MARK WHITE 

Attorney General 

Supreme Court Bullding 

P. 0. BOX 12549 

Austin. TX. 79711 

512/475-2501 

Telex 9101974.1367 

Telecopier 512/475.0266 

1907 Main St.. Suite 1400 

Dallas, TX. 75201 

21417428944 

The Attorney General of Texas 

February 8, 1982 

Mr. Homer A. Foerster 

Executive Director 

State Purchasing and General 

Services Commission 

L.B.J. State Office Building 

Austin, Texas 78711 

opinion No. w-440 

Re: Authority of state 

Purchasing and General 

Services Commission to award 

contracts on competitive proposals rather than competitive 

bids 

Dear Mr. Foerster: 

4924 Alberta Ave.. Suite 160 You advise that in October 1980. the State Purchasing and General 

El Paso, TX. 79905 Services Commission received the Report of the Operational Audit 

9151533.3484 Committee of the Governor's Budget and Planning Office recommending 

that your commission "employ the competitive sealed proposal method as 

1220 Dallas Ave., Suite 202 

an alternative to competitive sealed bidding, particularly when 

Houston. TX. 77002 factors'other than acquisition price are important." The commission 

7131650-0%6 requests our nconcurrence" that this method is permitted under article 

3 of article 601b, V.T.C.S. 

806 Broadway. Suite 312 

Lubbock. TX. 79401 

SOSi747.5238 

4309 N. Tenth, Suite S 

McAllan, TX. 79501 

5121092-4547 

200 Main Plaza, Suite 400 

San Antonio, TX. 78205 

512/225-4191 

An Equal OpportunityI 

Attirmative Action Employel 

Article 6Olb. section 3.10 states: 

In purchasing supplies, materials, services, and 

equipment the commission may "se, but is not 

limited to, the contract purchase procedure, the 

multiple award contract procedure, and the open 

market purchase procedure. The commission shall 

have the authority to combine orders in a system 

of schedule purchasing, and it shall at all times 

try to benefit from purchasing in bulk. All 

purchases of and contracts for supplies, 

materials, services, and equipment shall, except 

as provided herein, be based whenever possible on 

competitive bids. (Emphasis added). 

The "contract purchase procedure" and the "open market purchase 

procedure" are both described in detail by subsequent sections. Id. 

OP3.11, 3.12. Section 3.10 does not require the commission to G 

either procedure to the exclusion of other procedures, but it does 

require that all purchases and contracts shall (except as therein 

provided) be based on competitive bids "whenever possible." 

p. 1516 
Mr. Homer A. Foerster - Page 2 (MW-440) 

The exceptions provided therein are few. As amended in 1981, 

section 3.08(a) of article 601b provides that competitive bidding is 

not required for state agency purchases of $100 or less (or of $500 or 

less if the commission should so prescribe by rule). See V.T.C.S. 

art. 601b. 13, Acts 1981. 67th Leg., ch. 546, at 226c Although 

certain required preferences affect the selection of the “lowest,and 

best bid,” see article 601b. sections 3.20, 3.28, V.T.C.S., the only 

other exemp& provided by article 601b from the competitive bidding 

requirement is an exemption for blind-made products found in section 

3.22. With those exceptions, the commission is to make purchases on 

competitive bids “whenever possible.” 

As noted in Texas Highway Commission v. Texas Association of 

Steel Importers, Inc., 372 S.W.2d 525, 527 (Tex. 1963): 

Competitive bidding... contemplates a bidding on 

the same undertaking upon each of the same 

material items covered by the contract; upon the 

same thing. It requires that all bidders be 

placed upon the same plane of equality and that 

they each bid upon the same terms and conditions 

involved in all the items and parts of the 

contract, and that the proposal specify as to all 

bids the same, or substantially similar 

specifications. Its purpose is to stimulate 

competition, prevent favoritism and secure the 

best work and materials at the lowest practicable 

price.. . . There can be no competitive bidding $J 

a legal sense where the terms of the letting of 

the contract prevent or restrict competition, 

favor a contractor or materialman, or increase the 

cost of the work or of the materials or other 

items going into the project. (Emphasis added). 

See also Sterrett v. Bell, 240 S.W.2d 516, 520 (Tex. Civ. App. - 

Dallas 1951, no writ); Attorney General Opinion B-24 (1973). 

A “bid” is an offer to contract, and an invitation for bids is 

merely a solicitation of such offers. See A 6 A Construction Company, 

Inc. v. City of Corpus Christi, 527 =.2d 833 (Tex. Civ. App. - 

Corpus Christ1 1975, no writ); Lane and Nearn v. Warren, 115 S.W. 903 

(Tex. Civ. App. 1909, writ ref’d). In the law of contracts, a 

“proposal” is also an offer. Daugherty v. Missouri-Kansas-Texas 

Railroad Company of Texas, 221 S.W.Zd 928 (Tex. Civ. App. - Austin 

1949. no writ). Thus, the term “competitive proposals” does not in 

itself signify a procedure different &om that-of-“competitive bids.” 

As you describe the proposed procedure, however, and as it is 

delineated by the rules the commission contemplates, it does not 

provide for competitive bidding in a legal sense. 

p. 1517 
Mr. Homer A. Foerster - Page 3 (MW-440) 

You advise that “competitive sealed proposals” is a method of 

procurement included in the “Model Procurement Code for State and 

Local Governments” section 3.203 (1979), developed by the American Bar 

Association for statutory adoption, and we note that the rules 

proposed by the commission closely resemble the suggested statutory 

provisions and accompanying commentary by the American Bar 

Association. The suggested code has not been adopted by the Texas 

Legislature, however. and we do not think the commission can implement 

it by rule. In exercising its rule making power, the commission may 

not act contrary to the expressed statutory purposes; the commission 

must act consistently with and in furtherance of those purposes. See 

Attorney General Opinion MW-332 (1981). The code provisions, x 

interpreted by the commission’s proposed rules, are inconsistent with 

the competitive bidding requirements of article 601b, V.T.C.S. 

The inconsistency is succinctly pointed out by the portion of the 

contemplated rules discussing the use of “competitive sealed 

proposals.” It states: 

The competitive sealed proposals method differs 

from competitive sealed bidding in two important 

ways: 

(I) it permits discussions with competing vendors 

and changes in their proposals including 

price; and 

(ii) it allows comparative judgmental evaluations 

to be made when selecting among acceptable 

proposals for award of the contract. 

Again the proposed rules state: 

An important difference between competitive sealed 

proposals and competitive sealed bidding is the 

finality of the initial offers. Under competitive 

sealed proposals, alterations in the nature of a 

proposal, and in prices, may be made after 

proposals are opened. Such changes are not 

allowed, however, under competitive sealed 

bi.dding. 

In Nile6 v. Harris County Fresh Water Supply District No. lA, 336 

S.W.2d 637, 637 (Tex. Civ. App. - Waco 1960, writ ref’d), the 

governmental body invited bids for a sewage treatment plant and other 

facilities, the notice to bidders stating that plans, specifications 

and bid documents would be furnished, but that “the bid and other data 

submitted by bidders will form the basis for negotiations of a 

contract for all or part” of the work described. After negotiations 

p. 1518 
Mr. Homer A. Foerster - Page 4 (MW-440) 

with the low bidder resulted in a number of alterations of the 

original bid documents, a contract between the governmental district 

and the bidder was signed. The court held that the statute by which 

the fresh water supply district was governed required competitive 

bidding, that the prime purpose of such a statute is to stimulate 

competition, that compliance with such statutes is mandatory, and that 

the contract was illegal because the proposal for which competitive 

bids were called was not substantially similar to the contract 

executed, nor was there substantial compliance with the statute. See 

Attorney General Opinion MW-296 (1981). See also Attorney Gene= 

Opinions NW-299 (1981); MW-91 (1979). The procedure followed by the 

fresh water supply district in the Nile6 case was somewhat similar to 

the “competitive sealed proposals method” suggested by the 

commission’s proposed rules and the American Bar Association’s Model 

Code. Such a method is inconsistent with the competitive bidding 

reauirement of article 601b. V.T.C.S.. which anolies “whenever 

possible .‘I See Headlee v. Fryer, 208 S.W.il3 (Tex. <ii. App. - Dallas 

1919, writ d=‘d). Cf. V.T.C.S. art. 2368a; Overstreet v. Houston 

County, 365 S.W.2d 4OF(Tex. Civ. App. - Houston 1963, writ ref’d 

n.r.e.) (statute authorized changes). 

The use of the term “whenever possible” leaves little to the 

discretion of the commission. It means that purchases are to be made 

on competitive bids unless in the particular circumstance it is not 

Possible to do so. See Rogers v. Department of Civil Service, 111 

A.Zd 894 (N.J. 1955), Although there may be instances in which the 

commission may properly determine that a purchase on competitive bids 

is not possible, the controlling principle is that purchases are to be 

made on a competitive bids basis. Cf. V.T.C.S. art. 601b, 03.07 

(emergency purchases). The commission’ proposed rules would permit 

the use of the “competitive sealed proposals method” whenever it 

considered the use of competitive bids either “not practicible” or 

“not advantageous.” Those terms, as defined by the proposed rules, 

are not the substantial equivalents of “whenever possible” ss used by 

the legislature in article 601b. Cf. Attorney General Opinion NW-310 

(1981) (commission may promulgate % possible” rules). 

Of course, the commission is not prohibited from soliciting 

information or proposals which it may wish later to incorporate in 

plans and specifications submitted to prospective bidders regarding a 

contract thereafter to be submitted to competitive bids, cf. article 

6252-11~. V.T.C.S. (private consultants), but it may notcall for 

proposals and then negotiate a different contract with the preferred 

contractor instead of submitting the contract finally proposed to 

unrestricted competitive bidding. Texas Highway Commission v. Texas 

Association of Steel Importers, s; Headlee v. Fryer, supra. See 

- 

also Attorney General Opinions MW-139 (1980); H-972 (1977). 

p. 1519 
. 

*, 

* 

Hr. Homer A. Foerster - Page 5 (Mu-440) 

SUMMARY 

The "competitive sealed proposals method" of 

procurement as described Is inconsistent with the 

competitive bidding requirements of article 601b, 

V.T.C.S., and. whenever competitive bidding is 

possible, the competitive proposal method may not 

be used by the State Purchasing and General 

Services Commission in lieu of a competitive 

bidding procedure. 

Very truly yours, 

WHITE 

Attorney General of Texas 

JOHN W. FAINTER. JR. 

First Assistant Attorney General 

RICHARD E. GRAY III 

Executive Assistant Attorney General 

Prepared by Bruce Youngblood 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Susan L. Garrison, Chairman 

Robert Gauss 

Rick Gllpin 

Bruce Youngblood 

p. 1520