Public Contracts, Counties, Competitive Bidding, Negotiations

Subject:

Public Contracts, Counties, Competitive Bidding, Negotiations

Requested By:

James W. Tolin, Jr. Person County Attorney

Questions:

(1)

Where three bids are received from reputable and qualified contractors for a construction contract but one bid is rejected for failure to enclose a document required by the instructions to bidders, may the contract be awarded to the lowest of the two remaining bidders?

(2)

May a public agency reject all bids submitted for a construction contract?

(3)

Where the county commissioners have allocated from tax revenues and grant funds a fixed amount of money for a public building project, may bids in excess of that amount be rejected as being "in excess of funds available for the project" under G.S. 143-129?

(4)

Where bids received are in excess of funds availabe for the project, does G.S. 143-129 require the public agency to negotiate with the low bidder in an attempt to bring the contract price within the funds available?

Conclusions:

(1)

Yes

(2)

Yes

(3)

Yes

(4)

No

As to Conclusion 1, G.S. 143-132 contains minimum bid requirements for award of public building contracts. With certain exemptions for projects costing not in excess of $30,000 (See Chapter 644, 1977 Session Laws), the statute requires "three competitive bids" as a result of the first advertisement for bids from "reputable and qualified contractors regularly engaged in their respective lines of endeavor". Generally, failure of a bidder to enclose an informational document not essential as a prerequisite to acceptance and creation of a binding contract can be waived as an informality and the public agency may proceed to award upon submission of the omitted document. However, the advertisement and instructions to bidders may specify certain documents whose omission will require rejection of the bid. Where this occurs, the rejection is occasioned by the terms of the advertisement and instructions and not by the language of the statute. Therefore, the incompletely documented bid may still be counted as a competitive bid under the requirement of G.S. 143-132.

As to Conclusion 2, G.S. 143-129 requires the advertisement for bids to reserve to the public agency "the right to reject any or all" bids. No reason for exercise of this right of rejection need be stated by the public agency.

As to Conclusion 3, the term "funds available for the project" found in G.S. 143-129 contemplates a fixed sum of money from whatever source informally appropriated or allocated by the public agency for the construction of the particular project. When bids exceed that sum, the public agency has three alternatives: (1) It may reject all bids and proceed as if no advertisement had been made; (2) it may appropriate or allocate sufficient money to the project to enable it to proceed to award of contract, or (3) it may negotiate with the "lowest responsible bidder" in an attempt to bring the price within the available funds making reasonable changes in the plans and specifications to accomplish that purpose.

As to Conclusion 4, the language of G.S. 143-129 authorizes negotiations with the lowest responsible bidder. The language is discretionary; it does not manditorily require such negotiations.

Rufus L. Edmisten Attorney General

T. Buie Costen Special Deputy Attorney General