If a private estate pays for a building on West Virginia State Farm Museum land owned by the county, does the construction project have to go through public competitive bidding?
Plain-English summary
Christopher H. Bauer of Mason County had bequeathed his collection of taxidermy and other items to the West Virginia State Farm Museum, a nonprofit located on land owned by the Mason County Commission. Bauer's will told his estate to liquidate the rest of his property and use the proceeds to construct a new building on the Museum grounds to house the collection in perpetuity. After completion, the Estate would gift the building to the Museum.
Prosecutor Tatterson asked the AG whether the West Virginia Fairness in Competitive Bidding Act required the Estate to put this construction work out for public bid.
The AG said the Act does not apply on the facts presented. The Fairness in Competitive Bidding Act covers contracts entered into by "the State of West Virginia, every political subdivision thereof, every administrative entity that includes such a subdivision, all municipalities and all county boards of education." The Supreme Court of Appeals' 2001 decision in Affiliated Construction Trades Foundation v. University of WV Board of Trustees had recognized that courts must "examine who the real parties in interest are" to keep public bodies from using private intermediaries to dodge bidding rules. The court had laid out five factors:
- Did the State or its agency initiate the project?
- How much control does the State retain during development and construction?
- Will the project be used for a public purpose?
- Are public funds used directly, or indirectly through a lease that essentially covers construction costs?
- Are there other relevant facts indicating that the project is properly viewed as government construction?
Walking through these factors, the AG concluded that none was satisfied except possibly the "public purpose" element, since the Museum sits on county land and likely serves an educational purpose. But there was no facts suggesting the State initiated the project, retained control, or supplied funding. The Estate would build the building, the executor would serve as trustee of a trust the Estate established, and the trust's net income and principal would pay all utilities and maintenance. There was no government money in the deal at all.
The AG specifically warned that this conclusion would change if facts emerged showing the County Commission or another state subdivision was "intimately involved" in the project. The bidding statute cannot be evaded by laundering a public construction project through a private estate or nonprofit. But on the facts described, the project was a genuinely private gift, not government construction.
Currency note
This opinion was issued in 2014. 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
Q: What does "real parties in interest" mean?
A: It is the Supreme Court of Appeals' way of saying courts will look past the formal contracting parties to see who is actually paying for and controlling the project. If a county or state agency is the real driver of a construction project, the bidding statute applies even if the formal builder is a private trust, foundation, or nonprofit.
Q: Was the County Commission involved at all?
A: Yes, but only as the landowner. The Museum sits on County-owned land. The AG said that fact alone does not make the construction project public. What matters is initiation, control, public funding, and similar markers of public-construction substance.
Q: What if the Museum or the County had asked the Estate to fund the project?
A: The opinion explicitly leaves that question open. The AG's caveat about the analysis "changing" if facts indicated "intimate involvement" by the Commission or another state subdivision is a direct flag that solicitation, design coordination, or operational control by the County could move the project into the bidding statute.
Q: Does the Museum have to bid the construction itself?
A: No, because the Museum is a private nonprofit, not a covered public entity under W. Va. Code § 5-22-1(b)(2). Of course, the Museum's own bylaws, gift agreements, or any state grants tied to the project might impose their own procurement requirements, but those are separate from the Fairness in Competitive Bidding Act.
Q: What about lease arrangements?
A: The AG flagged this in factor 4. If a state body leases a privately constructed building under terms whose payments "essentially cover the amount of the construction," that disguised arrangement triggers the bidding statute. There was no lease here. The Museum will simply receive the building as a gift.
Background and statutory framework
The West Virginia Fairness in Competitive Bidding Act, W. Va. Code § 5-22-1 et seq., requires competitive bidding for state, political subdivision, administrative entity, municipal, and county school construction contracts. The Act's purpose is to "protect public coffers" and ensure transparency in the use of public funds.
The Supreme Court of Appeals in Affiliated Construction Trades Foundation v. University of WV Board of Trustees (2001) addressed an end-run around the Act: the WVU Board had partnered with private parties to build a campus facility using a structure that nominally avoided the bidding requirement. The court rejected the formalist reading. It held that to keep public bodies from "escap[ing] the requirements of the bidding statute by involving a third-party," the inquiry must look at who the real parties in interest are. The five-factor test from Affiliated Construction Trades is now the standard analytical tool for these questions.
The AG opinion applies the five factors in their natural order. On factor 1 (initiation), the project arose from a private will. On factor 2 (control), no public body would direct construction. On factor 3 (public purpose), the AG noted the building would house a museum on county land, which "is likely to be satisfied" but flagged that the prosecutor had not provided detailed facts about the Museum's educational mission. On factor 4 (public funding), no government dollars were involved. On factor 5 (catch-all), nothing else suggested a hidden public character.
Citations and references
Statutes:
- W. Va. Code § 5-22-1 et seq. (Fairness in Competitive Bidding Act)
- W. Va. Code § 5-22-1(b)(2) (entities subject to the Act)
Cases:
- Affiliated Construction Trades Foundation v. University of WV Board of Trustees, 210 W. Va. 456, 557 S.E.2d 863 (2001) (real-parties-in-interest test, five-factor framework)
Source
- Landing page: https://ago.wv.gov/media/18021/download?inline
- Original PDF: https://ago.wv.gov/media/18021/download?inline
Original opinion text
State of West Virginia
Office of the Attorney General
Patrick Morrisey, Attorney General
(304) 558-2021 / Fax (304) 558-0410
May 19, 2014
The Honorable R. Craig Tatterson
Prosecuting Attorney
Mason County
200 6th Street, Room 11
Point Pleasant, WV 25550
Dear Prosecutor Tatterson,
You have asked for an Opinion of the Attorney General regarding whether it is permissible to construct a building on the premises of the West Virginia State Farm Museum with proceeds of a decedent's estate without resorting to competitive bidding. This Opinion is being issued pursuant to West Virginia Code § 5-3-2, which provides that the Attorney General "may consult with and advise the several prosecuting attorneys in matters relating to the official duties of their office." To the extent this Opinion relies on facts, it is based solely on the factual assertions set forth in your correspondence with the Office of Attorney General.
You explain that certain issues have arisen following the death of Christopher H. Bauer, a resident of Mason County. According to your letter, Mr. Bauer has bequeathed certain collectibles, including his works of taxidermy, to the West Virginia State Farm Museum ("Museum"), a nonprofit corporation located on land owned by the Mason County Commission ("County Commission"). The remainder of Mr. Bauer's estate ("Estate") is to be liquidated with the proceeds used by the Estate to construct and maintain a separate building on the grounds of the Museum for the purpose of housing and preserving Mr. Bauer's collectibles in perpetuity. You explain that the Estate will gift the new building to the Museum after construction is completed.
Your letter raises the following legal question:
[W]hether it is permissible for a building to be constructed on the premises of the West Virginia State Farm Museum with proceeds of a decedent's estate without resorting to competitive bidding?
The West Virginia Fairness in Competitive Bidding Act ("Act") generally requires competitive bidding for all state construction contracts. See W. Va. Code § 5-22-1, et seq. Under the terms of the statute, the Act reaches contracts entered into by "the State of West Virginia, every political subdivision thereof, every administrative entity that includes such a subdivision, all municipalities and all county boards of education." W. Va. Code § 5-22-1(b)(2). Moreover, the West Virginia Supreme Court of Appeals has determined that it must also "examine who the real parties in interest are" in order to best fulfill the statute's purpose of "protect[ing] public coffers." Affiliated Const. Trades Found v. Univ. of W. Va. Bd. of Trustees, 210 W. Va. 456, 471, 557 S.E.2d 863, 878 (2001) (internal quotations omitted).
To ensure that the State or its agencies do not "escape the requirements of the bidding statute by involving a third-party," id., the Supreme Court of Appeals has created a multifactor test to determine whether the competitive bidding requirements apply. See Syl. Pt. 7, id. A court should examine:
(1) whether the State or its agency initiated the construction project; (2) the extent of control retained by the State or its agency during the development and construction phases; (3) the extent to which the project will be used for a public purpose; (4) whether public funds are used either directly for the costs of construction or indirectly by means of a lease arrangement which contemplates payments essentially covering the amount of the construction; and (5) all other relevant factors bearing on the issue of whether the construction is properly viewed as government construction.
Id.
Applying each factor to the facts provided, we conclude that the Estate's construction project is not subject to competitive bidding under section 5-22-1. First, no facts indicate that the construction project was "initiated" by the State. Id. As you explain, the project arose entirely from the deceased's will, not by the action or influence of the State or its subdivisions. Second, you provided no facts indicating that the State will exert control during the "development and construction phases" of the building project. Id. Third, the "public purpose" factor is likely to be satisfied because the building project will benefit a nonprofit museum that sits on county property, but we note that your letter does not describe the extent to which the Museum serves an educational or other public purpose. Fourth, no public funds will be used, directly or indirectly, to construct the new building. Id. Your letter indicates that the private executor of the Estate will serve as trustee of a trust established by the Estate to maintain the building and collectibles. Furthermore, the net income and principal of the trust will pay the utilities and maintenance of the new building and the collectibles. Fifth, no other facts provided suggest that the project should be viewed as "government construction." Id.
We stress that this letter is based solely on the facts you have provided. Our analysis could change if there were facts suggesting that the County Commission or other state subdivision would be "intimately involved" in the building project. Id. at 472, 557 S.E.2d at 879. As the Supreme Court of Appeals has explained, neither the Estate nor the Museum may be used to deliberately "insulate" the County Commission from the competitive bidding requirements. Id.
Should you have further questions, please do not hesitate to contact this Office.
Sincerely,
Patrick Morrisey
Attorney General
Elbert Lin
Solicitor General
J. Zak Ritchie
Assistant Attorney General