CITIES AND TOWNS - CONTRACTS - INSURANCE - CODIFICATION OF MUNICIPAL ORDINANCES - COMPETITIVE BIDS.
Under the provisions of RCW 35.23.352, a city or town of the second, third or fourth class is required to call for bids in the manner prescribed therein where the city or town seeks (a) to award a contract for liability and casualty insurance coverage, the anticipated annual premiums for which will exceed $2,000, and (b) to award a contract for the codification of municipal ordinances, the anticipated cost of which will exceed $2,000.
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January 21, 1970
Honorable Perry B. Woodall
State Senator, 15th District
Olympia, Washington 98501
Cite as: AGO 1970 No. 3
By letter previously acknowledged, you have requested the opinion of this office upon a question which we paraphrase as follows:
Is a city or town of the second, third or fourth class required by RCW 35.23.352 to call for bids in the manner prescribed in that statute where the city or town seeks (a) to award a contract for liability and casualty insurance coverage, the anticipated annual premiums for which will exceed $2,000, and (b) to award a contract for the codification of municipal ordinances, the anticipated cost of which will exceed $2,000?
We answer both parts of your question in the affirmative, for the reasons which appear in the analysis below.
RCW 35.23.352 requires that certain public works projects undertaken by cities of the second, third or fourth class shall be done only under contracts let at public bidding, as [[Orig. Op. Page 2]] follows:
"Any city or town of the second, third or fourth class may construct any public work or improvement by contract or day labor without calling for bids therefor whenever the estimated cost of such work or improvement, including cost ofmaterials, supplies and equipment will not exceed the sum of five thousand dollars. Whenever the cost of such public work or improvement, including materials, supplies and equipment, will exceed five thousand dollars, the same shall be done by contract. All such contracts shall be let . . . [subject to the bidding requirements of this section]." (Emphasis supplied.)
Then, after detailing the procedures to be followed in calling for and obtaining the required bids with respect to such public works projects as are governed by this portion of the statute, it goes on in a separate paragraph to provide that:
"Anypurchase of supplies, material, equipment or services, except for public work or improvement, where the cost thereof exceeds two thousand dollars shall be made upon call for bids in the same method and under the same conditions as required herein on a call for bids for public work or improvement." (Emphasis supplied.)
The question posed relates to the applicability of this paragraph of the statute to contracts for insurance coverage or for the codification of municipal ordinances.1/ Obviously, the contracts here under consideration are not for ". . . public work or improvement . . ." Equally obvious, they do not contemplate the purchase of ". . . supplies, material, [or] equipment. . . ." Thus, the only question is whether they are contracts for "services" as that term is used in RCW 35.23.352,supra. We think that they are and that, hence, the [[Orig. Op. Page 3]] purchase of such "services" must be made subject to the bidding requirements of the statute.
It is, of course, the general rule that a municipal corporation ". . . is not required to advertise or call for bids . . . [in the awarding of contracts] or let the contract to the lowest bidder unless there be a constitutional, statutory or charter provision requiring such a course to be pursued." Dalton v. Clarke, 18 Wn.2d 322, 329, 139 P.2d 291 (1943) (citations omitted); see, also, 10 McQuillin, Municipal Corporations 328 (3rd ed. rev. 1966). However, it is also equally clear, in this state at least, that, where bids on public contracts are required by statute,
". . . the courts will not, by strict construction, narrow the scope of a statute and limit its application in cases where such a construction is apparently against the legislative policy. [Of requiring bids]." Reiter v. Chapman, 177 Wash. 392, 397, 31 P.2d 1005 (1934). (Emphasis supplied.)2/
In construing a statute referring to bids on public contracts as with any statute it is a well-settled rule of construction that, where words used in a statute are undefined by its provisions, ". . . the words are to be given their ordinary meaning." State v. Roadhs, 71 Wn.2d 705, 708, 430 P.2d 586 (1967) (citations omitted). The word "services" as used in RCW 35.23.352 is nowhere defined therein, and hence, must be viewed with this precept in mind.
Obviously, the word "services" as used was intended by the legislature to mean something other than "supplies, material [or] [[Orig. Op. Page 4]] equipment."3/ These three words all connote tangible property. The word "services" does not, but connotes intellectual or manual skill and effort which may or may not result in the eventual production of tangible property. Cf.,Washington Printing and Binding Co. v. State, 192 Wash. 448, 453, 454, 73 P.2d 1326 (1937).
Decisive of the matter at hand is, we think, the adoption by our supreme court inSkrivanich v. Davis, 29 Wn.2d 150, 161, 186 P.2d 364 (1947), of an extremely broad definition of the term "personal services" as it appeared in § 9, chapter 35, Laws of 1945, the state unemployment compensation act.4/ We quote at some length from the opinion of the court:
"In defining the terms 'service' and 'personal service' as used in the Utah unemployment compensation act, the supreme court of that state, in the case ofCreameries of America v. Industrial Comm., 98 Utah 571, 102 P. (2d) 300, said:
"'In ordinary usage the term "services" has a rather broad and general meaning. It includes generally any act performed for the benefit of another under some arrangement or agreement whereby such act was to have been performed. The general definition of "service" as given in Webster's New International Dictionary is "performance of labor for the benefit of another"; "Act or instance of helping, or benefiting." The term "personal service" indicates that the "act" done for the benefit of another is donepersonally by a particular individual.'"5/
[[Orig. Op. Page 5]]
RCW 35.23.352, of course, does not speak of "personal services," but of "services" only. Hence, the word "services," being adverbially unqualified, must be considered to embrace all services, whether "personal" or not.
Recourse to dictionary definitions of the word "service" yields definitions of similar breadth. Merriam-Webster New International Dictionary (3rd ed. 1966), at p. 2075, gives as two of the many definitions of "service" the following:
". . . The performance of work commanded or paid for by another: . . ." and,
". . . useful labor that does not produce a tangible commodity -. . ."
We, therefore, must conclude that the word "services" as used in RCW 35.23.352 embraces the contracts which are the subject of your question: i.e., the "service" of providing insurance coverage,6/ and the "service" of codifying municipal ordinances.
From this it follows that your question, as paraphrased, must be answered in the affirmative; i.e., a city or town of the second, third or fourth class is required to call for bids in the manner prescribed in RCW 35.23.352, when a city or town seeks (a) to award a contract of liability and casualty insurance, the anticipated annual premiums for which will exceed $2,000, and (b) to award a contract for the codification of municipal ordinances, the anticipated costs of which will exceed $2,000.
In so concluding, we are fully cognizant of the general rule, as stated in 10 McQuillin Municipal Corporations, page 340, that:
"Although they are sometimes held to apply to such an agreement, provisions requiring competitive bidding as a basis for entering into contractual relations with a governmental body usually are held not to apply to contracts for personal services involving peculiar skill or ability. . . ."
[[Orig. Op. Page 6]]
See, also, AGO 61-62 No. 103, and AGO 57-58 No. 116, both concluding that school districts may, but are not required, to advertise for bids when purchasing public liability or fire insurance. However, neither the statutes which were involved in these two previous attorney general opinions (i.e., RCW 28.58.135 and RCW 28.62.170) nor any of those involved in the cases relied upon in support of the above stated text book [[textbook]]general rule contains the phraseology "purchase of . . .services" which appears to be peculiar to RCW 35.23.352,supra. Simply stated, then, it appears to us that the legislature, in enacting this particular "bid law" provision for second, third and fourth class cities and towns in this state, has seen fit to modify the general rule with respect to the purchase of personal and professional services in the case of these municipalities and to require these municipalities to advertise for bids even as to these categories of purchases. The question of whether or not this is a wise requirement is, of course, a question which the current special session of the legislature is free to review.7/
We trust that the foregoing will be of assistance to you.
Very truly yours,
DONALD FOSS, JR.
Assistant Attorney General
*** FOOTNOTES ***
1/It will be assumed, for purposes of discussion, that these contracts will call for the performance of what are commonly referred to as "professional services." The relevance of this assumption will become clear as we proceed with our analysis.
2/Compare the broad construction rule of the state bidding statute, RCW 43.19.1906, enunciated by the court in Miller v. State, 73 Wn.2d 790, 440 P.2d 840 (1968):
". . . Our interpretation, then, must approach the statute from the standpoint that the legislature, in enacting the statute, fully intended to secure to the state the numerous benefits thought to derive from publicly announced competitive bidding."
See, also,Edwards v. City of Renton, 67 Wn.2d 598, 602, 603, 409 P.2d 153 (1965).
3/And something other than the similar phrase "materials, supplies and equipment" used earlier in the statute. See, footnote 1,supra.
4/Cf., RCW 50.04.100, the successor to § 9 of that enactment.
5/It is true that § 2 of the unemployment compensation act stated that the provisions of the act were to ". . . be liberally construed. . . ." (Cf., RCW 50.01.010), nevertheless we have shown that a like rule of construction is applicable in this state with regard to matters within the purview of the bidding statutes. See, pp. 2-3,supra; especially the text at note 2,supra.
6/Along with whatever incidental services by way of inspection of city or town property for accident hazards, etc., as are customarily provided by insurance carriers.
7/In thus reviewing the matter, we might further suggest that even if the legislature should determine to retain the critical "purchase of . . . services" phraseology in RCW 35.23.352, supra, it might want to consider some clarification as to the meaning of this phraseology in connection with ordinary municipal employment contracts. Arguably, giving the phrase "purchase of . . . services" a broad and literal meaning, the result could be reached that all employment contracts entered into by a second, third or fourth class city or town, for compensation to exceed $2,000, would be subject to the bidding provisions of the statute. We do not believe it likely that this result would be reached either by this office or by a court of this state were the question squarely presented. The statutory terminology relates to the "purchase of . . . services," and ordinary municipal employment contracts are not, we think, usually regarded as involving a "purchase." (See, 42 Am.Jur., Public Officers § 2, p. 880.) Rather, we think that the verb "purchase" is suggestive of the relationship of employer and independent contractor, and not that of employer and employee. However, a clarifying amendment would undoubtedly be helpful in this regard, and we would be happy to assist you in its preparation should you so request.