performed by the board itself. This is a duty that cannot be delegated to agents. However, as long as this duty is performed within the thirty day period after the opening of such bids, such board has not violated the statutes of South Dakota.

I am hopeful that this explanation of the law in regard to competitive bidding in public contracts explains the reason that I have concluded that the answer to your question is, YES, and that the described advertising for bids, in no way violates the competitive bidding statutes of South Dakota.

Respectfully submitted,

Gordon Mydland
Attorney General