OFFICES AND OFFICERS ‑- STATE ‑- DIRECTOR OF GENERAL ADMINISTRATION ‑- VOLUME PURCHASES OF INSURANCE AND FAITHFUL PERFORMANCE BONDS ‑- DETERMINATION AND PLACEMENT ‑- DELEGATION OF AUTHORITY.
The administrative discretion vested in the director of general administration with respect to method to be used for satisfying the state's need for insurance and public official bonds under RCW 43.19.1935, may not be delegated to a private insurance agent, broker or association.
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December 6, 1965
Honorable Wm. E. Schneider
Director, Department of General Administration
218 General Administration Building
Cite as: AGO 65-66 No. 54
You have asked for the advice of this office regarding the following question:
"Can the state, under the provisions of Chapter 178, Laws of 1959, assign to a private insurance agent, broker or association the determination of and placement of the state's requirements for volume purchases of insurance and faithful performance bonds?"
We answer this question in the negative for the reasons set forth below.
The procurement of insurance and public official bonds on a volume rate basis has been delegated to the director of general administration through the division of purchasing.
RCW 43.19.1935 provides in part as follows:
"As a means of providing for the procurement of insurance and public official bonds on a volume rate basis, the director of general administration through the division of purchasing shall [[Orig. Op. Page 2]] purchase or contract for the needs of state agencies in relation to all such insurance and public official bonds: . . ."
The purchase of insurance is, as are other state purchases, subject to RCW 43.19.1906. This statute provides:
"Insofar as practicable, all purchases and sales shall be based on competitive bids and a formal sealed bid procedure shall be used as standard procedure for all purchases and contracts for purchases and sales executed by the director of general administration through the division of purchasing and under the powers granted by RCW 43.19.190 through 43.19.1939: Provided, That sealed competitive bidding shall not be necessary for:
"(1) Emergency purchases if such sealed bidding procedure would prevent or hinder the emergency from being met appropriately; and
"(2) Purchases not exceeding five hundred dollars but in all such purchases quotations shall be secured from enough vendors to assure establishment of a competitive price; and
"(3) Purchases which are clearly and legitimately limited to a single source of supply and purchases involving special facilities, services or market conditions, in which instances the purchase price may be best established by direct negotiation."
In this statute, the legislature has provided for purchasing on competitive bidding utilizing formal sealed bid procedures, as standard procedure, and also provided for purchases through private negotiations in certain cases.
Even assuming that the purchase of insurance falls under one or more of the permissible exceptions, a delegation of the entire matter of such purchasing to a private person or firm rather than exercising discretion in individual cases may result in a violation of the bid law. See, AGO 61-62 No. 41 [[to Prosecuting Attorney, Franklin County on June 26, 1961]], a copy of which is enclosed. Furthermore, in the matter of purchasing, the statutes delegate to the director of general administration powers which, in our opinion, may not be delegated to such person or firm.
[[Orig. Op. Page 3]]
Under RCW 43.19.1908 when competitive bidding is utilized notice is given to the public generally and notices are mailed to bidders who have qualified by application to the division of purchasing. Bids may also be solicited from other sources deemed to be advantageous to the state.
RCW 43.19.1911 next provides as follows:
"When purchases are made through competitive bidding, the contract shall be let to the lowest responsible bidder, subject to any preferences provided by law to Washington products and vendors, taking into consideration the quality of the articles proposed to be supplied, their conformity with specifications, the purposes for which required, and the times of delivery: Provided, That whenever there is reason to believe that the lowest acceptable bid is not the best price obtainable, all bids may be rejected and the division of purchasing may call for new bids or enter into direct negotiations to achieve the best possible price. . . . In determining 'lowest responsible bidder' in addition to price, the following elements shall be given consideration:
"(1) The ability, capacity and skill of the bidder to perform the contract or provide the service required;
"(2) The character, integrity, reputation, judgment, experience and efficiency of the bidder;
"(3) Whether the bidder can perform the contract within the time specified;
"(4) The quality of performance of previous contracts or services;
"(5) The previous and existing compliance by the bidder with laws relating to the contract or services;
"(6) Such other information as may be secured having a bearing on the decision to award the contract."
[[Orig. Op. Page 4]]
Applying the statutes cited above to the purchase of insurance, the following steps are contemplated, among others:
1. Determination as to insurance needs;
2. Determination as to the necessity for competitive bidding, or whether one or more of the statutory exceptions is applicable and if so, whether the exception should be utilized;
3. When competitive bidding is used, a determination as to the extent that the state's bid invitations should be extended in each case;
4. Determination as to the relative qualities of the bids and whether the best price could be obtained through acceptance of any of the bids;
5. If in the director's judgment the best obtainable price has not been obtained, a decision whether to obtain new bids or to negotiate.
Every step requires a certain measure of sound judgment on the part of the officer or person responsible. Therefore, it must be said that all purchases under RCW 43.19.1906 require the exercise of administrative discretion. The administrative discretion in purchasing has been vested ultimately in the director of general administration.
It is a general rule that the exercise of administrative discretion may not be delegated. In 42 Am.Jur., Public Administrative Law, § 73, this rule is stated as follows:
"It is a general principle of law, expressed in the maxim 'delegatus non potest delegare,' that a delegated power may not be further delegated by the person to whom such power is delegated. Apart from statute, whether administrative officers in whom certain powers are vested or upon whom certain duties are imposed may deputize others to exercise such powers or perform such duties usually depends upon whether the particular act or duty sought to be delegated is ministerial, on the one hand, or, on the other, discretionary or quasi-judicial. Merely ministerial functions may be delegated to assistants whose employment is authorized, but there is no authority to delegate acts discretionary or quasi-judicial in nature. . . ."
[[Orig. Op. Page 5]]
Our court approvingly cited this rule in In re Puget Sound Pilots Ass'n., 63 Wn.2d 142, 385 P.2d 711 (1963) at page 145. In Ledgering v. State, 63 Wn.2d 94, 385 P.2d 522 (1963), our court likewise upheld the rule that when the legislature has vested discretionary power in an officer, such responsibility is vested exclusively in such officer. See, also,Roehl v. Public Utility Dist. No. 1, 43 Wn.2d 214, 261 P.2d 92 (1953), at page 240.
We conclude therefore that purchases of the state insurance requirements, whether such purchases be made by direct negotiation or by competitive bidding, require the exercise of administrative discretion. And since the exercise of this discretion has been vested exclusively by the legislature in the director of general administration, such discretion may not legally be delegated to a private insurance agent, broker or association.
We trust the foregoing will be of assistance to you.
Very truly yours,
JOHN J. O'CONNELL
Assistant Attorney General