Request By:
L. Marion Oliver, Esq.
Oliver Building
Berea, Kentucky 40403
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in reply to your letter asking whether the City of Berea is required to advertise and let its insurance on a bid or whether it is possible to renew its policy through its present agent without submitting a bid.
KRS 424.260 provides in part that except where a statute specifically fixes a larger sum as the minimum for a requirement of advertisement for bids, no city may make a contract, lease, or other agreement for materials, supplies or equipment, or for contractual services other than professional, involving an expenditure of more than $2500 without first making newspaper advertisement for bids.
Although this office, over the years, has rendered numerous opinions on the general subject of whether insurance contracts involve a "professional" service so as to be excluded from the bidding requirements, it was not until this year that the question was specifically dealt with by an appellate court in Kentucky. We direct your attention to McCloud v. City of Cadiz, Ky. App., 548 S.W.2d 158, 162 (1977), where the Court said in part as follows:
". . . KRS 424.260 provides, in effect, that no city may make a contract for materials, supplies or equipment, or for contractual services other than professional, involving an expenditure of more than $2500.00 without first making newspaper advertisement for bids. Appellees argue that banking and insurance are not the kinds of contractual services contemplated by KRS 424.260. Citing an attorney general opinion as authority, appellees claim that the contractual services covered by KRS 424.260 are those involving personal service of a manual or mechanical nature. This court is in agreement with that conclusion. In addition, the generally uniform rates involved in both banking and insurance as well as the professional nature of these activities support the conclusion that the City of Cadiz was not required to comply with KRS 424.260 before securing these services."
Therefore, on the authority of the recent case of McCloud v. City of Cadiz, supra, a city may obtain insurance coverage without complying with the provisions of KRS 424.260 requiring newspaper advertisement for bids before a city makes a contract involving an expenditure exceeding $2500. See also OAG 77-518, copy enclosed, at page two.