Honorable George Pierce 

Chairman 

Urban Affairs Committee 

Texas Eouse of Representatives 

P. 0. Box 2910 

Austin, Texas 78769 

Opinion No. JM-687 

Re: Whether purchases made by 

a housiug authority under the 

Consolidated Supply Program are 

exempt from competitive biddiug 

requirements 

Dear Representative Pierce: 

Tout letter requesting an opinion of this office asks: 

Under the terms of the Annual Contributions 

Contract (ACC) between the United States Department of Housing and Urban Development (HUD) aud a 

housing authority, are purchases which a housing 

authority makes under the Consolidated Supply 

Program (CSP) exempted from the competitive 

bidding requirements of state law? 

The same question was posed last year by the chairman of the 

Eouse Committee on Judiciary. It was answered in Attorney General 

Opinion JR-573 (1986), where it was said: 

You inquire whether the competitive bidding 

requirements of the Department of Housing and 

Urban .Development [RUD] for its Consolidated 

Supply Program [CSP] meet the bidding requirements 

of state law, thereby allowing municipal housing 

authorities to participate in the Consolidated 

Supply Program in lieu of seeking compocitive 

bids. We conclude that participation in the CSP 

would not constitute compliance with the requirrmeuts of competitive bidding specified in Texas 

statutes. 

That opinion decided that housing 'authorities in Texas must 

comply with Texas statutes governing competitive bidding, and chat 

purchases which could coma within the federal Consolidatrd Supply 

Program under the terms of an Annual Contributions Contract were not 

exempted from the Texas requirements. See generally V.T.C.S. art. 

1269k. We adhere to that view. 

Ue have been again supplied - as we were in connection with 

consideration of Accorney General Opinion JM-573 -- with a portion of 

p. 3181 
Bonorablr George Pierce - Page 2 (JM-687) 

the Annual Contributions Contract between the Department of Housing 

and Urban Development and the San Antonio Housing Authority [section 

306. part 21. It reads: 

(A) In the purchasing of equipment, materials, 

and supplies, and in the award of contracts 

for services or for repairs, maintenance, 

and replacements, the Local Authority shall 

comply with all applicable State and local 

laws, and in any event shall make such 

purchases and award such contracts only to 

the lowest responsible bidder after advertising a sufficient time previously for 

proposals, except: 

(1) When the amount involved in any one 

case does not exceed $10,000; or 

(2) When the public exigencies require the 

immediate delivery of the articles or performance of service; or 

(3) Whca only one source of supply is 

available and the purchasing or contracting 

officer of the Local Authority shall so 

certify; E 

(4) The contract is for (a) professional, 

technical or other kinds of services, or 

(b) to be performed under Local Authority 

supervision and paid for on a time basis; 01 

(5) The purchase is made under a consolidated supply contract entered into between 

HUD and the contractor pursuant to HUD 

regulations. (Emphasis added). 

It has been suggested that subparagraph (A)(S) above specifically 

provides that purchases made under the Consolidated Supply Program 

fall within "the category of purchases that are specifically exempted 

from state law requirements." In our view, the import of the paragraph is somewhat different. 

The initial words of paragraph A above establish two contractual 

requirements regarding procurements. First. housing authorities are 

contractually bound to "comply with all applicable State and local 

laws." Second, "in any event," they are required to award procurement 

contracts "only to the lowest responsible bidder" except in five 

specified situations. The subparagraph A(1) through A(5) exceptions 

are intended to modify only the contractual responsibility to award 

contracts to the lowest responsible bidder, not the contractual 

obligation to comply with all state and local laws - which laws might 

p. 3182 
Ronorable George Pierce - Page 3 (JM-687) 

also statutorily require awards to be made only to the lowest 

responsible bidder. 

Participation by housing authorities in the Consolidated Supply 

Program is not mandatory under federal law. The regulations 

promulgated by the office of the Assistant Secretary for Public and 

Indian Housing, Department of Housing and Urban Development, for the 

implementation of applicable sections of the United States Housing Act 

of 1937, as amended (see 42 U.S.C. 501437-1437j) are found in chapter 

IX of.Ticle 24 of theCode of Federal Regulations. Subpart G, thereof, 

deals with the Consolidated Supply Program. Section 965.601(a), under 

subpart G, states: 

Under the [Consolidated Supply Program], the 

Department of Housing and Urban Development (HUD) 

furnishes technical assistance to [Public Housing 

Agencies 1 in purchasing certain supplies, 

material, equipment, and services necessary in the 

development, operation and maintenance of lowincome housing by entering into and administering 

contracts for the voluntary use of those agencies. 

(Emphasis added). 

Again, the HUD Consolidated Supply Program Randbook (7460.9. 

dated 7/86) states on page l-l: 

The use of the [Consolidated Supply Program] is 

voluntary and requires careful consideration in 

order to assure that the best product/services is 

purchased at minimum cost. 

We do not believe the terms of the Annual Contributions Contract 

set out above have either the effect or the intent of superseding 

state laws requiring competitive bidding. Those provisions merely 

bind the housing authority contractually to employ purchasing 

safeguards and procedures as responsible as those set forth-there in 

the absence of state law requiring more stringent procedures. 

Participation, if any, by a housing authority in the Consolidated 

Supply Program is on a voluntary basis. Where the laws of Texas 

require competitive bidding instead, a housing authority is not free 

co participate in the federal program in lieu of following the Texas 

statutes because, in those situations. thxegislature has deprived 

housing authorities of the power to voluntarily make that choice. 

However, there will be many situations where housing authorities may 

participate in the federal program in conjunction with the Texas 

statutes. 

Under article 236ga. V.T.C.S.. the Texas statute governing the 

procurement practices of Texas cities [and. thus, public housing 

authorities; see Attorney General Opinion Nos. JM-573 (1986); MU-132 

(1980)] certain procurements are exempted from competitive bidding 

p. 3183 
Honorable George Pierce - Page 4 (JM-687) 

requirements. Among them, for cities with a population above 50,000, 

are contracts of procurement calling for an expenditure of $10.000 or 

less. See V.T.C.S. art. 2368a, 951, 2(a). - 

When procedures respecting particular procurements are not 

regulated by statutes (or, are otherwise exempted from state compel 

tive bidding requirements). the contractual restraints imposed on 

public housing authorities by the Annual Contributions Contract with 

the federal government come into play. In other words, housing 

authorities must first look to state law to determine what procurement 

practices they must follow. If no state law decides the matter in a 

particular situation, they must then look for guidance to the contractual terms of the Annual Contributions Contract. Often, particular procurements made under the Consolidated Supply Program will 

not coeflict with Texas competitive bidding statutes. 

We also note that when state competitive bidding statutes do 

apply, housing authorities are not precluded from giving Consolidated 

Supply Contractors an opportunity to participate as bidders on 

contracts to be let in that manner. Section 965.603(e)(3) of Title 24 

of the Code of Federal Regulations provides: 

If the [Public Bousing Agency] invites competitive 

bids for procurement of a [Consolidated Supply 

Contract I item or proposes to negotiate for 

procurement of such an item. the [Consolidated 

Supply Contract] contractors shall be included in 

such invicacions or negotiations. 

We advise that purchases which a housing authority wishes to make 

under the Consolidated Supply Program administered by the federal 

government are not exempted by the terms of the authority's Annual 

Contributions Contract from the requirements of Texas law requiring 

competitive bids. 

SUMMARY 

Purchases which a housing authority wishes 

to make under the Consolidated Supply Program 

administered by the federal government are not 

exempted by the terms of the authority's Annual 

Contributions Contract with the Department of 

Housing and Urban Development from the requirements of Texas law requiring competitive bids. 

JZ)$& 

MATTOX 

Attorney General of Texas 

p. 3184 
R 

Honorable George Pierce - Page 5 (JM-687) 

JACK HIGRTOWER 

First Assistant Attorney General 

MARY KELLER 

Executive Assistant Attorney General 

JUDGE ZOLLIE STRARLET 

Special Assistant Attorney General 

RICK GILPIN 

Chairman, Opinion Committee 

Prepared by Bruce Poungblood 

Assistant Attorney General 

p. 3185