STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL

December 18, 1970

Eldon Stoehr
Auditor General
Pierre, South Dakota 57501

OFFICIAL OPINION NO. 70-54

Leasing school buses and drivers, competitive bidding required.

Dear Mr. Stoehr:

You have requested an official opinion in answer to this question:

Must the leasing of bus service by a school district be advertised for competitive bids when the total amount of the agreement will exceed fifteen hundred dollars?

This office has consistently, save and except in one instance, held that the provisions of SDCL 5-18 requiring competitive bidding in public contracts exceeding fifteen hundred dollars applies to the leasing of equipment. 1939-40 AGR 671, 194142 AGR 55, 86, 1953-54 AGR 92. The lone exception being that opinion reported in 1957-58 AGR 98, wherein it was ruled that the leasing of photostatic equipment, involved a personal service contract, the competitive bidding statutes did not apply. The opinion reported in 1959-60 AGR 255 dealt with voting machines. This office ruled that while, if the price exceeded the statutory limitations, the city in purchasing voting machines must comply with SDCL 5-18, a county in renting such voting machines from the city for county-held elections, was dealing in a factual situation to which SDCL 5-18 did not apply.

Foss v. Spitznagel, 77 SD 633, 97 NW 2d 856 adopted the rule that the competitive bidding statutes do not apply to require competitive bidding for a personal service contract. The exact factual situation therein involved was the employment of an architect to prepare plans for a proposed new civic arena or auditorium for the City of Sioux Falls.

Fonder v. City of South Sioux Falls, 76 SD 31, 71 NW 2d 618, 53 ALR (2) 493 set forth the purposes of the competitive bidding statutes. Said our court:

The object that 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.

* * *

Since they are based on public economy and are of great importance to the taxpayers, laws requiring competitive bidding as a condition precedent to the letting of public contracts ought not to be frittered away by exceptions, but, on the contrary, should receive a construction always which will fully, fairly, and reasonably effectuate and advance their true intent and purpose, and which will avoid the likelihood of their being circumvented, evaded, or defeated.

In such case, our court held that an attempt to "split" a contract for the purchase of gravel into separate units so as to be under the monetary amount set for competitive bidding, was violative of the statute.

It would seem, from what you have advised in regard to the immediate question, that in certain instances, certain school districts are entering in to a "package" deal for a school bus and driver, for transportation of children to the several schools of the state, without seeking competitive bids for such a contract. Such is justified on the claim or specification in such contract that it is a "personal service contract" within the purview of Foss v. Spitznagel, supra.

I doubt very much if the school board and the parties furnishing such school bus, under such a contract, are aware of the legal consequences arising from a "personal service contract." I doubt if they even are too well acquainted with what constitutes a "personal service contract."

Ordinarily a personal service contract is one which involves the peculiar skill of an expert in a particular field, who alone will perform the particular work required. It depends upon the continued existence of this particular person who is to render the particular service or perform the designated work.

Pope v. Dickerson, 205 Ala. 594, 89 So. 24;

Sandry v. Brooklyn School District, 47 ND 444,182 NW 689,15 ALR 719;

Rowe v. Compensation Research Bureau, 265 Wise. 589, 62 NW 2d 581.

The Sandry case is particularly applicable to the factual situation herein involved, for in such case the North Dakota court held that a con tract to drive a school bus furnished by the school district is not a personal service contract.

In certain instances, such a contract to scrape the barnacles from a designated ship, to sandblast a designated building, the court has held such to be "personal service contracts" to the extent that if the ship is destroyed or the building burned or damaged, prior to performing the work thereon, that the contract is discharged.

Insofar as a personal service contract is concerned, relative to the person involved in such contract, it is held that either the disability of or the death of such person, acts to terminate such contract.

Pope v. Dickerson, supra; Sandry v. School Dist. supra; Anderson v. May, 50 Minn. 280,52 NW 530.

Likewise, as pointed out in Smith v. Zuckman, 203 Minn. 535, 282 NW 269, a personal service contract is one which the person required to perform a service cannot delegate such performance to another. The duty of performance is not assignable, but must be performed solely and only by such contracting person himself.

Applying these settled rules of law to an alleged "personal contract" rental of a school bus, there is no question that if such bus driver is engaged prior to receiving a school bus driver's license, the contract would be immediately terminated. The particular expert chosen cannot perform his duties under such personal service contract. Likewise, if such school bus driver becomes ill or otherwise is incapacitated to drive such bus during the school year, such contract is terminated-the driver cannot perform his "personal services," and the law does not permit him to delegate the performance of such services to another even though such person be qualified as a school bus driver, and may in fact be able to drive such bus in a better manner than the holder of such personal service contract.

If the school bus be likened to the mentioned ship or designated building, then if such school bus breaks down and cannot be used for school bus purposes, the "personal service" contract is immediately terminated. It is that particular piece of equipment, the subject of the contract, and not another vehicle which is to be used in such personal services contract.

It is my opinion that no school board expects the consequences of a "personal service contract" actually to attach to such "package" lease of a school bus. The package deal is motivated by an attempt to circumvent the competitive bidding law. It is, like the ordering of gravel in Fonder v. City of South Sioux Falls, a subterfuge to designate a package leasing deal, involving a bus driver and a bus, evade the positive requirements of the competitive bidding statutes.

This positive statement, of course, must be tempered with a recognition that if the actual "package deal lease" recognizes all of the consequences of a personal service contract, and is worded in such language that it is apparent that only the bus driver therein named will drive the bus throughout the entire school year, and that only this particular vehicle will be used as such school bus during the entire school year, and that each of the parties to such lease recognize that if such bus driver becomes ill or otherwise incapacitated from driving a school bus, that the lease is automatically terminated, such might be considered a genuine personal service contract. To my mind, a contract of such nature is not going to be executed in such proposed "package" school bus leases. I believe my positive statement, in the light of human behavior and actions, is correct.

Subject to the last admonition, my answer to your question is YES.

Respectfully submitted,

Gordon Mydland
Attorney General