Request By:
Hon. Robert A. Becht
Deputy General Counsel
Department of Transportation
State Office Building
Frankfort, Kentucky 40601
Opinion
Opinion By: Steven L. Beshear, Attorney General; Robert L. Chenoweth, Deputy Attorney General
As Deputy General Counsel, Department of Transportation, you have asked the Office of the Attorney General for an advisory opinion regarding whether the City of Paducah, on behalf of the Paducah Transit Authority, may lawfully award a contract to the second low bidder under the circumstances to be described more fully below. The salient factual background is that the City of Paducah, on behalf of the Paducah Transit Authority, gave timely and proper notice of invitation for bids pursuant to KRS 45A.365 and KRS 424.260 for the purchase of five buses. The bids received were timely opened on May 12, 1980. Taylor Bus Sales submitted the low bid for five buses, to be manufactured by Ward Industries, Inc. On June 30, 1980, a contract for the purchase of the five buses was awarded to the low bidder, Taylor Bus Sales. However, subsequently, Ward Industries, Inc. filed for bankruptcy and notified Paducah Transit Authority that it would be unable to fulfill its contractual obligation to deliver the five buses. The Paducah Transit Authority agreed to the cancellation of the contract for the purchase of the five Ward buses. Upon cancellation of the contract with the low bidder, the Paducah Transit Authority contacted Bluegrass Bus Sales, who had been the second low bidder under the competitive sealed bid process previously followed. Bluegrass Bus Sales agreed to accept a contract from the Paducah Transit Authority for the manufacturing of five buses, based upon its previously submitted bid.
You stated the Federal Highway Administration has requested you to obtain an opinion from this office regarding the legality of awarding the contract for the purchase of the five buses to the Bluegrass Bus Sales under the circumstances as set out above. It is the opinion of this office that under the particular limited circumstances involved, it is proper for the City of Paducah on behalf of the Paducah Transit Authority to enter into a contract with Bluegrass Bus Sales for the purchase of the five buses.
In support of our conclusion regarding this matter, it must be recognized and remembered that the City of Paducah, as a local public agency, fully complied with the applicable provisions of the so-called Model Procurement Code, KRS 45A.345, et seq., and particularly KRS 45A.365 regarding competitive sealed bidding. Of course the whole thrust of the Model Procurement Code is to encourage and insist that local public agencies purchase services and supplies, which include personal property, only after competitive sealed bidding unless good reason is shown why competitive sealed bidding is inappropriate. Through no fault of the City of Paducah, the low bidder to whom the contract was awarded after the bids had been opened soon thereafter gave notice of their inability to perform at all under the contract due to the bankruptcy of the manufacturer of the buses relied on by the successful bidder. Through telephone conversations with legal counsel for the Paducah Transit Authority, it has been assured to us that the claim of inability of Taylor Bus Sales, due to the bankruptcy of Ward Industries, Inc., to perform under the contract is valid. Since there were multiple bidders for the contract, a check was made with the second low bidder to see if that bidder would take the contract for the bid amount previously submitted. The second lowest bidder, Bluegrass Bus Sales, was willing to stand by its bid on this contract.
We believe the circumstances of this situation warrant the accepting of the second low bid. The local public agency is getting the same product it had advertised for through the competitive bidding process. Since the second low bidder was willing to stand by their submitted bid amount, going to them upon default of the original low bidder gives the local public agency the lowest bid from the bidder that is in essence also the "responsible bidder. " See KRS 45A.345(14).
We want to make it clear that the facts involved here may well be one of a kind. If the second low bidder had been unwilling to assume the responsibility for the contract at the amount it had bid, we do not believe a reverting to them after default of the original low bidder could probably be used. But we do believe the protection intended to be afforded by using competitive sealed bids has been met in this situation under these unique facts.
Therefore, it is the opinion of this office that the City of Paducah, on behalf of the Paducah Transit Authority, may properly award the contract for five buses to the second low bidder, Bluegrass Bus Sales, under these circumstances.