STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL

September 11, 1968

Reed Hutchinson
State's Attorney, Beadle County
Huron, South Dakota 57350

OFFICIAL OPINION NO. 68-29

Interpretation of statutes relating to contracts for county building construction

Dear Mr. Hutchinson:

We acknowledge your request for an opinion under date of May 23, 1968, which presents the following factual situation and question:

"Beadle County has advertised for bids as required by law for certain repairs and remodeling of the Beadle County Courthouse. The Board of Commissioners has approved said lettings and has accepted a bid bond for 20% of the amount of the bid, as provided for by Chapter 465, 1963 South Dakota Session Laws.

"The question has now been raised as to the legal propriety of accepting a bid bond of 20% of the amount of the bid in view of Chapter 51, 1963 South Dakota Session Laws, which appears to require each bid to contain a certified check in a sum equal to 5% of the amount of the bid upon contracts for county building construction.

"I request your official opinion as to whether or not Beadle County acted properly in the instant case in accepting the 20% bid bond pursuant to Chapter 465, 1963 South Dakota Session Laws prevail, thus requiring each bid to contain a certified check in a sum equal to 5% of the amount of the bid."

Chapter 51, 1963 Session Laws in part provides:

". . . Each bid must contain a certified check in the sum equal to five per cent of the amount of the bid, made payable to the chairman of the board of county commissioners as a guaranty that the bidder will enter into contract should it be awarded to him and furnish a bond as herein provided and that should the successful bidder forfeit his certified check the same shall be turned into the county general fund. The certified checks of all the unsuccessful bidders shall be by the board immediately returned to the respective makers thereof, and not more than ten days shall elapse between the opening of the bids and either the acceptance of the bid of the lowest responsible bidder, or the rejection of all bids presented.

" ... The board must further require a bond from the contractor in a sum equal to the contract price, conditioned that the contractor will execute his contract and complete the building or buildings according to the plans and specifications and to the full satisfaction of the board, and account for all moneys paid to him and pay all bills and claims on account of labor or materials furnished in and about the performance of the contract including all demands of subcontractors, such bond to stand as security for all such bills, claims and demands and to be a surety bond issued by some surety company authorized to do a surety bonding business in the state or a personal bond with sufficient sureties, to be approved by the board of county commissioners."

Chapter 465, 1963 Session Laws in part provides:

"That SDC 1960 Supp. Section 65.0701-4 be, and the same is hereby amended to read as follows:

"65.0701-4 Bids; certified checks or bid bonds required; opening and accepting. Where the advertisement for bids is for the construction of a public improvement each bid must contain a certified check, cashier's check or draft, for five percent of the amount of the bid, such check to be certified or issued by either a state or national bank domiciled within this state and payable to the public corporation or to an officer of such public corporation letting such contract and inviting bids thereon, or in lieu thereof a bid bond for twenty percent of the amount of the bid, such bond to be issued by a surety authorized to do business in this state payable to said public corporation, its board or officers thereof, in accordance with the terms of such letting and bid in case such bidder be awarded the contract."

". . . The certified checks or bid bonds of all unsuccessful bidders shall be, by the public corporation, immediately returned to the respective makers thereof and not more than thirty days shall elapse between the opening of the bids and either the acceptance of the bid of the lowest responsible bidder or the rejection of all of the bids presented."

In the case of Schull Construction Co. v. Board of Regents of Education reported in 79 SD 487, 113 N.W. 2d 663, the Supreme Court, in construing contracts, held that:

"Purpose of statutes governing bidding for state construction contracts is for protection of public rather than that of bidders." (SDC 1960 Supp. 65.0701-1 to 65.0704-1, 65.0701-4 to 65.0701-7.)

It is my opinion that Chapter 51 of the 1963 Session Laws, which amends the law regulating county building constructions, in its terms is mandatory. Furthermore, it is the clear intent of the Legislature to require each bid to contain a certified check in a sum equal to 5% of the amount of the bid. And further, the Board of County Commissioners must require a bond from the contractor in a sum equal to the contract price.

Respectfully submitted,

Frank L. Farrar
Attorney General