Request By:
Mr. Gene Archbold
Executive Director
Northern Kentucky Area Development District
7505 Sussex Drive
Florence, Kentucky 41042
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
The Northern Kentucky Area Development District requests our opinion concerning purchasing procedures for cities of the second through sixth class. It is the desire of the cities of Kenton County to cooperate in the bidding and purchasing of materials and supplies.
Question No. 1:
"Are cities relieved of the individual requirement, pursuant to KRS Chapter 424.260, to have a newspaper advertisement for bids for any purchase over $2,500 if such a bid is prepared and issued on their behalf by another municipality? This 'cooperative bidding' appears consistent with KRS Chapter 45.365 which allows cities to utilize bids issued by the Commonwealth's Department of Finance and Administration."
KRS 45.365 permits any Kentucky city to purchase materials and supplies under a state price contract without the city's advertising for bids, provided that the price contract was obtained by the Executive Department for Finance and Administration through competitive bidding or provided that the state contract was negotiated as provided in KRS 45.360(2) [negotiated contract with vendors maintaining a general service administration price agreement]. There is nothing in KRS 45.365 which would authorize cities to "pool their requirements" and procure a price contract by acting jointly.
The cities in question, and including Kenton County, could use KRS 79.010, et seq., in forming a single compact for purchasing. See KRS 79.030 as concerns a city-county commission for such purpose. A merit system mentioned in KRS 79.050(2) would appear to be optional with the parties to the compact. The commission must appoint a comptroller who would have full charge of the procurement of supplies for the members of the compact. Of course the comptroller would have to follow bidding procedure as covered in KRS 424.260. Also see KRS 79.060(2). Under such a joint arrangement, the individual member cities as such would not apply KRS 424.260 in connection with purchases for the compact.
It is also our opinion that the Kenton County cities may enter into an interlocal cooperation agreement, pursuant to KRS 65.210 et seq., for the purpose of enjoying the benefits of mass purchasing at lower costs to the taxpayers. KRS 65.240 permits cities to do jointly what they can legally do singly. Of course the requirements of KRS 65.250 must be observed. And the bidding requirements of KRS 424.260 must be followed, except that the cities can create a special administrative entity as their agent in carrying out the purpose of the agreement, or one of the signatory cities can be designated as the agent to carry out the project.
Board of Education of Floyd County v. Hall, Ky., 353 S.W.2d 194 (1962) 195. This would mean, as a practical application of the statute, that the aggregate or combined monetary amount of needed purchases for the cities participating would be the figure in applying KRS 424.260. Here again the individual city members as such would not apply KRS 424.260 in connection with purchases for the members of the agreement. KRS 424.260 is applicable to the combine, since KRS 65.260 provides that no agreement made pursuant to the Interlocal Cooperation Act shall relieve any public agency of any obligation or responsibility imposed upon it by law, etc. Thus the individual cities will use the statute in a collective or joint capacity.
Question No. 2:
"Is it necessary for a city or county to be specifically mentioned in a bid advertised by another city or county to take advantage of the price outlined in that bid? Again, KRS Chapter 45.365 would indicate that this is not necessarily the case."
If the cities form a compact under KRS Chapter 79 or execute an interlocal cooperation agreement to purchase materials and supplies, the commission's comptroller or the agent for the cities, as the case may be, in advertising for bids, should identify the cities which are parties to the compact or agreement as being the real contracting parties and buyers of materials and supplies, even though it is a joint effort.
Question No. 3:
"Is it necessary for a number of cooperating cities to enter into some form of contractual arrangement to 'cooperatively purchase' materials, supplies and equipment under a bid accepted by only one city or county?"
We have covered the matter of a legitimate joint purchasing effort under question no. 1, above. Of course, Kenton County could join such a joint project if the fiscal court desired [Interlocal Cooperation Act, above and KRS 79.010 et seq.].