Does a Texas county have to rebid a county facility management contract before renewing or extending it?

Plain-English summary

The Midland County Attorney, on behalf of the county judge, asked the Attorney General whether the county had to follow competitive bidding before renewing or extending a contract to manage a county facility. The county owns a multi-purpose facility (used for livestock shows, rodeos, concerts, conventions, weddings, the county fair, and more) that is run by an independent contractor. The county first awarded that management contract through a request-for-proposal process in 2005 and renewed it three times since without going through another bidding or RFP process. There had also been a transfer of ownership and a name change of the contractor along the way.

The AG started with a limit on its own role: this office does not approve or construe specific contracts in the opinion process, so it could not pass on the legality of the particular contracts, only offer general advice about the legal authority to enter into such agreements.

On the central question, the AG explained that Local Government Code chapter 262, subchapter C, the County Purchasing Act, sets out the competitive processes a county must use for purchases over $50,000, subject to certain discretionary and mandatory exemptions (which the county did not invoke). But the county pointed instead to chapter 319, which governs county parks and other recreational and cultural resources. Chapter 319 authorizes a commissioners court to provide for annual exhibits and to build and maintain facilities for them, and section 319.004(a) specifically authorizes a commissioners court to "contract for the complete management of" and to operate such buildings and exhibits, with section 319.004(b) authorizing it to lease them.

The county cited two earlier AG opinions (JC-0582 and LO-98-057) concluding that a lease entered under section 319.004 is not void or voidable for failing to comply with chapter 263, a different competitive-bidding chapter for the sale or lease of county land. Those opinions reasoned that chapter 319's specific lease authority displaced chapter 263's general procedures. The AG also pointed to other opinions (such as JM-335) holding that when a statute authorizes a specific kind of transaction, its general competitive-bidding provisions are not mandatory. While the AG found no prior opinion or court decision applying that exact reasoning to the County Purchasing Act, it concluded a court could rely on those authorities to hold that the Act is not mandatory when a county has other specific authority to contract for services. So, to the extent the contracts were authorized by chapter 319, the AG concluded compliance with chapter 262's competitive procedures is not mandatory, for either an initial contract or its renewals or extensions. Because that answered the first question, the AG did not reach the second, which depended on a "yes."

On the vendor's sale, the AG again declined to construe the specific contract. As a general matter, absent a contract provision or law to the contrary, an assignee stands in the same position as the assignor and takes its rights and obligations (citing Crowell v. Bexar Cnty.), and a commissioners court managing its own affairs may agree to reasonable contract terms similar to those private citizens make, including an assignment clause, as long as they are consistent with applicable statutes and the constitutional role of the commissioners court (citing Comm'rs Ct. of Titus Cnty. v. Agan). Whether this contract became void or voidable when the vendor was sold, the AG said, is answered by the contract's own provisions, which it would not interpret.

What this means for you

This section describes what the opinion holds for each group. It is the AG's 2021 reading of the statutes, persuasive but not binding.

Commissioners courts and county officials

The opinion's position is that a lease or management contract authorized by chapter 319 can be renewed without running chapter 262's competitive purchasing procedures. The AG framed this as the specific statutory authority (chapter 319) displacing the general competitive-bidding requirement, consistent with its earlier opinions about chapter 263.

County attorneys

The opinion stops short of validating any particular contract. It supplies the general rule (chapter 319 authority makes chapter 262 competitive bidding non-mandatory) but expressly leaves whether a specific contract is void or voidable to the contract's own terms, which the AG does not construe.

Government contractors and facility managers

The opinion describes general assignment principles: an assignee takes the assignor's rights and obligations, and a commissioners court may include reasonable terms like an assignment clause. Whether a sale of the vendor affects a given contract depends on that contract's language.

Common questions

Q: Does a Texas county always have to rebid a facility contract before renewing it?
A: Not necessarily. The AG concluded that if the contract is authorized by chapter 319 (county exhibit and recreational facilities), the competitive procedures in chapter 262 are not mandatory for the original contract or its renewals.

Q: What is the chapter 262 County Purchasing Act threshold?
A: The opinion notes that subchapter C's competitive processes generally apply to county purchases that exceed $50,000, subject to discretionary and mandatory exemptions.

Q: Why does chapter 319 matter here?
A: Section 319.004 specifically authorizes a commissioners court to contract for the complete management of, and to lease, buildings and exhibit facilities. The AG treated that specific authority as displacing the general bidding requirement.

Q: Does selling the management company void the contract?
A: The AG did not decide that. It said the answer depends on the contract's own provisions, which the AG does not construe. In general, an assignee takes the assignor's rights and obligations.

Q: Did the AG approve Midland County's specific contract?
A: No. The opinion repeatedly notes that the AG does not approve or construe specific contracts; it gives general legal guidance only.

Background and statutory framework

Local Government Code chapter 262, subchapter C, the County Purchasing Act, requires competitive processes for county purchases over $50,000 (section 262.023), with discretionary exemptions (section 262.024) and mandatory exemptions (section 262.0241). Chapter 319, in Title 10, subtitle B, governs county parks and other recreational and cultural resources; sections 319.001 and 319.002 address agricultural and horticultural exhibits and facilities, and section 319.004 authorizes a commissioners court to contract for complete management of, and to lease, those buildings and exhibits. Chapter 263 (section 263.001) provides general procedures for the sale or lease of county land. The commissioners court is the county's principal governing body under article V, section 18(b), of the Texas Constitution.

The AG relied on Crowell v. Bexar Cnty. (a San Antonio court of appeals decision) for general assignment principles, on Comm'rs Ct. of Titus Cnty. v. Agan (Texas Supreme Court) for the commissioners court's governing role, and quoted Ehlinger v. Clark (Texas Supreme Court) on a county's authority to include an automatic-extension provision in a lease. It built its competitive-bidding conclusion on its own prior opinions, including JC-0582 (2002), LO-98-057, JM-335 (1985), DM-131 (1992), and JM-1197 (1990), while noting it does not construe specific contracts (KP-0041, KP-0099).

Citations and references

Statutes:

• Tex. Loc. Gov't Code § 262.023 (County Purchasing Act competitive procedures)
• Tex. Loc. Gov't Code § 319.004 (management and lease of county exhibit facilities)

Key cases:

• Crowell v. Bexar Cnty., 351 S.W.3d 114 (Tex. App.—San Antonio 2011, no pet.) (an assignee acquires the assignor's rights and obligations)
• Comm'rs Ct. of Titus Cnty. v. Agan, 940 S.W.2d 77 (Tex. 1997) (commissioners court is the county's principal governing body)
• Ehlinger v. Clark, 8 S.W.2d 666 (Tex. 1928) (county authority to include an automatic-extension provision in a lease)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/ken-paxton/kp-0391
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2021/kp-0391.pdf

Original opinion text

KEN PAXTON
ATTORNEY GENERAL OF TEXAS

November 15, 2021

The Honorable Russell W. Malm
Midland County Attorney
500 North Loraine, Suite 1103
Midland, Texas 79701

Opinion No. KP-0391

Re: County compliance with competitive bidding procedures before renewing or extending a contract for management of a county facility (RQ-0406-KP)

Dear Mr. Malm:

On behalf of the Midland County Judge, you ask several questions about a particular contract between Midland County (the "County") and a vendor.¹ Your primary question is whether a county must comply with the competitive procedures of Local Government Code, chapter 262, subchapter C, "before renewing or extending a contract for management of a county facility that was originally awarded through a request for proposals[.]" Request Letter at 1.

Background

You tell us the County owns a multi-purpose facility, which is managed by an independent contractor. See id. This facility is "leased out to host a variety of events, including livestock shows, rodeos, equestrian competitions, concerts, sporting events, trade shows, conventions, community events, quinceañeras," wedding receptions, and the annual County fair. Id. You inform us that the County first awarded the contract at issue to the independent contractor in 2005 after a request-for-proposal process. See id. at 1–2. You state that the County has renewed the contract with the independent contractor three times since 2005 but "did not go through another bidding or request for proposal process" for those subsequent renewals. Id. at 1. You also tell us about a transfer of ownership and name change of the independent contractor. See id. at 2. You attach the current and previous contracts and highlight language in each providing that "the agreement may renew for an additional specific time frame by the written and mutual consent of both parties." Id.; see also Attachments A–D. You also refer us to language in the 2018 contract acknowledging an anticipated transfer of ownership from the original vendor to a successor vendor. See Request Letter at 2; see also Attachment D.

As an initial matter, this office does not approve or construe specific contracts in the opinion process. See Tex. Att'y Gen. Op. No. KP-0041 (2015) at 4 (stating that "construction of a contract is beyond the scope of an attorney general opinion"). Accordingly, we cannot opine about the legality of the specific contracts you submit but can offer general advice about the legal authority to enter into agreements. See Tex. Att'y Gen. Op. No. KP-0099 (2016) at 1.

Competitive Bidding Requirements in Local Government Code, Chapter 262, Subchapter C

In your first question, you ask about the applicability of competitive bidding requirements in Local Government Code chapter 262, subchapter C, known as the County Purchasing Act (the "Act"). See Request Letter at 1; TEX. LOC. GOV'T CODE § 262.021. Subchapter C sets out the competitive processes a county must use for purchases exceeding $50,000. TEX. LOC. GOV'T CODE § 262.023(a); see also id. § 262.023(b) (providing for the applicability of subsection (a) based on specified funding methods). While subchapter C contains discretionary and mandatory exemptions, you do not suggest any exemptions apply to the contracts about which you ask. See id. §§ 262.024 (discretionary exemptions), .0241 (mandatory exemptions).

Authority for County Parks and other Resources in Local Government Code, Chapter 319

Instead, you ask whether the specific authority granted in Local Government Code chapter 319 allows a commissioners court to enter into a contract without complying with the competitive bidding requirements of chapter 262. See Request Letter at 2. Chapter 319 of Local Government Code, Title 10, subtitle B governs county parks and other recreational and cultural resources. Concerning horticultural and agricultural exhibits, it authorizes a commissioners court to provide for annual exhibits of a variety of products and establish and maintain a building or other improvement to aid in that exhibition. See TEX. LOC. GOV'T CODE §§ 319.001–.002. Subsection 319.004(a) specifically authorizes a commissioners court to "contract for the complete management of, and for the conducting, maintenance, use, and operation of, buildings, improvements, and exhibits authorized by this chapter." Id. § 319.004(a); see also id. § 319.004(b) (authorizing a commissioners court to "lease the buildings, improvements, or exhibits").

You refer us to two prior attorney general opinions that concluded "a lease entered into under section 319.004 . . . is not void or voidable if it was entered into without complying with chapter 263." Request Letter at 3 (citing Tex. Att'y Gen. Op. No. JC-0582 (2002) and Tex. Att'y Gen. LO-98-057). These opinions considered chapter 319's operation against Local Government Code chapter 263, which contains competitive bidding requirements similar to those in chapter 262. See Tex. Att'y Gen. Op. Nos. JC-0582 (2002), LO-98-057; compare TEX. LOC. GOV'T CODE § 262.023(a), with id. § 263.001(a).

Opinion LO-98-057 characterized chapter 263 as providing general procedures for the sale or lease of county land. See Tex. Att'y Gen. LO-98-057, at 2. It contrasted the express authority of chapter 319 to lease a specific kind of real property. See id. The opinion concluded that, because of that specific authority, "chapter 263 do[es] not apply." Id. Years later, Opinion JC-0582 relied on LO-98-057 to similarly conclude that "a lease entered into under section 319.004 . . . is not void or voidable if it was entered into without complying with chapter 263." Tex. Att'y Gen. Op. No. JC-0582 (2002) at 5.

Other opinions from this office considered the mandatory nature of chapter 263 in connection with other county sale or lease authority and determined that when a statute authorizes a specific kind of transaction, its general competitive bidding provisions do not apply. See Tex. Att'y Gen. Op. No. JM-335 (1985) at 1–2 (concluding that "when counties sell real estate by other means authorized by the constitution or statutes, compliance with [chapter 263's predecessor statute] is not mandatory").²

Though we find no Attorney General or judicial opinion that reaches the same conclusion with respect to the Act as against other statutes providing authority for county contracts, a court could rely on these opinions to conclude that the Act is not mandatory when a county has other specific authority to contract for services. Thus, to the extent the contracts about which you ask were authorized by chapter 319, compliance with the competitive procedures of chapter 262 is not mandatory, either for an initial contract or for renewals or extensions thereof.³

Transfer of Ownership

Your third and fourth questions relate to the transfer of ownership of the original vendor. You question whether a contract between the County and a vendor becomes void or voidable if the vendor is sold during the terms of the contract. See Request Letter at 1. Then you ask whether our answer changes if the contract contained language acknowledging that the company would be sold. See id. at 2.

You do not provide details about the transfer of ownership from the original vendor to the successor organization, but we presume the contract with the County was either an asset conveyed to the successor organization (i.e., an asset purchase), or was a transfer of the shares or other similar equity in the original vendor (i.e., a share purchase) as part of the transfer. Under general contracting principles, and absent a contractual provision or law prohibiting or conditioning another party's consent for an assignment, an assignee stands in the same position as his assignor and acquires all the assignor's rights and obligations. See Crowell v. Bexar Cnty., 351 S.W.3d 114, 118 (Tex. App.—San Antonio 2011, no pet.). And in the exercise of its powers to manage its own affairs, a governmental body may execute contract terms "similar to those made by citizens." Tex. Att'y Gen. Op. Nos. JC-0354 (2001) at 4, JM-1043 (1989) at 2, H-1025 (1977) at 2 (quoting Ehlinger v. Clark, 8 S.W.2d 666, 671 (Tex. 1928) (referring to county authority to include automatic-extension provision in lease)); see also Comm'rs Ct. of Titus Cnty. v. Agan, 940 S.W.2d 77, 79 (Tex. 1997) (recognizing the Texas Constitution's establishment of the commissioners court as the principal governing body of the county, and that the duties of commissioners courts "include aspects of legislative, executive, administrative, and judicial functions"); TEX. CONST. art. V, § 18(b). Accordingly, a commissioners court may agree to reasonable terms in a contract, including an assignment clause, provided such terms are consistent with applicable statutes and constitutional provisions regarding county contracting and the authority of the commissioners court generally. See Tex. Att'y Gen. LO-98-057, at 2. As the Act does not impose limits on the types of terms a contract may contain, it does not address your questions. Instead, your questions are answered by the specific provisions of the contracts at issue, which this office does not construe.

¹ See Letter and attachments from Honorable Russell W. Malm, Midland Cnty. Att'y, to Honorable Ken Paxton, Tex. Att'y Gen. at 1–2 (Apr. 23, 2021) ("Request Letter" and "Attachments," respectively).

² See Tex. Att'y Gen. Op. No. DM-131 (1992) at 3–4 (recognizing Revised Civil Statute article 1577 as predecessor statute to Local Government Code section 263.001 and concluding that section 286.077(b) of the Health and Safety Code authorized a hospital district's board of directors to lease district facilities and therefore section 263.001 of the Local Government Code "has no application"); see also Tex. Att'y Gen. Op. No. JM-1197 (1990) at 7 (relying on Opinion JM-335 to conclude that compliance with Local Government Code section 263.001 was unnecessary because other law authorized a commissioners court to enter into a lease with an appraisal district).

³ Given this conclusion, we need not address your second question which was contingent upon an affirmative answer to your first. See Request Letter at 2; see generally Tex. Att'y Gen. Op. No. GA-0247 (2004) at 5–7 (discussing the voidability of a contract that violates chapter 262).

S U M M A R Y

The commissioners court of a county may renew a lease agreement authorized by Local Government Code chapter 319 without complying with the competitive purchasing procedures of Local Government Code chapter 262.

While this office does not construe contracts, as a general matter a commissioners court may agree to reasonable terms in a contract, including an assignment clause, provided such terms are consistent with applicable statutes and constitutional provisions regarding county contracting and the authority of the commissioners court generally.

Very truly yours,

KEN PAXTON
Attorney General of Texas

BRENT E. WEBSTER
First Assistant Attorney General

LESLEY FRENCH
Chief of Staff

MURTAZA F. SUTARWALLA
Deputy Attorney General for Legal Counsel

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

CHARLOTTE M. HARPER
Assistant Attorney General, Opinion Committee