Who enforces Texas's rule against awarding architect and other professional-services contracts by competitive bid?

Plain-English summary

The Professional Services Procurement Act bars a governmental entity from picking a provider of professional services, including architects, or awarding the contract on the basis of competitive bids. Instead the entity must select on the basis of qualifications. The Executive Director of the Texas Board of Architectural Examiners asked who actually enforces that ban, what her Board should do when it learns of a violation, and whether any statute sets penalties.

The Attorney General concluded that enforcement is divided by who pays the bills. At the state level, the Comptroller is the official who approves and pays claims against the state, and the Comptroller's rules let the office demand supporting documentation and reject a payment as unsubstantiated or erroneous. So when a state agency submits a claim on a contract that the Act makes void, the Comptroller can refuse to pay it. The State Auditor backs that up: a compliance audit checks whether state funds were used within the limits the law imposes, and the Auditor must report any illegal transaction found. At the county level, the county auditor performs the same gatekeeping function. By statute a claim cannot be paid until the auditor examines and approves it, and the auditor may not approve a claim unless it was incurred as provided by law, so the auditor cannot approve payment on a contract that violates the Act. The opinion noted that cities are not required to have an officer with that claim-approval role, and that school districts have their own more detailed audit-and-review scheme, with architectural services exempted from the Education Code's competitive bidding rules.

As to architects themselves, the Board's own enabling statute (article 249a) required it to adopt rules preventing its registrants from submitting or soliciting prohibited competitive bids, and authorized the Board to enforce its rules by seeking injunctions in court in its own name and to discipline registrants, including revocation, suspension, reprimand, or an administrative penalty of up to $1,000. So the Board is the proper enforcer against individual architects. On procedure, the opinion said the Board's primary job when it receives a report is to investigate and, if needed, pursue judicial and disciplinary action under article 249a, and it may notify the Comptroller or the relevant county auditor. On penalties, the opinion's short answer was no, with two exceptions: the Class C misdemeanor for a knowing school-district violation and the Board's administrative penalty. It noted that the general official-misconduct statute (Penal Code section 39.02) might reach a violation, but only with intent to obtain a benefit or to harm or defraud, which a mere purchasing oversight would not satisfy.

Currency note

This opinion was issued in 2000. Subsequent statutory amendments, court decisions, or later Attorney General 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.

What the opinion meant for those who asked

The Texas Board of Architectural Examiners (what the opinion held for it): The opinion held the Board is the proper entity to enforce the Act against individual architects, through the rules article 249a required it to adopt, court injunctions it may seek in its own name, and discipline up to a $1,000 administrative penalty. On receiving a report, its first duty was to investigate and take judicial or disciplinary action, with discretion to notify the Comptroller or county auditor.

State agencies and the Comptroller (what the opinion held for them): At the time of this opinion, the Comptroller, backed by the State Auditor, was the primary enforcer against state agencies, by refusing to pay claims on contracts the Act makes void.

Counties and county auditors (what the opinion held for them): The opinion held the county auditor was the principal enforcer against a commissioners court, because the auditor may not approve a claim unless it was incurred as provided by law.

Architects and architectural firms (what the opinion held for them): A registrant who engaged in prohibited competitive bidding faced enforcement by the Board, including injunction and discipline, on top of the contract being void.

Common questions

Is there one agency that polices the Professional Services Procurement Act?
No. The opinion described a split system: the Comptroller and State Auditor for state agencies, the county auditor for counties, and the Board of Architectural Examiners for individual architects.

How does the Comptroller stop an illegal architect contract?
By approving and auditing the claim. The opinion explained the Comptroller may demand supporting documentation and reject a payment as unsubstantiated or erroneous, so a claim on a void contract need not be paid.

What can happen to an architect who takes a competitive-bid job they shouldn't?
The opinion held the Board could seek a court injunction in its own name and impose discipline, including revocation, suspension, reprimand, or an administrative penalty up to $1,000.

Are there criminal penalties for violating the Act?
Mostly no. The opinion identified only a Class C misdemeanor for a knowing school-district violation and the Board's administrative penalty. It said the general official-misconduct statute could apply, but only with intent to benefit, harm, or defraud, which a simple oversight would not meet.

Background and statutory framework

Section 2254.003 of the Government Code prohibits a "governmental entity," defined by section 2254.002 to include a state agency or department as well as a district, authority, county, municipality, or other political subdivision, from selecting a provider of professional services or awarding a contract for the services on the basis of competitive bids. Section 2254.005 declares such a contract void as against public policy. Because the request was not limited to state bodies, the opinion considered both state and local levels.

At the state level, the Comptroller is the official charged with approving and paying claims against the state (Norris v. Bullock, 580 S.W.2d 812, 813 (Tex. 1979)), and the Comptroller's rules in title 34 of the Administrative Code make agency officers responsible for the legality of their expenditures and let the Comptroller demand documentation and reject unsubstantiated or erroneous payments. The State Auditor's compliance-audit authority and duty to report illegal transactions provide a second line of review. At the county level, the county auditor must see to strict enforcement of the law governing county finances, and a claim may not be paid until the auditor examines and approves it; the auditor may not approve a claim unless it was incurred as provided by law (Crider v. Cox, 960 S.W.2d 703 (Tex. App.—Tyler 1997, pet. denied); Smith v. McCoy, 533 S.W.2d 457 (Tex. Civ. App.—Dallas 1976, writ dism'd)). Municipalities need only have records audited annually, and school districts operate under the Education Code's separate fiscal-review scheme, which exempts architectural services from its competitive bidding rules and makes a knowing violation a Class C misdemeanor.

For architects, article 249a of the Revised Civil Statutes required the Board to adopt rules barring registrants from prohibited competitive bidding, authorized the Board to enforce its rules and the practice statutes by injunction in its own name, and let it impose discipline including an administrative penalty up to $1,000. The opinion read the official-misconduct statute (Penal Code sections 39.01(1) and 39.02) as a possible but limited reach, because it requires intent to obtain a benefit or to harm or defraud.

Citations

Statutory and regulatory provisions:

• Tex. Gov't Code Ann. §§ 2254.002(1), 2254.003, 2254.004, 2254.005 (Vernon 2000)
• Tex. Gov't Code Ann. §§ 403.011, 403.071(a), 403.078
• 34 Tex. Admin. Code § 5.51(c), (e) (2000)
• Tex. Gov't Code Ann. §§ 321.013(f), 321.0132(2), 321.014, 321.016(b)
• Tex. Loc. Gov't Code Ann. §§ 112.006, 113.064, 113.065, 103.001(a)
• Tex. Educ. Code Ann. §§ 44.001(a), 44.008(a), 44.010, 44.031(f), 44.032(d), 44.032(f)
• Tex. Rev. Civ. Stat. Ann. art. 249a, §§ 5(c), 5(d), 11(b)(1)
• Tex. Penal Code Ann. §§ 39.01(1), 39.02(a), 39.02(b)

Cases:

• Norris v. Bullock, 580 S.W.2d 812 (Tex. 1979)
• Crider v. Cox, 960 S.W.2d 703 (Tex. App.—Tyler 1997, pet. denied)
• Smith v. McCoy, 533 S.W.2d 457 (Tex. Civ. App.—Dallas 1976, writ dism'd)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/john-cornyn/jc-0266
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2000/jc0266.pdf

Original opinion text

Best-effort transcription from the official scanned PDF. Minor character-level errors from the source OCR have been corrected; the linked PDF is authoritative.

August 7, 2000

Ms. Cathy L. Hendricks
Executive Director
Texas Board of Architectural Examiners
333 Guadalupe, Suite 2-350
Austin, Texas 78711-3942

Opinion No. JC-0266

Re: Responsibility for enforcement of the Professional Services Procurement Act (RQ-0204-JC)

Dear Ms. Hendricks:

You have requested our opinion regarding the enforcement of the Professional Services Procurement Act ("PSPA"), subchapter A of chapter 2254, of the Government Code. We conclude that the Comptroller, and to a lesser extent, the State Auditor, have the primary roles in enforcing the PSPA against state agencies. We also determine that the County Auditor has the principal responsibility for enforcing the PSPA against a commissioners court. Finally, we conclude that the Texas Board of Architectural Examiners ("TBAE") is charged with enforcing the PSPA with regard to individual architects.

Section 2254.003 of the Government Code prohibits a "governmental entity," defined by section 2254.002 to include "a state agency or department" as well as "a district, authority, county, municipality, or other political subdivision of the state," from "select[ing] a provider of professional services" or "award[ing] a contract for the services on the basis of competitive bids." TEX. GOV'T CODE ANN. §§ 2254.002(1), .003(a) (Vernon 2000). Section 2254.003 sets forth the requisite standards for making the award of a contract for professional, including architectural, services, and section 2254.004 establishes the mechanism for doing so. See id. §§ 2254.003, .004. Section 2254.005 declares that "[a] contract entered into or an arrangement made in violation of this subchapter is void as against public policy." Id. § 2254.005. You first ask what entity has the authority to enforce the "no competitive bids" requirement of the PSPA against a "governmental entity." Because you do not limit your inquiry to state-level governmental bodies, we shall consider governmental entities at both the state and local levels. We will first address the matter at the state level.

The Comptroller of Public Accounts is the official charged by statute with approving and paying claims against the state. See generally id. § 403.011 (Vernon Supp. 2000). As "the State's sole accounting officer," the Comptroller has the duty "to determine that the fiscal concerns of the State are managed as provided by law. Included is the duty to verify the correctness of all accounts presented for settlement and to require vouchers in support of same." Norris v. Bullock, 580 S.W.2d 812, 813 (Tex. 1979). Subsection 403.071(a) of the Government Code provides that "[a] warrant may not be prepared unless a properly audited claim, verified as to the correctness by the agency submitting the claim, is presented to the warrant clerk." TEX. GOV'T CODE ANN. § 403.071(a) (Vernon 1998). Section 403.078 requires that "[a]ll claims and accounts against the state . . . be submitted on forms or according to the method and format that the comptroller prescribes. The claims and accounts shall be prepared to provide for entering on the claim or account, for use of the comptroller's office, . . . information required by the comptroller's rules . . . ." Id. § 403.078.

Several of the Comptroller's rules address the matter at hand. Section 5.51(c) of volume 34 of the Texas Administrative Code provides that:

The officers and employees of a state agency are responsible for:

(A) being knowledgeable about Texas laws and rules concerning expenditures;

(B) ensuring that the agency's expenditures comply with those laws and rules;

(C) determining the agency's legal authority for making each payment that would result from a purchase document before the document is submitted to the comptroller;

(D) ensuring that for each purchase document, the agency maintains necessary documentation for proving that each payment resulting from the document is legal, proper, and fiscally responsible; and

(E) ensuring that each purchase document complies with the processing requirements of USAS.

34 TEX. ADMIN. CODE § 5.51(c) (2000) (emphasis added). Section 5.51(e) states that "[t]he comptroller may require a state agency to make available to the comptroller documentation to support the legality and fiscal responsibility of each payment that results from a purchase document if the payment is made out of the agency's funds." Id. § 5.51(e)(1). Furthermore, "[i]f the agency does not make supporting documentation for a particular purchase document or payment transaction available to the comptroller according to the comptroller's requirements, then the comptroller may reject the document or transaction or deem the payment resulting from the document or transaction to be unsubstantiated or erroneous." Id. § 5.51(e)(6). Thus, when an agency submits a claim for payment on a contract that is void under the PSPA, the Comptroller may, by demanding and examining the accompanying supporting documentation, deem it to be "unsubstantiated or erroneous" and reject payment therefor.

In addition to the Comptroller's authority to disapprove a claim that is invalid, the State Auditor has a supporting role in the process. The State Auditor is empowered to conduct various kinds of audits, including compliance audits. See TEX. GOV'T CODE ANN. § 321.013(f) (Vernon Supp. 2000). A compliance audit is the means to determine, inter alia, "whether the audited entity has obligated, expended, received, and used state funds in accordance with any limitations, restrictions, conditions, or mandatory directives imposed by law on those obligations, expenditures, receipts, or uses." Id. § 321.0132(2) (Vernon 1998). The State Auditor is required to "prepare a written report for each audit" and furnish copies of the report to the legislative audit committee, the Governor, the Lieutenant Governor, the Speaker of the House, and "members of the legislature on a committee with oversight responsibility for the entity or program that is the subject of the report." Id. § 321.014 (Vernon Supp. 2000). Furthermore, "[i]f in the course of an audit the State Auditor finds evidence of an illegal transaction," he must "immediately report the transaction" to the Governor, the legislative audit committee, and the appropriate legal authority. Id. § 321.016(b) (Vernon 1998). Thus, even if a claim for payment under a contract made in violation of the PSPA is approved by the Comptroller, the State Auditor may serve as a second line of defense to correct the error.

At the county level, the County Auditor is the official who performs the claim approval function that is committed to the Comptroller at the state level. The County Auditor is directed by statute to "see to the strict enforcement of the law governing county finances." TEX. LOC. GOV'T CODE ANN. § 112.006 (Vernon 1999). A claim "may not be allowed or paid until it has been examined and approved by the auditor." Id. § 113.064. Section 113.065 provides that "[t]he county auditor may not audit or approve a claim unless the claim was incurred as provided by law." Id. § 113.065. In Crider v. Cox, 960 S.W.2d 703 (Tex. App.—Tyler 1997, pet. denied), the court observed that "[o]ne of the functions of the office of County Auditor is to operate as part of a delicate system of checks and balances to protect county funds." Id. at 706. "The legislative scheme of control of county funds requires specific approval of the claim by the Auditor before consideration by the Commissioners Court." Id. The County Auditor "must make an independent examination of each claim and approve it before the Commissioners Court may consider it." Id. As the court noted in Smith v. McCoy, 533 S.W.2d 457 (Tex. Civ. App.—Dallas 1976, writ dism'd), "[t]he language of these statutes is mandatory. They impose on the auditor the responsibility, before approving a claim, to determine whether it strictly complies with the law governing county finances." Id. at 459. Thus, since it is the County Auditor's duty to withhold approval of a claim "unless the claim was incurred as provided by law," an auditor may not approve a claim for payment under a contract made in violation of the PSPA. See TEX. LOC. GOV'T CODE ANN. § 113.065 (Vernon 1999).

Texas law does not require a municipality to have an officer whose claim approval duties correspond to those of the Comptroller or County Auditor. Chapter 103 of the Local Government Code requires merely that "[a] municipality shall have its records and accounts audited annually and shall have an annual financial statement prepared based on the audit." Id. § 103.001(a) (Vernon Supp. 2000).

With regard to school districts, state law is somewhat more detailed. Section 44.001 of the Education Code requires the Commissioner of Education to "establish advisory guidelines relating to the fiscal management of a school district." TEX. EDUC. CODE ANN. § 44.001(a) (Vernon 1996). The board of trustees of each independent school district is required to "have its school district fiscal accounts audited annually at district expense by a certified or public accountant." Id. § 44.008(a). Section 44.010 directs that "[t]he budgets, fiscal reports, and audit reports filed with the [TEA] shall be reviewed and analyzed by the staff of the agency to determine whether all legal requirements have been met . . . ." Id. § 44.010 (emphasis added). Subsection 44.031(f) of the Education Code exempts architectural services from the competitive bidding requirements of section 44.031. See id. § 44.031(f) (Vernon Supp. 2000). A "knowing" violation of subsection 44.031(f) is a Class C misdemeanor. See id. § 44.032(d). Furthermore, "[a] court may enjoin performance of a contract made in violation of this subchapter," including section 44.031, and "any interested party," including a prosecutor, may initiate such action. See id. § 44.032(f).

There are numerous other kinds of entities that come within the rubric of "governmental entity" for purposes of the PSPA. See TEX. GOV'T CODE ANN. § 2254.002(1) (Vernon 2000) (defining governmental entity for purposes of the PSPA). In some instances, the applicable statute may identify a person who serves a function similar to that of the Comptroller at the state level, or to the County Auditor at the county level. In others, the statute will not assign this function. In any event, the large variety of individual entities precludes a general answer to this question with regard to such entities.

We must also, however, consider the responsibility of the Texas Board of Architectural Examiners with regard to the enforcement of the PSPA against individual architects and architectural firms. Subsection 5(d) of article 249a of the Revised Civil Statutes provides, in relevant part, that the TBAE shall:

adopt rules to prevent a person regulated by the Board from submitting a competitive bid to, or soliciting a competitive bid on behalf of, a governmental entity that is prohibited by Subchapter A, Chapter 2254, Government Code, from making a selection or awarding a contract on the basis of competitive bids

TEX. REV. CIV. STAT. ANN. art. 249a, § 5(d) (Vernon Supp. 2000). Thus, the TBAE's own enabling legislation clearly contemplates that it is required to adopt rules to provide for the discipline of its registrants who engage in competitive bidding in violation of the PSPA. Furthermore, the TBAE is:

empowered and authorized to enforce such rules and regulations, the provisions of this Act, and the statutes of this state pertaining to the practice of architecture, by applying to a court of competent jurisdiction in the county of the residence of the defendant or the county where the violation occurred for relief by injunction, restraining order, or such other relief as may be available from such court, in order to enjoin or restrain a person, firm, corporation, partnership, or any other group or combination of persons from the commission of any act which is contrary to or in violation of such rules, regulations, or statutes. The Board has the right to institute these actions in its own name. The remedy provided by this section shall be in addition to any other remedy provided by law. The Board may be represented by the Attorney General, the District Attorney, or the County Attorney, and by other counsel when necessary.

Id. art. 249a, § 5(c) (emphasis added). Under this provision, then, the TBAE may act on its own to enjoin its registrants from entering into any contract in violation of the PSPA. Furthermore, as an adjunct to this direct enforcement authority, the TBAE may impose disciplinary measures, including revocation or suspension of an individual's certificate of registration, reprimand, or assessment of an "administrative penalty" not to exceed $1,000, against any of its registrants because of "a violation of [article 249a] or of a rule of the Board adopted under this Act." Id. art. 249a, § 11(b)(1).

In summary, then, the Comptroller, and to a lesser extent, the State Auditor, by their approval and audit of claims, have the primary responsibility for requiring state agencies to abide by the directives of the PSPA. Likewise, the County Auditor, by her approval and audit of claims, has the principal duty for requiring county government to conform to the PSPA. Finally, the TBAE is the proper entity to enforce the provisions of that statute against its individual registrants.

You also ask about the procedure that the TBAE should follow when it receives a report of a violation of the PSPA. In our opinion, the TBAE's primary responsibility is to ensure that it complies with article 249a, and the rules it adopts pursuant to section 5(d) thereof, by investigating the matter and, if necessary, taking the appropriate judicial and disciplinary action. The TBAE may, of course, wish to notify the Comptroller, when the report involves a state agency, and the particular County Auditor, when it relates to a county, that the TBAE has received the information.

Finally, you ask whether any specific statute establishes penalties for violation of the PSPA. Except for the Class C misdemeanor noted above with regard to school districts, and the permissive "administrative penalty" that may be imposed by the TBAE, the short answer to your question is "no." Section 39.02 of the Penal Code provides that "[a] public servant commits an offense" if "he intentionally or knowingly . . . violates a law relating to the public servant's office or employment." TEX. PEN. CODE ANN. § 39.02(a)(1) (Vernon 1994). The definition of a law that relates to a public servant's office or employment includes "a law . . . that directly or indirectly . . . governs the conduct of the public servant." Id. § 39.01(1). Section 2254.003 of the Government Code, which prohibits competitive bidding for architectural contracts, is probably such a law. However, section 39.02 requires an "intent to obtain a benefit or [an] intent to harm or defraud another." See id. § 39.02(a). A mere oversight on the part of a purchasing agent is unlikely to be sufficient to support a conviction under such a standard. An offense under section 39.02(a)(1) is a Class A misdemeanor. See id. § 39.02(b). As we have previously observed, the primary means of enforcing the PSPA against a governmental entity is through the Comptroller or the County Auditor, as appropriate, to reject a claim submitted under a contract made in violation of the PSPA.

SUMMARY

The Comptroller, and to a lesser extent, the State Auditor, by their approval and audit of claims, have the primary responsibility for requiring state agencies to abide by the directives of the Professional Services Procurement Act, subchapter A of chapter 2254 of the Government Code. The County Auditor, by her approval and audit of claims, has the principal duty for requiring county government to conform to the Professional Services Procurement Act. The Texas Board of Architectural Examiners is the proper entity to enforce the provisions of that statute against its individual registrants.

Yours very truly,

JOHN CORNYN
Attorney General of Texas

ANDY TAYLOR
First Assistant Attorney General

CLARK KENT ERVIN
Deputy Attorney General - General Counsel

SUSAN D. GUSKY
Chair, Opinion Committee

Rick Gilpin
Assistant Attorney General - Opinion Committee