Request By:
Mr. William S. O'Daniel
Commissioner
Department for Local Government
909 Leawood Drive
Frankfort, Kentucky
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
Your department has received an Area Development Fund application from Barren-Metcalfe Counties Ambulance Service to retire a debt owed to Barren County since October, 1978, for purchase of two ambulances. There is some doubt that the ambulances were purchased in accordance with KRS 424.260.
KRS 42.350(2)(f) provides in part that money in the fund may be used to retire a mortgage or other indebtedness emcumbering an eligible capital project made on and after January 1, 1977 . . . . See alos KRS 42.355 as to the role of your department in the examination and approval of such projects.
You ask whether your department is required to review and certify that the capital project was advertised and awarded according to statute at the time of acquisition or purchase, or whether you are merely required to establish the existence of the debt for the stated capital purpose.
The key phrase here is "encumbering an eligible capital project. " (Emphasis added). Although KRS 424.260 is not mentioned in KRS 42.345 et seq., implicit in such statutes is the concept that a mandatory law applicable to procuring of personal property [see KRS 42.350(2)(c), "major items of equipment"] must be complied with. A statutory requirement of competitive bidding in the letting of public contracts is mandatory, and nonobservance renders the contract void.
Board of Education of Floyd County v. Hall, Ky., 353 S.W.2d 194 (1962) 195.
If the ambulances were of such cost as to require advertised bids under KRS 424.260, then their purchase without competitive bidding made the whole transaction void.
We are of the opinion that your department could not approve the proposed expenditure, since you are not able to certify, inter alia, that the proposed project is an eligible capital project for the simple reason that the property in question was acquired under a void transaction. The certification of merely the existence of the debt, without any reference to the legitimacy of the acquisition of the property, would indeed be putting a blinder on the real truth. Such a "house" cannot be constructed on such void and shifting sands.