Could a Kentucky county buy road asphalt under a bid that named no quantity or project?

Plain-English summary

In 1994, Kentucky's Attorney General found Marion County's invitation for asphalt bids inadequate under KRS 424.260. It named road-surface materials but specified no quantity, project, or period of supply. The AG said bidders could not know the size of the commitment and the public could not identify the roads or spending involved. On the facts supplied by the county attorney, the AG concluded that the resulting contractor claims were unenforceable and payments, if made, could be recovered.

The opinion also said the county judge/executive could not appropriate county funds or independently choose road projects without fiscal court approval. It separately discussed KRS 68.310's limit on spending in the first half of a fourth fiscal year, but declined to decide that crossing the limit automatically made resulting claims unenforceable. Its conclusions rested on the facts in the request, not on an independent finding about the contractor.

Currency note

This opinion was issued in 1994. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical summary

Fiscal courts and county judges

The AG assigned county appropriations and decisions about which road sections to pave to the fiscal court. It described the county judge/executive's role as supervising administration of the road program and said the judge/executive could not order a particular paving project without fiscal court approval.

Contractors bidding on road materials

The AG said a county could solicit supplies for a stated period or bids for specific projects. The Marion County advertisement did neither. Because the quantity, project, and duration were missing, the AG concluded it did not give reasonable notice or a basis for competitive comparison under KRS 424.260.

Contractor claims and the budget limit

The AG said failure to follow the bidding statute made the paving contractor's claims unenforceable and allowed recovery of public money already paid under the transaction. It did not apply the same automatic rule to KRS 68.310. The office could neither affirm nor deny that exceeding the spending cap alone voided a claim and left case-specific application open.

Common questions

What was missing from the county's asphalt bid invitation?

The AG said it identified neither the quantity of asphalt nor the projects to be paved. It also specified no supply period. The opinion concluded that the invitation failed to give reasonable notice of the county's plans.

Could the county judge/executive direct paving without a fiscal court vote?

The AG said no. It placed road-project choices and appropriation authority with the fiscal court.

Did the AG say the contractor could enforce its paving invoices?

No, on the facts presented. It concluded that the defective bidding process made those claims unenforceable and that payments, if already made, were recoverable.

Did spending over the statutory percentage cap independently void every claim?

The AG left that question open. It declined a blanket rule under KRS 68.310 and said particular circumstances might warrant a different result.

Background and statutory framework

The county attorney described an advertisement that grouped asphalt with other supplies, a single price-per-ton bid, and three paving projects directed without fiscal-court approval. The AG applied KRS 67.080 to county fiscal authority and KRS 424.260 to the 1994 bidding requirement. It then separately considered KRS 68.310's restriction on spending more than 65% of current funds in the first half of a fourth fiscal year, subject to its stated emergency exception. The opinion assumed that the advertisement's apparent same-day publication and deadline reflected an incorrect date because the requester had not asked about it.

Citations and references

• KRS 67.080: fiscal court appropriation authority.
• KRS 424.260: the bidding requirement the AG found unmet.
• KRS 68.310: fourth-fiscal-year spending limit discussed without a categorical claim-voiding rule.

Source

• Landing page: https://www.ag.ky.gov/Resources/Opinions/Opinions/OAG94-020.htm

Original opinion text

OAG 94-20

March 29, 1994

Joseph H. Mattingly III

Marion County Attorney

15 Court Square Box 681

Lebanon, Kentucky 40033

Re: Procurement of Paving Materials

Dear Mr. Mattingly:

You have asked two questions regarding your county's procurement of road paving materials and services. The facts, as we understand them, are these:

Marion County purchases over $100,000 worth of road asphalt a year. Some time in 1993 the county judge/executive placed an advertisement that sealed bids would be accepted on a variety of named materials such as diesel fuel, gasoline, antifreeze, motor oil, and concrete. The bid included among the items "bituminous class 1 base, bituminous class 1 surface." No quantity was given for any of the items, nor was any indication given of the period of time the bids were to cover.

The only bid received regarding the road surface was from Nally & Haydon Surfacing, Inc., whose bid was $24.50 per ton. The fiscal court never voted to ratify a contract with Nally & Haydon, and apparently did not adopt a county road plan. Instead, the county judge/executive would simply contact the paving company with directions to pave designated portions of county roads. In some instances the county judge/executive may have directed the county road foreman to obtain the asphalt and have it installed by county employees. If the asphalt was installed by Nally & Haydon, the company did not charge the county for this service. Three paving projects were completed in the fall of 1993. The county received invoices for these projects in amounts of approximately $40,000, $16,000, and $24,000. These expenses were incurred after the county's road budget for the fiscal year had been entirely depleted. Although it is not clear whether the county paid the contractor for the materials in question, the county evidently spent more than 65% of its fiscal 1993-94 budget in the first half of the fiscal year, leaving less than 35% available for the incoming administration that took office in January 1994.

You have asked whether the three paving projects should have been separately bid, and whether the transactions with the contractor were illegal and thus unenforceable against the county.

In this opinion we will point out the more obvious statutory violations. The list that follows is not necessarily complete.

County judge/executive lacks procurement authority

The county judge/executive has no authority to appropriate county funds. OAG 78-332. That is the function of the fiscal court. KRS 67.080.

County judge/executive lacks authority over road projects

Responsibility for determining what sections of county roads shall be paved rests with the fiscal court; the county judge/executive has no authority to order work on a particular project without fiscal court approval. OAG 80-368. The county judge/executive's role is to supervise the administration of the county road program. OAG 80-412.

Bids must relate to particular projects or time periods

KRS 424.260 states:

Except where a statute specifically fixes a larger sum as the minimum for a requirement of advertisements 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 except perishable meat, fish, and vegetables, equipment, or for contractual services other than professional, involving an expenditure of more than ten thousand dollars ($10,000) without first making newspaper advertisements 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 purpose of the bidding process is to provide 1) an offering to the public; 2) an opportunity for competition; and 3) a basis for exact comparison of bids. Handy v. Warren County Fiscal Court, Ky.App., 570 S.W.2d 663, 665 (1978), citing OAG 74-20. In addition we have recognized that the bidding process protects the taxpaying public against the waste of public funds and prevents abuses such as fraud, favoritism, and extravagance. OAG 78-166. Our opinions have recognized that fiscal courts have some latitude in the manner in which materials are procured, as long as the method employed complies with the purposes just stated and does not amount to a subversion of the bidding requirement. In the matter of procuring road materials, we have said that a county may bid for supplies to be furnished over a stated period of time, or may accept bids for specific projects. OAG 82-125; OAG 83-316.

The bid process that you have described to us amounts to little more than a sham. At best it might be called a slipshod attempt to comply with the letter of KRS 424.260. The bid invitation contains no indication of either the quantity of materials to be purchased nor the projects for which the materials will be used. A party wishing to bid has no idea whether he may be obligated to supply one ton or ten thousand tons. The taxpaying public has no indication of either the amount of public money proposed for expenditure or the county roads to be resurfaced. The bid invitation does not grant reasonable notice of the county's intentions and does not comply with the statute.

An additional curious feature of the bid advertisement you have sent us is the fact that it is dated June 1, 1993, and it states that the deadline for bids is 9:00 A.M. on June 1, 1993. The bid in question was submitted on May 28, 1993. Because you have not asked us to comment on this peculiarity, we will assume that the date shown on the advertisement is incorrect and that the bid invitation was advertised a reasonable time before the deadline.

Contractor's claim unenforceable

Nonobservance of a bidding requirement renders a contract void, and public funds paid out pursuant to such a transaction are recoverable. Board of Education of Floyd County v. Hall, Ky., 353 S.W.2d 194 (1962). Because the procurements in question did not comply with the bidding statute, the contractor's claims are unenforceable. If the claims have been paid, they are recoverable.

County not to spend over 65% of budget in six months

KRS 68.310 states:

Except in case of an emergency concerning which the county judge/executive, the fiscal court and the state local finance officer unanimously agree in writing, no county may, during the first half of any fourth fiscal year, beginning with the fiscal year 1941-1942, encumber or expend more than sixty-five percent (65%) of all its current funds, taken as a unit, budgeted for that fiscal year, not counting as current funds any budgetary allotments for or payments of principal and interest of bonded indebtedness.

The purpose of this statute is to ensure that an incoming administration will have enough money on hand to pay for essential government operations. OAG 73-802.

You ask us to consider whether claims such as the ones we have discussed here would be unenforceable if payment of the claims would result in a violation of this statute. Although we suggested in OAG 82-309 that such claims would be void, we can neither affirm nor deny the correctness of that assumption. Our hesitation is compelled by three observations. First, in any specific factual setting it may be difficult to segregate the particular claims that brought the county's expenditures over the 65% limitation. For example, if two expenditures were made on the same day, and both together put the county over its limit but neither claim alone would do so, fairness to the claimants would require that both claims be paid. Second, while we understand the law's expectation that contractors know whether the officials they are dealing with have authority to bind the government, we are reluctant to state that a contractor has a similar duty to monitor a county's expenditures in the first six months of the fourth year of the county's budget cycle in order to determine whether the expenditures exceed the 65% limit. Third, were a blanket rule laid down whereby all expenditures over 65% could be voided, counties would have little incentive to control spending during the last six months of the administration.

For these reasons we are unwilling to say that violation of KRS 68.310 renders claims against the county unenforceable. We leave open the possibility that particular circumstances may arise in which the application of such a rule would be warranted.

The conclusions reached in this opinion are based on the facts set out in your letter. They should not be taken as findings of fact that would prejudice any legal action taken by or against the contractor in question.

Sincerely,

Chris Gorman

Attorney General

Ross T. Carter

Assistant Attorney General