Could a Louisiana water district invite public bids for billing services, reject both, then hire the higher bidder without rebidding?

Plain-English summary

Pointe Coupee's Waterworks District advertised a public bid for billing and collection services. After receiving two bids, its board rejected both and then voted to award the contract to the higher bidder without another bid. The AG distinguished whether bidding was required from what happens after the district elects to bid. It said service contracts like this were outside the Public Bid Law's mandatory bidding categories, but the board had chosen a public-bid process and was bound by the solicitation's requirements.

The opinion said the district had to follow its advertised process and award the contract to the lowest responsible bidder whose bid met the contract, plans, and specifications. A decision to reject bids was subject to fair, legal, nonarbitrary exercise of the board's discretion. The AG did not itself adjudicate a bidder's entitlement or substitute a factual ranking of the two bids.

The official extract's first-page date stamp is garbled as “JUN 3006,” and no clear release date appears in the extract. This page leaves the date blank. Pages 4 through 6 reproduce an older opinion attached to the official PDF; that attachment is part of the source text below.

Currency note

The official extract does not state a reliable release date. 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.

Common questions

Did Louisiana law require this district to bid a water-billing service contract?

The AG said no. It treated billing and collection as services rather than public works or purchases of materials and supplies covered by mandatory public bidding.

Once the district advertised a public bid, could it ignore the stated procedure?

No. The AG said its own choice of public bidding bound it to the solicitation's requirements for advertising, specifications, evaluation, selection, and award.

Did the board have any discretion to reject bids?

Yes, but the AG said a rejection had to be fair and legal rather than arbitrary. It discussed judicial review of the board's interpretation of bid specifications.

Could the district award the contract to a bidder whose earlier bid it had rejected?

The AG did not validate the described award. It concluded that the board's chosen bid process required an award to the lowest responsible bidder meeting the advertised terms, with any rejection made fairly and lawfully.

Background and statutory framework

The board argued that professional services did not require compliance with the Louisiana Public Bid Law. The AG agreed the statutory mandate did not cover the described service contract, then applied the district's self-imposed public-bid decision. The PDF appended Opinion 81-582, which the AG cited for the same distinction between optional bidding and compliance after choosing it.

Citations

• R.S. 38:2211-2293 (Public Bid Law range printed in the opinion heading).
• Haughton Elevator Division v. State of Louisiana (review of bid-specification discretion discussed).
• Ag. Op. No. 81-582 (older opinion reproduced in the official PDF).

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/06-0051

Original opinion text

DEPARTMENT OF JUSTICE
P.O. BOX 94005
BATON ROUGE
70804-9005
CHARLES C. FOTI, JR.
ATTORNEY GENERAL

JUN 3006
OPINION NUMBER 06-0051

90-A-1 Public Funds & Public Contracts R.S. 38:2211-2293
John Wayne Jewell
Assistant District Attorney
Parish Police Jury must comply with self-imposed
Eighteenth Judicial District
competitive public bidding requirements in awarding
contract for billing and collection services, including award
P.O. Box 156
of contract to lowest responsible bidder who bids in
New Roads, LA 70760
accordance with the contract, plans, and specifications as
advertised.
Dear Mr. Jewell:

On behalf of the Point Coupee Parish Police Jury ("Police Jury") you have requested the opinion of this office on whether Board of Commissioners ("Board") for Waterworks District Number Two of the Parish of Pointe Coupee, Louisiana ("District"), violated any laws when it rejected all bids for a billing and collection services contract. According to your request the Point Coupee Parish Police Jury created Waterworks District Number Two of the Parish of Point Coupee and appoints all five members to the Board of Commissioners. The Board advertised for billing and collection services. Two bids were received but, after reviewing the bids, the Board rejected both and, without further bidding, voted to award the billing and collection contract to the higher of the two bidders whose bids were rejected. The Board’s decision was based on the fact that the contract called for professional services and, as such, did not require compliance with the Louisiana Public Bid Law (R.S. 38:2211-2293).

Submitted with your opinion request were copies of the minutes taken at the Board meetings, portions of which relate to the review of bids, rejection of bids and final award of the contract. Also attached was a copy of an advertisement in the official journal of the parish, which was published on October 6, 2005, and which read as follows:

ADVERTISMENT FOR BIDS

The Board of Commissioners for the Water Works District No. 2 of Point Coupee Parish is seeking bids from interested parties for the billing of water customers and for the collection of water bills and depositing of bill collections, and perform book keeping services, prepare monthly financial, profit and loss statements. Individuals requesting bid packages should have a back ground in governmental finance. All interested parties may acquire bid packages from Mr. John Gosserand, Utility Department, Police Jury Office, Court House Annex, 160 Main Street, New Roads, Louisiana no earlier than October 7, 2005. Sealed Bids are to be delivered to Mr.

Page 2

Opinion Number 06-0051
John Wayne Jewell
Assistant District Attorney
Page -2-

John Gosserand, 160 Main Street, New Roads, Louisiana on or before 4:30 P.M., October 19, 2005. Bids are to be opened on October 19, 2005, at 5:00 P.M. at the Police Jury meeting room.

While the Police Jury and District are subject to the Louisiana Public Bid Law, LSA-R.S. 38:2211-2296, when contracting for public works or the purchase of materials and supplies, our courts have held that contracts for services, professional or otherwise, are flot subject to the requirements of that statute. Lafourche Parish Water District No. 1 v. Carl Heck Engineers, Inc. (La.App. 1st Cir. 1977) 346 So.2d 769; BFI, Inc. v. City of Monroe (La.App. 2d Cir. 1985) 465 So.2d 882. A contract for billing and collection services as described in your opinion request would constitute a similar procurement of services and would not be subject to the Public Bid Law.

Although the District is not mandated to comply with the Public Bid Law in securing a contract for billing and collection services, the District may, if it wishes, acquire such services by competitive public bidding.

If the District elects to procure the billing and collection contract by competitive public bidding, then the District is bound by its own resolution to comply with the requirements of the bid process including those related to advertisement, bid specifications, evaluation, dates, selection, awarding of such contracts, etc. See Ag. Op. No. 81-582. This would require the contract be awarded to the lowest responsible bidder who bids in accordance with the plans and specifications as advertised.

The information submitted with the opinion request, including the Board minutes, clearly indicates that the Board mandated that the contract to secure billing and collection services be procured by "public bid", thereby triggering compliance with the bid requirements set forth in the bid solicitation and advertisement including the award of the contract to the low responsive and responsible bidder. The advertisement itself reflects the intent of the Board to give the proposer or offerer the right to conclude that a contract will result from such a proposal or offer.

Having concluded that the Board must comply with the requirements set forth in the bid solicitation and advertisement, we next address the issue of whether or not the Board may reject all bids after bid opening and evaluation. Louisiana follows the general rule of vesting an awarding body, such as the Board, with discretion in interpreting the requirements of the specifications set forth in the bidding documents subject to judicial review. Absent an abuse of its discretion, the courts will not substitute their judgment for that of the governing authority. See Haughton Elevator Division v. State of Louisiana, et al, (La. 1979), 367 So.2d 1161. Therefore, any administrative decision by the Board to reject bids must be exercised in a fair and legal manner and not arbitrarily.

Page 3

Opinion Number 06-0051
John Wayne Jewell
Assistant District Attorney
Page -3-

It is therefore of the opinion of this office that the Board of Commissioners for Waterworks District Number Two of the Parish of Point Coupee, in mandating the use of a "public bid" in awarding a contract for billing and collection services, must award the contract to the lowest responsible bidder who bids in accordance with the contract, plans and specifications as advertised and as set forth in the bid solicitation. Any administrative decision to reject bids must be exercised in a fair and legal manner and not arbitrarily.

We trust that this answers your inquiry.

Very Truly Yours,

CHARLES C. FOTI, JR.
Attorney General

;,
RICHARD L. MCGIMS~~
Assistant Attorney General
Public Finance & Contracts Section
CCF, JR/RLM/jv

Page 4

DEPARTMENT 01=" JUSTICE

WILLIAM J. GUSTE,JR.

May 21, 1981
OPINION NUMBER 81-582
54 - INSURANCE; 90 - POLICE JURIES
90-A-I PUBLIC FUNDS; R.S. 38:2211 et seq.
Placing of insurance by police jury by public bid not mandated by law. If mandated by resolution specifications must be specific enough for compet- itive bidding to occur.
Honorable Samuel B. Nunez, Jr.
" State Senator
Post Office Box 44183
Capitol Station
Baton Rouge, Louisiana 70804
Dear Senator Nunez:
YoU verbally requested an opinion from our office concerning the validity of the process by which the police jury of St. Bernard Parish is seeking to institute a program of partial self-insurance with tiers or layers of excess or catastrophic insurance for general liability, auto fleet, physical property damage and bonds for public officials.
You have furnished us a copy of an advertisement in the official journal of the parish reading in full:
ADVERTISEMENT FOR BIDS
" Seale~ bids will be received by the
St. Bernard Parish Police Jury, at the office of the Parish Engineer Thomas P.
Reed, Police Jury Complex; 8201 W. Judge Perez Drive, Chalmette, Louisiana,:until 3:00 p.m. Daylight Saving Time.on Tuesday, May 26, 1981.
"BID FOR SELF-INSURANCE PROGRAM FOR .
ALL PHASES OF INSURA!~CE OTHER,THAN WORK- MEN’S COMPENSATION."

Page 5

Honorable Samuel B. Nunez, Jr.
6PINION NUMBER 81-582
Page 2
May 21, 1981

Bids are to be addressed to the St.
Eernard Parish Police Jury, Mr. Thomas
P. Reed, Parish Engineer, Police Jury
Complex, Room 212, 8201 W. Judge Perez
Drive, Chalmette, Louisiana, 70043.
Bids for the above should be in a sealed envelope which is clearly marked "BIDS FORSELF-INSURANCE PROGRAM
FOR ALL PHASES OF INSURANCE, OTHER THAN
WORKMEN’S COMPENSATION," to be opened at 7:00 p.m. on Tuesday, May 26, 1981.
Any bidder may secure plans and specifications from the office of the
Parish Engineer, Room 212, Police Jury
Complex, between the hours of 8:30 a.m. and 4:30 p.m. Monday thru Friday.
Bids will be opened a~d read aloud in the Police Jury Chambers. Any bid received after closing time will be returned unopened.
The St. Bernard Parish Police Jury reserves the right to reject any and all bids and waive informalities.
/s/John A. Metzler, Jr.
.Purchasing Agent’
May l, 8, 15, 22, 1981

The "plans mnd specifications" referred.~to in the advertisement, according to the one page undate~ letter by David S. Gorbatt, Chairman, Insurance Committee, addressed tq "applicant", read in pertinent part:
"It is our intentio~ to seek out the most adgantageous and cost effective insurance.program, to meet the needs of the St. Bernard Parish Police Jury. In that light, we have consciously omitted any specific guidelines.or specifications

Page 6

Honorable Samuel B. Nunez, Jr.
OPINION NUMBER 81-582
Page 3
May 21, 19 81
in regard to the program’s components.
The program in general should be a modified insurance program with total
!oss funds and tiers of excess coverage.
Therefore, it is incumbent upon each applicant to prepare their own indivi- dual program."
Under the applicable l~w, a police jury is not mandated to comply with the public bid law (R.S. 38:2211 et seq.) in securing contracts of insurance and may, if it wishes, place such insurance without either competitive bidding or competitive negotiations. A police jury may utilize the public bid laws for procuri.ng itemsnot required to be secured by public bid.
This office has been informed that the St..Bernard Parish Police Jury adopted a resolution requiring its purchasing .agent to "bid insurance policies. " Since the police jury has decided to procure the contract or contracts of insurance by "publi.c bid" then they are bound, by its own resolution, to comply with the requirements of law as to advertisement, bid specifications, evaluation, dates, selection and awarding of such contracts, etc. However, it must be noted that a governing° authority has the absolute discretion to reject all bids under the public bid laws.
Since the insurance c~mmittee for St. Bernard Parish has been mandated by resolution to procure contracts of insurance by "public bid", the advertisement anti’plans, and specifications do not comply with the public bid laws (R.S. 38:2211 et seq.), because there are no specific guidelines or specifications in regard to the program’s components.
Very truly
WILLIAM ~ GJ~TE, JR.
Attorney General

BY:
KENNETH C.
Assistant Attorney General

CC¯ St. Bernard Parish Police Jury