Mr. Mike Moses Commissioner of Education Texas Education Agency 1701 North Congress Avenue Austin, Texas 78701-1494
Re: Whether section
Dear Commissioner Moses:
You request this office to reconsider Attorney General Opinion
In Attorney General Opinion
At the time this office issued Attorney General Opinion
(a) Except as provided in this section, all contracts proposed to be made by any Texas public school board for the purchase of any personal property, except produce or vehicle fuel, shall be submitted to competitive bidding for each 12-month period when said property is valued at $25,000 or more, in the aggregate for each 12-month period.
(b) Except as provided in Subsection (e) of this section, all contracts proposed to be made by any Texas public school board for the construction, maintenance, repair or renovation of any building shall be submitted to competitive bidding when said contracts are valued at more than $15,000. . . .
(c) Nothing in this section shall apply to fees received for professional services rendered, including but not limited to architect[']s fees, attorney's fees, and fees for fiscal agents.
Subsequent to the issuance of Attorney General Opinion
(a) Except as provided by this section, all school district contracts, except contracts for the purchase of produce or vehicle fuel, valued at $25,000 or more in the aggregate for each 12-month period shall be made by the method, of the following methods, that provides the best value to the district:
(1) competitive bidding;
(2) competitive sealed proposals;
(3) a request for proposals;
(4) a catalogue purchase as provided by Subchapter B, Chapter 2157, Government Code;1
(5) an interlocal contract;2 or (6) a design/build contract.3
(b) In determining to whom to award a contract, the district may consider;
(1) the purchase price;
(2) the reputation of the vendor and of the vendor's goods or services;
(3) the quality of the vendor's goods or services;
(4) the extent to which the goods or services meet the district's needs;
(5) the vendor's past relationship with the district;
(6) the impact on the ability of the district to comply with laws and rules relating to historically underutilized businesses;
(7) the total long-term cost to the district to acquire the vendor's goods or services; and (8) any other relevant factor that a private business entity would consider in selecting a vendor.
(c) The state auditor may audit purchases of goods or services by the district.
(d) The district may adopt rules and procedures for the acquisition of goods or services.
(e) To the extent of any conflict, this section prevails over any other law relating to the purchasing of goods and services except a law relating to contracting with historically underutilized businesses.
(f) This section does not apply to fees received for professional services rendered, including architect's fees, attorney's fees, and fees for fiscal agents. [Footnotes added.]
Thus, section 44.031 "[s]ets forth methods by which all school district contracts shall be made, except contracts for the purchase of produce or vehicle fuel, valued at $25,000 or more in the aggregate for each 12-month period." Senate Research Center, Bill Analysis 176, S.B. 1, 74th Leg., R.S. (1995). Also, fees received for professional services rendered are not subject to section 44.031. Educ. Code §
We found nothing in the legislative history explaining the legislature's motivation for altering schools' purchasing procedures.4 We believe the revision is consistent with one of the primary purposes of Senate Bill 1, however, which was to allow more local control over schools. See Education for Tomorrow: The Public Schools Reform Act of 1995 at 1 (explaining that S.B. 1 proposes to rein in powers of State Board of Education), 2 (explaining that S.B. 1 proposes to establish regional education service centers), 6 (explaining that S.B. 1 would allow local school districts, rather than State Board of Education, to adopt textbooks) (available in bill file). We deduce, therefore, that the legislature wanted each local school district to have more control over the means by which the school district awards contracts. Although section 44.031 now allows a school district flexibility to select the means it will use to award a particular contract from the list in subsection (a), the school district always must have as its goal obtaining the best value for the school district. See Educ. Code §
Section 44.031 prevails over Attorney General Opinion
Whether a contract for the purchase of insurance is a contract to purchase personal property no longer matters in the context of section 44.031. Under section
You first ask whether Attorney General Opinion
You next ask whether Attorney General Opinion
A multi-year contract must, however, contain a clause retaining to the school board "the continuing right to terminate at the expiration of each budget period of the [school district] during the term of the contract . . . ." Id. § 271.903(a); see id. § 271.903(b) (defining "local government" to include school district). In the alternative, the school board may condition the contract on "a best efforts attempt by [the school board] to obtain and appropriate funds for payment of the contract . . . ." Id. § 271.903(a). The school board also may include both provisions in the contract, providing the school district a continuing right to terminate and conditioning the contract on the school board's best efforts to appropriate funding. Id.
Third, you ask whether a school district may, under section
Section 44.033 provides in pertinent part as follows:
(a) A school district shall purchase personal property as provided by this section if the value of the items is at least $10,000 but less than $25,000, in the aggregate, for a 12-month period. In the alternative, the school district may purchase those items in accordance with Sections [sic] 44.031(a) and (b).
(b) For each 12-month period, the district shall publish a notice in two successive issues of any newspaper of general circulation in the county in which the school is located. If there is no newspaper in the county in which the school is located, the advertising shall be published in a newspaper in the county nearest the county seat of the county in which the school is located, specifying the categories of personal property to be purchased under this section and soliciting the names . . . of vendors that are interested in supplying any of the categories to the district. For each category, the district shall create a vendor list consisting of each vendor that responds to the published notice and any additional vendors the district elects to include.
(c) Before the district makes a purchase from a category of personal property, the district must obtain written or telephone price quotations from at least three vendors from the list for that category . . . . The purchase shall be made from the lowest responsible bidder.
We find nothing in section 44.033 prohibiting a school district from entering a contract for the purchase of insurance with a duration longer than twelve months. But see Local Gov't Code §
If the school district enters a multi-year contract, it must comply with section
Your fourth question causes us to consider the value requirement articulated in sections 44.031(a) and 44.033(a). You ask whether a school district must aggregate different types of insurance, e.g., workers' compensation insurance and health insurance, to determine the value, for purposes of ascertaining the methods the school district may use to purchase the insurance. You also ask whether a school district may assume that it need not aggregate coverage in different "lines" of insurance, as defined by rule of the commissioner of insurance, for purposes of section 44.031(a) and section 44.033(a). You ask whether a school district must aggregate insurance coverage under different types of insurance if the coverage is available under a single contract in the local market.
You do not indicate any particular rule of the commissioner of insurance that defines "lines" of insurance. We note that the Department of Insurance has, in its rules, categorized the various types of insurance as follows: life, accident, and health insurance, see 28 T.A.C. ch. 3; property and casualty insurance, see id. ch. 5; title insurance, see id. ch. 9; surplus lines insurance, see id. ch. 15; and prepaid legal service, see id. ch. 23. We understand you to inquire whether, for purposes of determining the value of a contract, a school district may consider, for example, the value of its health insurance coverage separately from the value of its property insurance coverage, its workers' compensation coverage, or its life insurance coverage. We believe the answer to your question lies in the phrase "in the aggregate" in sections 44.031(a) and 44.033(a).
The Education Code does not define either the phrase "in the aggregate" or the term "aggregate"; nor do we find a definition elsewhere in state law. In common usage, see Gov't Code §
Section 44.031(a) provides that, in general, a school district must use one of the specified purchasing methods to contract for anything, except professional services, vehicle fuel, or produce, "valued at $25,000 or more in the aggregate for each 12-month period . . . ." Clearly, the school district need not add together the value of all of the contracts it proposes to execute during a 12-month period. If it did, a school district always would cross the $25,000 line and have to award all of its contracts in accordance with section 44.031(a). On the other hand, we believe the phrase "in the aggregate" in section
Section
As you suggest, whether a school district may aggregate different insurance coverages may depend upon the local market; the question also may depend upon the types of coverage involved, the size or location of the school district, and other factors that we are unable to predict. Possibly, one school district would normally contract to purchase certain products together, while another school district normally would not contract to purchase the same products together.
Again, the statute expressly requires a school district to consider the aggregate value of certain contracts to be executed in a twelve-month period only in reference to determining whether the school district must use one of the methods listed in section
In your final question you ask whether the services of a third-party administrator who is licensed under Insurance Code article
To become a licensed third-party administrator, a person must obtain a certificate of authority from the commissioner of insurance. Id. § 3(a). In its application for a certificate of authority, an applicant must provide the commissioner with copies of organizational documents, such as the articles of incorporation and bylaws; a description of the administrator; if the applicant is not domiciled in this state, a power of attorney appointing the commissioner as the administrator's attorney; financial audits; and any other information the commissioner requires. Id. § 4; see also
(1) the granting of the application would not violate a federal or state law;(2) the financial condition of an administrator applicant or those persons who would operate or control an administrator applicant are such that the granting of a certificate of authority would not be adverse to the public interest;
(3) the applicant has not attempted through fraud or bad faith to obtain the certificate of authority;
(4) the applicant has complied with this article and rules adopted by the board under this article; and
(5) the name under which the applicant will conduct business in this state is not so similar to that of another administrator or insurer that it is likely to mislead the public.
Ins. Code art.
Once the commissioner of insurance has approved an application for a certificate of authority, the third-party administrator must obtain and maintain a fidelity bond. Id. § 6(a); see also
The opinion then considered the nature of professional services. As the opinion noted, this office previously defined professional services to include any member of a discipline "requiring special knowledge or attainment and a high order of learning, skill, and intelligence." Id. (quoting Attorney General Opinion
We believe the conclusion reached in Attorney General Opinion
In Attorney General Opinion
According to Attorney General Opinion
Finally, [Attorney General Opinion
Attorney General Opinion
Furthermore, this office generally abstains from determining whether a particular service is a professional service for purposes of a statute other than the Professional Services Procurement Act, V.T.C.S. art. 664-4, because of the fact-based nature of such a determination. See, e.g., Attorney General Opinions
Of course, except for the professional services listed in the Professional Services Procurement Act, V.T.C.S. art. 664-4, a school district may contract for professional services using any appropriate method listed in section
You ask whether "reinsurance procurement duties" included in a claims administration contract with a licensed third-party administrator are professional services for purposes of section
You ask whether a school board must award, in accordance with section
To the extent Attorney General Opinion
Neither section
Nothing in section
The requirement in sections
To the extent "reinsurance procurement duties" consist of pricing and acquiring, on behalf of a school district, reinsurance for the school district's self-insurance fund, such duties are not professional services.
To the extent that a contract, valued at $25,000 or more in the aggregate for a twelve-month period, is for anything other than professional services, produce, or vehicle fuel, a school district must award it using the one method among the six listed in section
Yours very truly,
DAN MORALES Attorney General of TexasJORGE VEGA First Assistant Attorney General
SARAH J. SHIRLEY Chair, Opinion Committee
Prepared by Kymberly K. Oltrogge Assistant Attorney General
A state agency may purchase or lease an automated information system directly from a qualified information systems vendor. Id. § 2157.063(a). The purchase or lease must, however, be the "best value available." Id. A local government, such as a school district, may avail itself of the catalogue purchase procedure if the local government qualifies for cooperative purchasing under Local Government Code sections 271.082 and 271.083. Id. § 2157.067(a).
The term "political subdivision" includes "any corporate and political entity organized under state law." Id. § 791.003(5). A local government that is a party to an interlocal cooperation contract also may contract with a state agency, as defined by section
Parties may enter an interlocal contract only for one of two purposes: (1) [to] study the feasibility of the performance of a governmental function or service by an interlocal contract; or
(2) [to] provide a governmental function or service that each party to the contract is authorized to perform individually.
Id. § 791.011(c). Thus, no party to an interlocal contract may perform a function or service that is inconsistent with the authority of any party to the contract.
§§ 44.031 [21.901]. CONTRACTS — COMPETITIVE BIDDING. (a) Except as provided by [in] this section, all contracts proposed to be made by the [any Texas public school] board of trustees of a school district for the purchase of any personal property, except produce or vehicle fuel, must [shall] be submitted to competitive bidding for each 12-month period when the [said] property is valued at $25,000 or more, in the aggregate for each 12-month period.(b) Except as provided by [
in] Subsection (e) [of this section], all contracts proposed to be made by the [any Texas public school] board of trustees of a school district for the construction, maintenance, repair, or renovation of any building must [shall] be submitted to competitive bidding when the [said] contracts are valued at more than $15,000. In this section, maintenance includes supervision of custodial, plant operations, maintenance, and ground services personnel.(c) This [
Nothing in this] section does not [shall] apply to fees received for professional services rendered, including [but notlimited to] architects [sic] fees, attorney's fees, and fees for fiscal agents.
S.B. 1, 74th Leg., R.S. (1995) (as introduced).
The Senate Committee on Education amended subsection (b), the provision requiring the board of trustees of a school district to competitively bid a contract for the construction, maintenance, repair, or renovation of a building, by adding a provision permitting a board to award the contract "by the method that provides the best value to the district." The amendment provided a nonexclusive list of five different methods a board might use: competitive bidding; competitive sealed proposals; catalogue purchase; a group purchasing program; or an open market contract. The amendment further listed those factors a board must consider in determining the best value to the district. The committee did not amend subsection (a), pertaining to contracts for the purchase of personal property generally. The full Senate approved the committee substitute for subsection (b) without amendment.
The House Committee on Public Education clarified subsection (b) by deleting the competitive bidding requirement, thus permitting a school district to contract for the construction, maintenance, repair, or renovation of a building by using the one of five listed methods that provides the best value to the district. The five listed methods were substantially the same as the five listed in the Senate's version of the bill.
The conference committee amended section 44.031 to the form in which the legislature finally passed it. Both the Senate and the House of Representatives passed a resolution noting that the conference committee had amended section 44.031 differently from either the previous senate or house version of the bill. See S.R. 1258, 74th Leg., R.S. (1995); H.R. 1145, 74th Leg., R.S. (1995). Each resolution explained that the revisions were necessary to "clarify the manner in which school district[s] can make purchases of personal property and to impose consistent restrictions on purchases of personal property and certain buildings contracts made in relation to buildings." S.R. 1258, 74th Leg., R.S., 65 (1995).