Can a Texas county or school district skip competitive bidding by buying through the state catalogue?

Plain-English summary

The Commissioner of Education and the McLennan County criminal district attorney both asked the Attorney General the same thing: when a local government buys computer systems through the state's catalogue purchasing procedure, does it still have to run a competitive bid? The question came up because the General Services Commission had told McLennan County about the chance to buy automated information systems through that catalogue procedure, but warned in the same letter that the procedure "may not satisfy competitive bidding requirements" and told the county to check with its own lawyers.

The catalogue purchasing procedure sits in article 601b, section 3.081 of the old state purchasing statute (V.T.C.S.). Under it, vendors who want to sell or lease automated information systems apply to the General Services Commission to be designated as qualified vendors, and a buyer can then purchase directly from a designated vendor instead of soliciting bids. Subsection (g) of section 3.081 tells the commission to make that catalogue purchasing procedure available to local governments that qualify for cooperative purchasing under sections 271.082 and 271.083 of the Local Government Code.

The office answered that a local government using the catalogue procedure does satisfy its competitive bidding requirements. The key was section 271.083(b) of the Local Government Code, which says a local government that purchases an item under a state contract "satisfies any state law requiring the local government to seek competitive bids for the purchase of the item." Because section 3.081(g) directs the commission to make the catalogue procedure available to local governments already in the cooperative purchasing program, the office read the legislature as having folded the catalogue procedure into that program. A purchase made through the catalogue procedure therefore carries the same bidding exemption as a purchase under a state contract.

The office gave a second, reinforcing reason. Subsection (g) requires local governments using the catalogue procedure to follow the same rules that apply to state agencies, and at the state level the procedure substitutes a "best value" determination for competitive bidding. Section 3.081 directs that purchases of automated information systems be made through the catalogue procedure unless the commission or agency finds that the best value comes from another authorized method. The office concluded the legislature intended the same alternative-to-bidding result for local governments. Finally, it rejected the narrow reading that subsection (g) only requires the commission to hand local governments vendor catalogues (information) rather than the whole purchasing mechanism. The statute says the commission shall make the catalogue purchasing "procedure" available, and the office held that means the entire procedure, not just the catalogues.

Currency note

This opinion was issued in 1995. 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.

This opinion turned on article 601b, V.T.C.S. (the State Purchasing and General Services Act). That statute and the General Services Commission have since been replaced; state and local purchasing functions were reorganized and the relevant provisions recodified into the Government Code, and the cooperative purchasing rules in the Local Government Code have been amended over the years. Read this page for how the office reasoned in 1995, and check current Texas purchasing law before relying on any specific procedure or section number mentioned here.

What the opinion meant for those who asked

For McLennan County and District Attorney Segrest (a requestor): The opinion resolved the question the commission had left open in its letter. A county already in the cooperative purchasing program that bought automated information systems through the catalogue procedure did not have to run a separate competitive bid for that purchase.

For the Commissioner of Education and school districts: The opinion answered the parallel school-district question the same way. A school district participating in cooperative purchasing satisfied its competitive bidding obligations when it bought through the catalogue procedure, the same as buying under a state contract.

For local governments generally: Under the opinion, any "local government" as defined in section 271.081 (county, municipality, special district, school district, junior college district, or other political subdivision) that took part in cooperative purchasing could use the catalogue procedure for automated information systems without a separate bid.

For vendors of automated information systems: The opinion confirmed that being a commission-designated qualified vendor opened the door to direct sales to participating local governments, because those local-government purchases through the catalogue did not have to be put out for competitive bid.

Common questions

Did a Texas local government have to take competitive bids when buying through the state catalogue?
No. Under this 1995 opinion, a local government in the cooperative purchasing program that bought through the catalogue purchasing procedure satisfied any state competitive bidding requirement for that purchase.

Why did the General Services Commission tell McLennan County the catalogue "may not satisfy" bidding rules?
The commission flagged the uncertainty and told the county to consult its own lawyers rather than resolve it. The Attorney General then resolved it in the county's favor.

What law made the bidding requirement go away?
Section 271.083(b) of the Local Government Code, which says a local government that buys an item under a state contract "satisfies any state law requiring the local government to seek competitive bids." The office read the catalogue procedure as part of the cooperative purchasing program, so the same exemption applied.

Which local governments could use the catalogue procedure?
Those that qualified for cooperative purchasing under sections 271.082 and 271.083. Section 271.081 defined "local government" broadly: counties, municipalities, special districts, school districts, junior college districts, and other political subdivisions.

Did the catalogue procedure cover all purchases, or just computers?
The procedure in section 3.081 was specific to automated information systems (computer systems, software, and related hardware). The opinion addressed that category.

Background and statutory framework

The dispute lived at the intersection of two statutes. Article 601b, section 3.081 of V.T.C.S. (part of the State Purchasing and General Services Act) created a catalogue purchasing procedure for automated information systems. Vendors applied to the General Services Commission to be designated as qualified information systems vendors, and a buyer could then purchase or lease directly from a designated vendor. At the state level, section 3.081 made this an alternative to competitive bidding: a state agency had to determine that a purchase or lease was based on the "best value" available and in the state's best interest, and purchases of automated information systems were to go through the catalogue procedure unless the commission or agency found that the best value came from another authorized method.

The other statute was subchapter D of chapter 271 of the Local Government Code, which provides for state help with local government purchasing. Section 271.081 defines "local government." Section 271.082 requires the commission to run a program that performs purchasing services for local governments, including extending state contract prices, soliciting bids when feasible, and giving information and technical assistance. Section 271.083 lets a local government join by filing a resolution with the commission, and subsection (b) supplies the crucial exemption: a local government that purchases an item under a state contract "satisfies any state law requiring the local government to seek competitive bids for the purchase of the item."

The bridge between the two was section 3.081(g), which directs the commission to make the catalogue purchasing procedure available to local governments that qualify for cooperative purchasing under sections 271.082 and 271.083. The office read that direction as incorporating the catalogue procedure into the cooperative purchasing program, so the section 271.083(b) bidding exemption reached catalogue purchases too. The office also pointed to the legislative history: the catalogue purchasing procedure was added to the legislation in committee, and its purpose was to let agencies avoid the competitive bidding process and instead find the best buys on automated information systems, a purpose the office found consistent with treating the procedure as an alternative to bidding for local governments as well.

Citations

Statutory provisions discussed:

• V.T.C.S. art. 601b, § 3.081 (state catalogue purchasing procedure for automated information systems; subsections (d) "best value," (f) catalogue-or-alternative, and (g) availability to local governments)
• Local Government Code § 271.081 (definition of "local government")
• Local Government Code § 271.082 (commission's local-government purchasing program)
• Local Government Code § 271.083 (participation by resolution; subsection (b) competitive-bidding satisfaction)

No cases were cited in this opinion.

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/dan-morales/dm-0350
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1995/dm0350.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain (including footnote numbering) — the linked PDF is authoritative.

Office of the Attorney General
State of Texas

DAN MORALES
ATTORNEY GENERAL

June 6, 1995

Mike Moses, Ph.D.
Commissioner of Education
Texas Education Agency
1701 North Congress Avenue
Austin, Texas 78701-1494

Honorable John W. Segrest
Criminal District Attorney
McLennan County
209 North Sixth Street, Suite 200
Waco, Texas 76701

Opinion No. DM-350

Re: Whether purchases made by a local government through the state catalogue purchasing procedure established by article 601b, section 3.081, must be competitively bid (RQs-744, 754)

Dear Commissioner Moses and Mr. Segrest:

We have been asked whether purchases made by local governments through the state catalogue purchasing procedure established by article 601b, section 3.081, V.T.C.S., must be competitively bid. Section 3.081 establishes a state catalogue purchasing procedure whereby vendors wishing to sell or lease automated information systems to certain state agencies apply to the General Services Commission (the "commission"). A state agency may purchase or lease automated information systems directly from vendors who have been designated as qualified information systems vendors by the commission. Subsection (g) of section 3.081 provides as follows:

The commission shall make the catalogue purchasing procedure enumerated in this section available to local governments that qualify for cooperative purchasing under Sections 271.082 and 271.083, Local Government Code. In this subsection, "local government" has the meaning assigned to it by Section 271.081, Local Government Code.[1]

V.T.C.S. art. 601b, § 3.081(g) (footnote added).

Subchapter D of chapter 271 of the Local Government Code provides for state cooperation in local government purchasing programs. Section 271.081 of the Local Government Code defines "local government" to mean "a county, municipality, special district, school district, junior college district, or other legally constituted political subdivision of the state." Section 271.082 requires the commission to "establish a program by which the commission performs purchasing services for local governments." The services must include the following:

(1) the extension of state contract prices to participating local governments when the commission considers it feasible;

(2) solicitation of bids on items desired by local governments if the solicitation is considered feasible by the commission and is desired by the local government;

(3) provision of information and technical assistance to local governments about the purchasing program.

Local Gov't Code § 271.082(a)(1) - (3).

Section 271.083 provides that a local government may participate in this purchasing program by filing a resolution with the commission adopted by its governing body requesting that the local government be permitted to participate. Id. § 271.083(a)(1). The resolution must also state that the local government will designate a representative to act for the local government with respect to the program, will be responsible for submitting requisitions to the commission and for payment to the vendor, and will be responsible for the vendor's compliance with all conditions of delivery and quality. Id. § 271.083(a)(2), (3). Significantly, subsection (b) of section 271.083 provides as follows:

A local government that purchases an item under a state contract satisfies any state law requiring the local government to seek competitive bids for the purchase of the item.

Mr. Segrest explains that McLennan County (the "county") is a member of the cooperative purchasing program established under sections 271.082 and 271.083 of the Local Government Code. The commission recently advised the county of the opportunity to purchase automated information systems through the state catalogue purchasing procedure. The commission's letter states in pertinent part:

Article 601b, Section 3.081(g), V.T.C.S., mandates that the General Services Commission "make the Catalog Purchase Procedure . . . available to local governments that qualify for Cooperative Purchasing . . ."; however, this procedure may not satisfy competitive bidding requirements that govern a local government. The rules for this procedure are enclosed and you should seek counsel from your legal staff as to whether you may use this procedure or not.

Mr. Segrest asks us to resolve the issue raised but not answered by the commission, that is, whether the county is exempted from otherwise applicable competitive bidding requirements when it makes a purchase through the state catalogue purchasing procedure. Commissioner Moses' predecessor in office asked essentially the same question:

Does a purchase by a school district using the catalogue purchasing procedure established by the General Services Commission under Section 3.081 of the State Purchasing and General Services Act satisfy competitive bidding requirements in the same manner as a purchase by a school district under a state contract as provided by Section 271.083(b), Local Government Code?

Based upon our review of the applicable statutes, we conclude that a local government satisfies otherwise applicable competitive bidding requirements when it makes a purchase through the state catalogue purchasing procedure. As noted above, section 3.081(g) of article 601b requires the commission to "make the catalogue purchasing procedure . . . available to local governments that qualify for cooperative purchasing" under sections 271.082 and 271.083 of the Local Government Code. Section 271.083 of the Local Government Code expressly provides that a local government that makes a purchase under a state contract through the cooperative purchasing program "satisfies any state law requiring the local government to seek competitive bids for the purchase of the item." Local Gov't Code § 271.083(b). We believe that the legislature, in requiring the commission to make the state catalogue purchasing procedure available to local governments that participate in cooperative purchasing, intended to incorporate the state catalogue purchasing procedure into that program. Thus it follows that a local government purchase made through the state catalogue purchasing procedure "satisfies any state law requiring the local government to seek competitive bids for the purchase of the item" as provided by section 271.083(b) of the Local Government Code.

We also believe that subsection (g) of article 601b, section 3.081 requires local governments that use the state catalogue purchasing procedure to abide by the same requirements applicable to state agencies. The state catalogue purchasing procedure requires a state agency, and local governments by virtue of subsection (g), to determine that a purchase or lease is "based on the best value available and is in the state's best interest." See V.T.C.S. art. 601b, § 3.081(d). The requirement that state agencies obtain the "best value" demonstrates the state catalogue purchasing procedure is intended as an alternative to competitive bidding for purchases and leases of automated information systems at the state level. See id. § 3.081(f) ("Purchases of automated information systems shall be made through the catalogue procedure enumerated in this section unless the commission or state agency determines that the best value available accrues from an alternative purchase method authorized by this Act."). We believe that the legislature intended the same result for purchases and leases of automated information systems at the local level.

Finally, it has been suggested that subsection (g) merely requires the commission to make information, i.e., vendor catalogues, available to local governments and that subsection (g) is not intended to make the catalogue purchasing procedure available to local governments as a mechanism to actually purchase products and services. We disagree. Subsection (g) provides that "the commission shall make the catalogue purchasing procedure enumerated in this section available to local governments." (Emphasis added.) Subsection (g) on its face requires that the catalogue purchasing procedure in its entirety, not just the information compiled in vendor catalogues about products and services, be made available to local governments.

SUMMARY

A local government that participates in the cooperative purchasing program established under sections 271.082 and 271.083 of the Local Government Code satisfies otherwise applicable competitive bidding requirements when it makes a purchase through the catalogue purchasing procedure established by article 601b, section 3.081, V.T.C.S.

DAN MORALES
Attorney General of Texas

JORGE VEGA
First Assistant Attorney General

SARAH J. SHIRLEY
Chair, Opinion Committee

Prepared by Mary R. Crouter
Assistant Attorney General

[1] See Local Gov't Code § 271.081 (defining "local government" to mean "a county, municipality, special district, school district, junior college district, or other legally constituted political subdivision of the state").