When a Tennessee school district hires a contractor to build or renovate a school, does the general public-procurement statute for energy services apply, or just the school-construction statute?

Subject

Opinion No. 13-04, Construction or Renovation of Public School Buildings, January 10, 2013

Plain-English summary

The question came from a state senator and dealt with a procurement clash. Tennessee's general public-contracts chapter has a provision, Tenn. Code Ann. § 12-4-115, that says contracts by "counties, cities, metropolitan governments, towns, utility districts and other municipal and public corporations" for "energy-related services that include both engineering services and equipment, and have as their purpose the reduction of energy costs in public facilities," are awarded on the same basis as contracts for professional services, meaning a qualifications-based selection rather than a low-bid auction.

Separately, the education code has its own detailed regime for school construction at Tenn. Code Ann. § 49-2-203. That statute spells out how a local education agency (LEA) must procure school-building construction: either through the local governing body's competitive-bid procedure (if the body has adopted one) or through a default competitive sealed-bid process with a $10,000 floor. It also sets out separate rules for "construction management services" treated as professional services.

The senator wanted to know which statute controlled when an LEA's school project also involved energy-saving features. The AG answered that § 49-2-203 controlled. The reasoning had two layers. First, there was real doubt whether an LEA was even within the class of entities ("municipal and public corporations") covered by § 12-4-115. Tennessee case law had reached different conclusions in different contexts about whether a school district counted as a municipal corporation. Second, even if an LEA fell within § 12-4-115, the specific-over-general canon would have made § 49-2-203 control. The opinion cited Keough v. State for the long-standing rule that a special statute prevails over a more general one.

The answer to the senator's follow-up was the same. The result did not turn on which procurement subroutine the LEA chose under § 49-2-203 (local governing body's procedure, the default competitive-bid procedure, or the construction-management-services framework). Section 49-2-203 was the governing statute either way.

Currency note

This opinion was issued in 2013. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Both § 49-2-203 (school district procurement) and § 12-4-115 (public contracts for energy-related services) have been amended multiple times. Anyone working out the current procurement path for a school energy retrofit should pull the current text of both statutes and check whether the legislature has added a cross-reference or carved out energy-performance contracts in some new way.

Background and statutory framework

Tenn. Code Ann. § 49-2-203 was, and is, the basic school-construction procurement statute. Subsection (a)(3)(C) gave LEAs a choice: follow the procurement procedure of the local governing body (if that body had adopted one by charter, private act, or ordinance that provided for advertisement and competitive bidding), or follow a default process of open competitive bids on contracts over $10,000 with at least 10 days' advance public notice and award to "the lowest and best bidder." Construction management services for a fee were deemed professional services under subsection (a)(3)(C)(ii) and were procured through a written request for proposals, with the contract going to "the best qualified and responsive proposer." Cost could not be the sole criterion.

Tenn. Code Ann. § 12-4-115, by contrast, was a niche provision targeting energy performance contracting by local governments. Its operative language read:

Contracts by counties, cities, metropolitan governments, towns, utility districts and other municipal and public corporations of this state for energy-related services that include both engineering services and equipment, and have as their purpose the reduction of energy costs in public facilities, shall be awarded on the same basis as contracts for professional services.

The opinion observed that Tennessee case law had been mixed on whether a school district counted as a "municipal" or "public corporation." Breeding v. Williams called a school district "a public institution in the nature of a municipal or a quasi-municipal corporation." Perritt v. Carter held that a special school district was not a "municipality" within the meaning of the Home Rule Amendment. Kee v. Parks and Quinn v. Hester held a school district was not a municipal corporation for taxing purposes. The AG's earlier Opinion 90-51 had observed that whether a school district fits the label "seems to depend on the context."

Even setting that question aside, the AG relied on Keough v. State for the canon that a specific statute prevails over a general one. Section 49-2-203 spoke directly to school-building construction procurement. Section 12-4-115 spoke generally to energy-services procurement by local governments. The more targeted statute governed.

Common questions

Why does it matter which statute applies?

The two regimes produce different procurement processes. Section 49-2-203 generally pushes school construction toward competitive sealed bids with a low-bid-wins default (subject to "lowest and best" judgment). Section 12-4-115 pushed energy-services contracts toward a qualifications-based selection like a professional services contract. A contractor whose value proposition is "we'll save you money on energy over the life of the building, even if our upfront price isn't the lowest bid" has a much easier path under the § 12-4-115 framework than under a strict low-bid process.

Did the AG say LEAs couldn't use professional-services-style selection at all?

No. Section 49-2-203 itself treats "construction management services" as professional services and provides for an RFP-based, qualifications-driven selection. The AG didn't disturb that. The point of the opinion was that the procurement framework lived inside § 49-2-203, not § 12-4-115.

What if a school project was almost entirely an energy-savings retrofit?

The opinion's reasoning still pointed back to § 49-2-203. The AG framed the question as "a contract to construct or renovate a public school," and said any such contract "would be governed by the specific process set forth in Tenn. Code Ann. § 49-2-203," "to the extent" it might include energy-saving services. An LEA wanting an alternative procurement path for a pure energy-performance project would have needed the General Assembly to amend § 49-2-203 or to add a cross-referenced exception.

Did this opinion address the role of the State Building Commission or state contracting rules?

No. The question stayed at the intersection of two specific statutes (§§ 49-2-203 and 12-4-115). General state-procurement rules administered by the Department of General Services and any State Building Commission requirements for state-funded school construction were not in scope.

Did the opinion treat LEAs as municipal corporations?

The AG hedged. It catalogued the conflicting case law, said the answer "seems to depend on the context," and concluded that the question didn't need to be resolved because § 49-2-203 controlled either way. That kind of "assume X and answer doesn't change" framing is common in AG opinions when a definitive characterization isn't necessary.

Citations

• Tenn. Code Ann. § 49-2-203 (LEA powers and duties, including school construction procurement)
• Tenn. Code Ann. § 12-4-115 (general public contracts for energy-related services)
• Tenn. Code Ann. § 62-6-102 (contractor licensing definitions, including "normal architectural and engineering services")
• Keough v. State, 356 S.W.3d 366 (Tenn. 2011) (specific statute prevails over general one)
• Breeding v. Williams, 9 Tenn. App. 335 (1929) (school district as quasi-municipal corporation)
• Perritt v. Carter, 325 S.W.2d 233 (Tenn. 1959) (special school district not a municipality under Home Rule Amendment)
• Kee v. Parks, 283 S.W. 751 (Tenn. 1926) (school district not a municipal corporation for taxing purposes)
• Tenn. Att'y Gen. Op. 90-51 (Apr. 11, 1990) (school district classification depends on context)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2013/op13-004.pdf

Original opinion text

S T A T E O F T E N N E S S E E
OFFICE OF THE
ATTORNEY GENERAL
PO BOX 20207
NASHVILLE, TENNESSEE 37202

January 10, 2013

Opinion No. 13-04

Construction or Renovation of Public School Buildings

QUESTIONS

1. Does Tenn. Code Ann. § 12-4-115 apply to contracts procured by a local education agency for the construction or renovation of public school buildings?

2. Does the answer to the first question depend on the specific procurement process employed by a local education agency for its construction projects?

OPINIONS

1. No.
2. No.

ANALYSIS

1. Pursuant to Tenn. Code Ann. § 49-2-203(a)(3)(C)(i), one of the duties and powers of a local education agency ("LEA") is the "construction of school buildings or additions to existing buildings." Tenn. Code Ann. § 49-2-203(a)(3)(C) also specifically delineates the procedures to be utilized by an LEA regarding the procurement of contracts for the "construction of school buildings or additions to existing buildings." Tenn. Code Ann. § 49-2-203(a)(3) states in relevant part:

(a) It is the duty of the local board of education to:

. . . .

(3) Purchase all supplies, furniture, fixtures and material of every kind through the executive committee;

. . . .

(C)(i) For construction of school buildings or additions to existing buildings, the LEA may follow prescribed procedures of its respective local governing body, so long as that body, through its charter, private act or ordinance has established a procurement procedure that provides for advertisement and competitive bidding. If the LEA chooses not to follow the local governing body's procedure, the board shall contract, following open bids, for the construction of school buildings or additions to existing buildings, the expenditure for which is in excess of ten thousand dollars ($10,000). Public notice shall be given at least ten (10) days in advance of accepting bids for the construction, and the board shall award the contract to the lowest and best bidder. Whether following local governing body procedures or those set forth in this subdivision (a)(3)(C)(i), in the event no bid is within the budgetary limits set by the board for the construction, the board may negotiate with the lowest and best bidder to bring the cost of the construction within the funds available, with the approval of the commissioner of education;

(ii) Construction management services that are provided for a fee and that involve preconstruction and construction administration and management services are deemed to be professional services and may be performed by a qualified person licensed under title 62, chapter 6. Construction management services are to be procured for each project through a written request for proposals process through advertisement made pursuant to subdivision (a)(3)(A). A board may include, in a single written request for proposal process, new school construction or renovation projects at up to three (3) sites, if construction at all sites will occur at substantially the same time. The written request for proposals process will invite prospective proposers to participate and will indicate the service requirements and the factors used for evaluating the proposals. The factors shall include the construction manager's qualifications and experience on similar projects, qualifications of personnel to be assigned to the project, fees and costs or any additional factors deemed relevant by the procuring entity for procurement of the service. Cost is not to be the sole criterion for evaluation. The contract for such services shall be awarded to the best qualified and responsive proposer. A construction manager is prohibited from undertaking actual construction work on a project over which the construction manager coordinates or oversees the planning, bid or construction phases of the project, except in instances where bids have been solicited twice and no bids have been submitted. If the construction manager can document that a good faith effort was made in each bid solicitation to obtain bids and no bids were received, then the construction manager may perform the construction work at a price agreed upon by the construction manager, the architect and the owner of the project. A school system, at its own discretion, may perform work on the project with its own employees, and may include the coordination and oversight of this work as part of the services of the construction manager. Sealed bids for actual construction work shall be opened at the bid opening and the names of the contractors and their bid amounts shall be announced;

(iii) Construction management agent or advisor services for the construction of school buildings or additions to existing buildings in accordance with subdivision (a)(3)(C)(ii) may be performed by:

(a) A general contractor licensed in Tennessee pursuant to title 62, chapter 6; provided, that none of such services performed by a general contractor involve any of the services exempt from the requirements of title 62, chapter 6 as "normal architectural and engineering services" under § 62-6-102(4)(B) or (C), unless, with regard to the performance of any services defined as normal architectural and engineering services, the general contractor is also licensed as an architect or engineer under title 62, chapter 2; or

(b) An architect or an engineer licensed pursuant to title 62, chapter 2; provided, that none of such services performed by an architect or engineer involve any of the services required to be performed by a contractor within the definition of "contractor" under § 62-6-102, unless with regard to the performance of any services included within the definition of contractor, the architect or engineer is also licensed as a contractor under title 62, chapter 6.

(iv) Construction work that is under the coordination and oversight of a construction manager shall be procured through competitive bids as provided in this subsection (a);

(D) No board of education shall be precluded from purchasing materials and employing labor for the construction of school buildings or additions to school buildings;

(E) Subdivisions (a)(3)(A), (B) and (D) apply to local boards of education of all counties, municipalities and special school districts; provided, however, that subdivisions (a)(3)(A) and (B) shall not apply to purchases by or for a county's or metropolitan government's board of education in counties with a population of not less than two hundred thousand (200,000), according to any federal census, so long as the county, through county or metropolitan government charter, private act, or ordinance, establishes a procedure regarding purchasing that provides for advertisement and competitive bidding and sets a dollar amount for each purchase requiring advertisement and competitive bidding; and provided, further, that purchases of less than the dollar amount requiring advertisement and competitive bidding shall, wherever possible, be based upon at least three (3) competitive bids. Subdivision (a)(3)(C) applies to county and municipal boards of education . . .

Title 12, Chapter 4 of the Tennessee Code concerns public contracts. Tenn. Code Ann. § 12-4-115 states as follows:

Contracts by counties, cities, metropolitan governments, towns, utility districts and other municipal and public corporations of this state for energy-related services that include both engineering services and equipment, and have as their purpose the reduction of energy costs in public facilities, shall be awarded on the same basis as contracts for professional services.

The question posed is whether the provisions of Tenn. Code Ann. § 12-4-115 apply to LEAs that contract for the construction or renovation of public school buildings pursuant to Tenn. Code Ann. § 49-2-203. The more persuasive interpretation of the interrelationship between these statutes is that Tenn. Code Ann. § 12-4-115 is not applicable to the LEAs' procurement process for obtaining a contract to construct or renovate a public school.

Initally, some uncertainty exists whether an LEA is an entity covered by Tenn. Code Ann. § 12-4-115, which by its terms applies only to "counties, cities, metropolitan governments, towns, utility districts and other municipal and public corporations." To come within the ambit of Tenn. Code Ann. § 12-4-115 an LEA would have to be a "municipal" or "public corporation." This Office has previously observed that whether a school district can be treated the same as a municipal or public corporation "seems to depend on the context." Tenn. Att'y Gen. Op. 90-51, at 3 (Apr. 11, 1990). This opinion noted that the following Tennessee cases had reached different conclusions on this point depending on the circumstances presented:

Compare Breeding v. Williams, 9 Tenn. App. 335, 339 (1929) (school district is a public institution in the nature of a municipal or a quasi-municipal corporation and implied if not expressly has the right to take and hold property for the specific purpose for which it was created) with Perritt v. Carter, 204 Tenn. 611, 325 S.W.2d 233, 234 (1959) (a special school district does not come within the definition of a municipality as contemplated in the Home Rule Amendment, §9, Art. 11 of the Constitution of the State of Tennessee) and Kee v. Parks, 153 Tenn. 306, 309, 283 S.W. 751 (1926) (school district is not a municipal corporation in the sense that it can be authorized to impose taxes) (citing Quinn v. Hester, 135 Tenn. 373, 380, 186 S.W. 459 (1916)).

Id. See also 16B McQuillin Mun. Corp. § 46:20 (3d ed.) (stating that "[b]oards of education and school districts are sometime described as municipal corporations, sometimes as public corporations, particularly where disconnected with the government of the municipal corporation, sometimes as bodies corporate or bodies politic, sometimes as quasi-municipal corporations, and sometimes in even different terms") (footnotes omitted).

Even if an LEA is considered a municipal or public corporation for purposes of Tenn. Code Ann. § 12-4-115, a court would likely conclude that the more specific provisions of Tenn. Code Ann. § 49-2-203 governing the LEA's procurement process for securing contracts to construct and renovate public schools would supersede the more general provisions of Tenn. Code Ann. § 12-4-115 that address how certain defined public entities procure contracts for "energy-related services" that will reduce "energy costs in public facilities." See Keough v. State, 356 S.W.3d 366, 371 (Tenn. 2011) (stating the general rule of statutory construction that a special statute will prevail over a general provision in another statute). Thus, to the extent a contract to construct or renovate a public school might include services to reduce energy costs, its procurement by an LEA would be governed by the specific process set forth in Tenn. Code Ann. § 49-2-203.

2. For these same reasons, the answer to the second question is that Tenn. Code Ann. § 49-2-203 and not Tenn. Code Ann. § 12-4-115 controls how an LEA shall procure contracts to construct or renovate a public school.

ROBERT E. COOPER, JR.
Attorney General and Reporter

WILLIAM E. YOUNG
Solicitor General

MELISSA A. BRODHAG
Assistant Attorney General

Requested by:

The Honorable Charlotte Burks
State Senator
304 War Memorial Building
Nashville, TN 37243-0215