Request By:
Honorable Kendall Robinson
Owsley County Attorney
Booneville, Kentucky 41314
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
You ask whether the purchase of insurance by the county is subject to the bidding requirements of KRS 424.260 if the premium is expected to exceed $2500.
KRS 424.260 reads:
"Except where a statute specifically fixes a larger sum as the minimum for a requirement of advertisement for bids, no city, county or district, or board or commission of a city or county, may make a contract, lease, or other agreement for materials, supplies or equipment, or for contractual services other than professional, involving an expenditure of more than two thousand five hundred dollars ($2,500) without first making newspaper advertisement for bids. Provided, however, that this requirement shall not apply in an emergency if the chief executive officer of such city, county or district has duly certified that an emergency exists, and has filed a copy of such certificate with the chief financial officer of such city, county, or district."
The Court of Appeals, in McCloud v. City of Cadiz, Ky. App., 548 S.W.2d 158 (1977), 162, ruled that the contractual services covered by KRS 424.260 do not include insurance coverage. The Court specifically agreed with the similar conclusion reached in OAG 62-1082, in which we wrote that insurance does not qualify under the term "contractual services" as mentioned in the statute. The opinion (OAG 62-1082) pointed out that the term "contractual services" universally means personal service of a manual or mechanical character where the term is not otherwise defined. See also OAG 77-518, copy enclosed, of related interest. The old Court of Appeals, in Commonwealth Ex Rel. Breckinridge v. Nunn, Ky., 452 S.W.2d 381 (1970), indicated, in its ruling that competitive bidding does not apply to state procured life insurance, and that where the bidding statute does not expressly mention insurance, the category of insurance is simply not covered. The Court said the legislature could have so included insurance under such bidding statute.
Finally, the Court of Appeals in McCloud v. City of Cadiz, above, wrote that the generally uniform rates involved in insurance as well as its professional nature support the conclusion as to the nonapplication of the bidding statute to insurance coverage. It is common sense that competitive bidding is not required where it would produce no financial advantage for government. 72 C.J.S. Supp., Public Contracts, § 9, p. 185.
The answer to your question is that the bidding statute, KRS 424.260, does not apply to insurance procured for the county, regardless of the amount.