November 30, 1990

Mr. Dennis R.Jones Commissioner Opinion No. JM-1252

Texas Department ofMental Re: Whether section Health andMental Retardation of the Mental Health P. 0. BOX 12668 Mental Retardation

. 2.13 and Act Austin, Texas 78711-2668 authorizes the Department of Mental Health and Mental Retardation topurchase and/or lease real and personal property for the purpose of providing community-based services without following the procedures of the State Purchasing and General Services Act (RQ-2049)

Dear Commissioner Jones:

You askwhether section 2.13 ofthe Texas Mental Health andMental Retardation Act authorizes the Texas Department ofMental Health andMental Retardation [the l'departmentl'], topurchase or leasepersonal property, or to lease real property, in connection with the provision of community-based mental health andmental retardation services under that act,without being subject to the provisions of the State Purchasing andGeneral Services Act,V.T.C.S. article 601b. SeeV.T.C.S. art. 5547-201 et sea. (theTexas Mental Health andMental Retardation Act).

Article 601b provides that the State Purchasing and General Services Commission [the 18commission**] "shall purchase, lease, rent, orotherwise acquire all supplies, materials, services, and equipment forall state agencies."1

1. Section 3.01(a)(4) makes exception for "materials, supplies, or equipment purchased bya state-owned hospital (Footnote Continued)

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Id. S 3.01(a). Article 6ofthat actprovides that "[w]hen
a state agency needs space to carry on its functions [it] shall submit awritten request forthe space to the commission." Id. 5 6.02(a). If state-owned space isnot available "the commission may lease space for the agency from another source.lV & 56.05(a). Under such a lease contract "the State ofTexas, acting through the commission, isthe lessee." & 06.05(e).2

The department isclearly a state agency within the purview of the provisions of article 601b. Seeid. §l-02(2) (defining "state agency"). Attorney General Opinion JM-978 (1988) noted that a "state agency . . .is subject to the provisions of article 601b . . .unless exempted by the legislature." YOU suggest that the department has authority under the circumstances YOU describe topurchase or lease personal property or to lease realproperty without being subject to the requirements of article 601b.

Article 5547-204 provides specifically for the department's duties regarding "community-based services,UV the context inwhich your question about the department's purchasing and leasing authority has arisen. Section 4.03, in subsection (a), lists the minimum services that must be available in each service area and, in subsection (b), directs the department to contract with "designated providers" in each service area toprovide the services directly orby subcontract. "Designated providers" may be

(Footnote Continued)
orclinic" under the circumstances set out there. Section 3.06provides that the commission may delegate to a state agency authority to purchase supplies, materials, and equipment in accordance with commission-prescribed procedures. Section 3.07 provides for emergency purchases. Section 3.08provides that "state agencies are delegated the authority topurchase supplies, materials, and equipment if thepurchase does not exceed $500"but that the commission shall prescribe procedures forthese purchases. You neither reference any ofthese provisions nor supply uswith facts indicating they are relevant to the situations you are concerned about. Wewill therefore not address them here.

2. See also 1 T.A.C. 55 113.1 et sea. (commission rules regarding purchasing), 115.31 et sea. (commission rules regarding leasing of space).

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"community centers"3 operated by certain local governmen:; entities, other local agencies, orprivate providers. 54.03(b). "If the Department isunable to identify s contract with adesignated provider ina service area, the Department shall provide the services required under this article directly through a departmental facility outreach program." &
Section 4.01A of article 5547-204 provides that the term "mental health ormental retardation authority8'isused inthe article torefer toboth a "designated provider" and
a "departmental facility outreach program." You indicate in your request that under some contracts with designated providers, and for some departmental outreach programs established under article 5547-204, the department must acquire andprovide equipment, supplies, and facilities to be used by such mental health or mental retardation authorities inrendering the community-based services. YOU suggest that section 2.13 ofthe Mental Health and Mental Retardation Act, if read together with section 4.03C, provides the department with authority to acquire such property under the "competitive procurement system" established under section 4.03c, rather than under the requirements ofarticle 601b. Wedisagree.

Section 2.13 of article 5547-202 provides:

The Department may cooperate, negotiate and contract with local agencies, hospitals, private organizations and foundations, community centers, physicians and persons to plan, develop and provide community-based mental health andmental retardation services.

Section 4.03C ofarticle 5547-204 reads, in pertinent part:
(a) This section applies only to a contract to provide service for persons with mental retardation or mental illness at the 'community level, including residential services, that:

3. m V.T.C.S. art. 5547-203 (providing for establishment and operation of "community centers").

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(1) isbetween a private provider and a mental health or mental retardation authority:
(2) involves the use of state funds or funds for which the state has oversight responsibility: and

(3) is initially awarded on or after August 30, 1989.
(b) Thedepartment shall design a competitive procurement or similar system that a mental health ormental retardation authority shall use inawarding a 'cktract under this section.

See also 25T.A.C. 5s 401.377 - 401.385 (the departmentts rules promulgated pursuant to section 4.03C).

We findnothing insections 2.13 or 4.03Cwhich indicates that the legislature intended these sections to provide exemptions fromarticle 601b for leases orpurchases ofproperty by thedepartment.

Even ifthe procurement system provided for in section 4.03Cmight arguably bemade applicable to departmental procurements where themental health ormental retardation authority to be contracting for services with a private provider isadepartmental facility outreach program, that section applies only to contracts with a provider. If, under such a contract, a departmental facility outreach program is to provide space or property to be used in rendering the services, thedepartment's acquisition of such space or property is not exempt fromarticle 601b. See Attorney General Opinion JM-445 (1986) (purchases by Texas Surplus Property Agency with funds from Service Charge Trust Fund subject to article 601b). s Attorney General Opinion JM-978 (1988) (administration of medicaid program for Department of Human Services). CornDare Attorney General Opinion H-459 (1974) (thepredecessor to article 601b did not apply to a short-term rental of space by the Texas Rehabilitation Commission fora client ofthe commission). 1

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SUMMARY

Where the Department ofMental Health and Mental Retardation purchases or leases personal property, or leases real property, tobeused in connection with the provision of community-based services by a mental health ormental retardation authority under theMental Health andMental Retardation Act, section 2.13 of that act does not exempt those acquisitions from the provisions of article 601b, the State Purchasing and General Services Act.

JIM MATTOX Attorney General ofTexas

MARYKKLLKR FirstAssistant Attorney General

LOUMCCREARY Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLKY Special Assistant Attorney General

RENEA HICKS Special Assistant Attorney General

RICK GILPIN Chairman, Opinion Committee
Prepared byWilliam Walker Assistant Attorney General

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