Case Information
*1 The Attorney General of Texas February 8, 1982 MARK WHITE
Attorney General opinion No. w-440
Supreme Court Bullding Executive Director P. 0. BOX 12549 State Purchasing and General Re: Authority state Austin. TX. 79711 Services Commission Purchasing and General 512/475-2501 Telex 9101974.1367 L.B.J. State Office Building Services Commission to award Telecopier 512/475.0266 Austin, Texas 78711 contracts on competitive pro-
posals rather than competitive 1907 Main St.. Suite 1400 Dallas, TX. 75201 Dear Mr. Foerster: bids
You advise in October 1980. the State Purchasing and General
4924 Alberta Ave.. Suite 160 Services Commission received the Report the Operational Audit El Paso, TX. 79905 Committee of the Governor's Budget and Planning Office recommending that your commission "employ sealed proposal method as an alternative bidding, particularly when 1220 Dallas Ave., Suite 202 factors'other than acquisition price are important." The commission Houston. TX. 77002 requests our nconcurrence" that this method is permitted under article 7131650-0%6 3 of article 601b, V.T.C.S. 806 Broadway. Suite 312 Article 6Olb. section 3.10 states: Lubbock. TX. 79401 SOSi747.5238 In purchasing supplies, materials, services, and commission may "se, but is not
equipment 4309 N. Tenth, Suite S the contract purchase procedure, limited to, McAllan, TX. 79501 multiple award contract procedure, and the open 5121092-4547 market purchase procedure. The commission shall
have the authority to combine orders in a system of schedule purchasing, and it shall at all times 200 Main Plaza, Suite 400 San Antonio, TX. 78205 in bulk. All try to benefit from purchasing 512/225-4191 purchases and contracts supplies,
materials, services, and equipment shall, except as provided herein, be based whenever possible on An Equal OpportunityI bids. (Emphasis added). Attirmative Action Employel The "contract purchase procedure" and "open market purchase procedure" are both described in detail by subsequent sections. Id. OP3.11, 3.12. Section 3.10 does not require to G either procedure to the exclusion of other procedures, but it does require that all purchases and contracts shall (except as therein provided) be based on competitive "whenever possible." The exceptions provided therein are few. As amended in 1981, section 3.08(a) 601b provides that competitive bidding is not required for state agency purchases of $100 or less (or of $500 or if the commission should so prescribe by rule). See V.T.C.S. less art. 601b. 13, Acts 1981. 67th Leg., ch. 546, at 226c Although certain required preferences affect the selection of the “lowest,and best bid,” see article 601b. sections 3.20, 3.28, V.T.C.S., the only other exemp& provided by article 601b from the competitive bidding requirement is an exemption for blind-made products found in section 3.22. With those exceptions, the commission is to make purchases on bids “whenever possible.”
As noted in Texas Highway Commission v. Texas Association of Steel Importers, Inc., 372 S.W.2d 525, 527 (Tex. 1963):
Competitive bidding... contemplates a bidding on the same undertaking upon each of the same material items covered by the contract; upon the same thing. It requires that all bidders be placed upon the same plane of equality and that they each bid upon the same terms and conditions involved in all the items and parts the contract, and that the proposal specify as to all the same, or substantially similar specifications. Its purpose is stimulate competition, prevent favoritism and secure the best work and materials at the lowest practicable price.. . . There can be no competitive bidding $J a legal sense where the terms of the letting the prevent or restrict competition, favor a contractor or materialman, or increase cost the work or of the materials or other items going into the project. (Emphasis added).
See also Sterrett v. Bell, 240 S.W.2d 516, 520 (Tex. Civ. App. - Dallas 1951, no writ); Attorney General Opinion B-24
A “bid” is an offer to contract, and an invitation for bids is merely a solicitation of such offers. See A 6 A Construction Company, Inc. v. City of Corpus Christi, 527 =.2d (Tex. Civ. App. - Corpus Christ1 1975, no writ); Lane and Nearn v. Warren, 115 S.W. 903 (Tex. Civ. App. 1909, writ ref’d). In law of contracts, a “proposal” is also an offer. Daugherty v. Missouri-Kansas-Texas Railroad Company of Texas, 221 S.W.Zd 928 (Tex. Civ. App. - Austin 1949. no writ). Thus, the term “competitive proposals” does not itself signify a procedure different that-of-“competitive bids.” &om As you describe the proposed procedure, however, and as it delineated rules contemplates, it does not provide for competitive in a legal sense.
You advise that “competitive sealed proposals” is a method of procurement included in the “Model Procurement Code for State and Local Governments” section (1979), developed by the American Bar Association statutory adoption, and we note rules proposed by the commission closely resemble the suggested statutory provisions and accompanying commentary the American Bar Association. The suggested code has not been adopted by the Texas Legislature, however. and we do not think the commission can implement it by rule. In exercising its rule making power, the commission may not act contrary to the expressed statutory purposes; must act consistently with and in furtherance of those purposes. See The code provisions, x Attorney General Opinion MW-332 interpreted by the commission’s proposed rules, are with requirements 601b, V.T.C.S.
The inconsistency is succinctly pointed out by the portion of the contemplated rules discussing the use “competitive sealed proposals.” It states:
The competitive sealed proposals method differs from competitive sealed bidding in two important ways:
(I) it permits discussions with competing vendors and changes their proposals including price; and
(ii) it allows comparative judgmental evaluations to be made when selecting among acceptable proposals for award of the contract.
Again the proposed rules state:
An important difference between competitive sealed proposals and competitive sealed bidding finality of the initial offers. Under competitive sealed proposals, alterations in the nature of a proposal, and in prices, may be made after proposals are opened. Such changes are not allowed, however, under
bi.dding. In Nile6 v. Harris County Fresh Water Supply District No. lA, 336 S.W.2d 637, 637 (Tex. Civ. App. - Waco 1960, writ ref’d), governmental body invited for a sewage treatment plant and other facilities, the notice to bidders stating that plans, specifications and bid documents would be furnished, but that “the bid and other data submitted by bidders will form the basis for negotiations of a for all or part” of the work described. After negotiations *4 Mr. Homer A. Foerster
with the low bidder resulted in a number of alterations the original bid documents, a contract between the governmental district and the bidder was signed. The court held that the statute by which fresh water supply district was governed required the bidding, the prime purpose of such a statute is to stimulate competition, that compliance with such statutes is mandatory, and that the contract was illegal because the proposal for which competitive bids were called was not substantially similar to the contract executed, nor was there substantial compliance with the statute. See Attorney General Opinion MW-296 (1981). See also Attorney Gene= Opinions NW-299 (1981); MW-91 (1979). The procedure followed by the fresh water supply district in the Nile6 case was somewhat similar to the “competitive sealed proposals method” suggested the commission’s proposed rules and the American Bar Association’s Model Code. Such a method with
reauirement article 601b. V.T.C.S.. which anolies “whenever .‘I See Headlee v. Fryer, 208 S.W.il3 (Tex. <ii. App. - Dallas possible 1919, writ d=‘d). Cf. V.T.C.S. art. 2368a; Overstreet v. Houston County, 365 S.W.2d 4OF(Tex. Civ. App. - Houston 1963, writ ref’d n.r.e.) (statute authorized changes).
The use of the term “whenever possible” leaves little to the discretion of the commission. It means that purchases are to be made on competitive bids unless in the particular circumstance it is not Possible to do so. See Rogers v. Department of Civil Service, A.Zd 894 (N.J. 1955), Although there may be instances in which commission may properly determine that a purchase on competitive is not possible, the controlling principle is that purchases are to be made on a competitive bids basis. Cf. V.T.C.S. art. 601b, (emergency purchases). The commission’ proposed rules would permit the use of the “competitive proposals method” whenever it considered the use of competitive bids either “not practicible” or “not advantageous.” Those terms, as defined by the proposed rules, are not the substantial equivalents of “whenever possible” ss used by the legislature in article 601b. Cf. Attorney General Opinion NW-310 (1981) (commission may promulgate % possible” rules).
Of course, commission is not prohibited from soliciting information or proposals which it may wish later to incorporate plans and specifications submitted to prospective bidders regarding a contract thereafter to be submitted to competitive bids, cf. article 6252-11~. V.T.C.S. (private consultants), but it may notcall proposals and then negotiate a different contract with the preferred contractor instead submitting finally proposed unrestricted bidding. Texas Highway Commission v. Texas Association of Steel Importers, s; Headlee v. Fryer, supra. See - also Attorney General Opinions MW-139 (1980); H-972 *5 . Hr. Homer A. Foerster (Mu-440) *, *
SUMMARY The "competitive sealed proposals method" of procurement as described Is with the bidding requirements 601b, V.T.C.S., and. whenever
possible, proposal method may not be used by the State Purchasing and General Services Commission lieu of a competitive bidding procedure.
Very truly yours, WHITE Attorney General of Texas JOHN W. FAINTER. JR.
First Assistant Attorney General
RICHARD E. GRAY III
Executive Assistant Attorney General
Prepared by Bruce Youngblood
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Susan L. Garrison, Chairman
Robert Gauss
Rick Gllpin
Bruce Youngblood