May 6, 1981

Mr. James E. Brinkman, CPPO 
Director 
Purchasing & Printing 
State Capitol 
Pierre, South Dakota 57501

Official Opinion No. 81-16

Bidding of Telephone Equipment Contracts

Dear Mr. Brinkman:

You have requested an official opinion from this office in regard to the following factual situation:

FACTS: 

The State purchases, leases, or rents telephone equipment for state use.  For purposes of this question, equipment means devices that plug into or attach to the telephone transmission line on the inside of a wall.  In the past, the phones have been rented from the Bell System.  The prices the Bell Companies could charge have been regulated by tariffs issued under the authority of the Public Utilities Commission.

Based on the above factual situation, you have asked the following question:

QUESTION: 

According to the provisions of SDCL 5-23, is the State required to bid for the lease, rental or purchase of telephone equipment?

SDCL 5-23-2 provides: 

The bureau of administration shall purchase, or authorize the purchasing of, or the leasing, hiring or lease-purchasing of, all furniture and fixtures, equipment, supplies, printing and stationery, fuel, clothing, staple foodstuffs, utilities, and all other commodities for each and every department of the state government, state institutions, and state agencies,  except when otherwise specifically provided by this law.  Provided, however, that the purchase, leasing, hiring, or leasing-purchase of motor vehicles shall be only from authorized dealers licensed by the state of South Dakota.

In view of SDCL 5-23-2, it is my opinion that the lease, rental, or purchase of telephone equipment by the State of South Dakota must be bid.

To any suggestion that the requiring of bidding puts the regulated industries, such as the Bell System, at a disadvantage vis a vis its competitors who are not regulated by the State's Public Utilities Commission, I would note that SDCL § 49-2-6 authorizes the Bell System to give a price preference, below any regulated rate, to the State of South Dakota.  This preference statute in effect allows regulated carriers to compete with their unregulated competitors in the present case.

Respectfully submitted,

Mark V. Meierhenry
Attorney General