Alabama Attorney General Opinion 1979-0189

WALTER S. TURNER CHIEF ASSISTANT ATTORNEY GENERAL LEE L. HALE DEPUTY ATTORNEY GENERAL WILLIAM M. SEHURS. JR . EXECUTIVE ASSISTANT -OFFICE OF THE ATTORNEY GENERAL 79- 00119 L41:1?-1 CHARLES A. GRADDICK ATTORNEY GENERAL STATE OF ALABAMA MAY 3 1979 • JANIE NOBLES ADMINISTRATIVE ASSISTANT ADMINISTRATIVE BUILDING 64 NORTH UNION STREET MONTGOMERY, ALABAMA 36130 AREA (205(. 836-51 SO Honorable Harry M. Philpott President Auburn University Auburn, Alabama 36830 Public Works - Contracts - Auburn University Contract for significant additional work arising during performance of renovation contract must be awarded pursuant to sealed competitive bids. Dear Sir: part This letter is in response to your letter of recent date, the pertinent of which is as follows: "Your opinion is requested with respect to the following question: Under the specific facts and circumstances herein described, may Auburn University accomplish the renovation and repair of a fire-damaged building located on its campus by Change order to existing contract or by negotiated supplemental contract? After advertisement and receipt of sealed bids, Auburn University entered into a contract with the low bidder, Giddens and Huff Construction Company of Auburn, Alabama, for the renovation and restoration of Hargis Hall, located on the Auburn University campus, for the amount of $501,669. Work under the contract was commenced by the contractor. However, after approximately one-third of the work was completed, a fire of now undetermined origin destroyed the work done by the contractor andolso sub- stantially damaged the existing structure. c Honorable Harry M. Philpott - 2 "sit tiara, Alabama • Funds remaining on hand under the construction contract and proceeds from the builder's risk insurance policy carried by the contractor are sufficient to restore and complete work under the renovation contract. However, this work cannot be done until fire damage to the existing structure in the approximate amount of $180,000 is repaired. Funds for this purpose are available from fire insurance proceeds and from fees contained in the institution's building fund. Auburn University desires to repair the damage to Hargis Hall and to proceed with its renovation and restoration in accordance with its original contract by change order or by negotiated supplemental agreement with Giddens and Huff Construction Company. The existing condition of the building creates a risk of further substantial damage to the property and of injury in the event of collapse, and it is felt that this situation is one of emergency affecting public health and safety. Moreover, repairing damage to the existing structure through the normal procedure of advertisement and receipt of sealed bids would require termination of the original contract, when the contractor is ready, willing land able to continue. This contractor has a unique knowledge of the building based on his work on the premises under the existing contract. Termination and proceeding through a new contract would involve substantial additional expense, including the expense of re-enforcing and protecting the building during the period required for solicitation of new bids, new wage rates and increased building costs. Further, there is now paid for and stored by Auburn University construction material ordered for the project which was ordered prior to, but delivered subsequent to, the fire of an approximate value of $50,000." Obviously, Auburn University could not anticipate that Hargis Hall would suffer fire damage that would have to be repaired during the performance of the renovation contract which had been awarded to the low bidder. However, it is my opinion that the fire damage repair work is a separate and distinct item from the renovation contract. I do not believe that it constitutes an emergency affecting public health or safety which would permit the award of a contract without competitive bids. In an opinion of the Attorney General dated August 13, 1968 to Honorable Dennis Porter, City Attorney; Town of Chatom, the following conments were made concerning a.ditional work: . . In general, but subject to certain limitations and exceptions, statutes requiring the letting of public contracts to the lowest bidder are regarded as rendering invalid and unenforceable subsequent agreements to pay on to whom a Honorable Harry M. Philpott - 3 Auliarn, Alabama public contract has been duly awarded additional compen- sation for extras or additional labor and materials not included in the original contract, at least where the additional compensation exceeds the amount for which public contracts may be made without competitive bidding. See annotations contained in 135 AIR 1266, et seq. It has also been said that public authorities cannot enter into a contract with the lowest bidder containing substantial provisions beneficial to him not included in or contemplated in the terms and specifications upon whieh bids were invited; the contract which they execute must be the contract offered to the lowest responsible bidder by advertisement and any contract entered into containing substantial provisions beneficial to the bidder which were not included in the specifications is void. Any other course would prevent real competition, lead to 9 favoritism and fraud and defeat the purpose of the law in requiring contracts to be let upon bids made upon advertised specifications. See Section 46 of Public Works and Contracts contained in 43 Am. Juris. 789. Some examples noted are such as the holding of the court in Ely v. Grand Rapids, 84 Mich:-336, 47 NW 447, providing that paving contracts could not be expanded by supplemental agreement to include gutter paving, this being a distinct matter wholly outside the original contract. Also, it was held in Sadler v. Eureka Co., 15 Nev. 39, that changes could not be considered as separate and distinct it®s within a dollar amount for competitive bid when the aggregate total of all changes to the contract exceeds the amount required for competitive bids. In a ruling by this office, reported in Quarterly Report of the Attorney General, Volume 53, page 37, it has been held on request by the Highway Director for an opinion regarding addition by supplemental agreement of 1.8 miles to a construction contract that such entering into a supplemental agreement on an entirely new project would be in the very teeth of Title 50, Section 1, Code of Alabama 1940, requiring competitive bids on public improvements." Although it may be uore convenient to Auburn University to award the fire damage repair contract to the firm which was low bidder for the renovation and restoration contract, I know of no legal authority whereby this could be done. Since the fire damage repair contract greatly exceeds $500.00, it is my opinion that it rust be awarded by sealed competitive bids as required by the public works statute, Code of Alabama 1975, Section 39-2-2. If I may be of any further assistance to you in this matter, please let me know. Very truly yours, CHARLES A. GRADDICK Attorney General By - MN E. LAWLEY Assistant Attorney General DEL/dc