Honorable

### GeorgePierce Chairman Urban Affairs Committee Texas Eouse ofRepresentatives P. 0. Box 2910 Austin,Texas 78769 OpinionNo. JM-687

Re: Whether purchasesmade by a housiug authority under the ConsolidatedSupplyProgram are exempt from competitivebiddiug requirements

Dear RepresentativePierce:

Tout letterrequestingan opinionof 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 requirementsof state law?
The same question was posed last year by the chairman of the Eouse Committee on Judiciary. It was answered in Attorney General OpinionJR-573 (1986),where itwas said:

You inquire whether the competitive bidding requirements of the Department of Housing and Urban .Development [RUD] for its Consolidated SupplyProgram [CSP]meet thebidding 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 compliancewith 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 thatview.

Ue have been again supplied - as we were in connection with considerationof Accorney General Opinion JM-573 -- with a portion of

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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 performanceof 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 supervisionandpaid 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. (Emphasisadded).

It has been suggested that subparagraph (A)(S)above specifically provides that purchases made under the Consolidated Supply Program fallwithin "the category of purchases that are specifically exempted from state law requirements." In our view, the import of the paragraph is somewhatdifferent.
The initialwords 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 awardprocurement 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 complywith all state and local laws - which lawsmight

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also statutorily require awards to be made only to the lowest responsiblebidder. 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 implementationof applicable sectionsof theUnited StatesHousingAct of 1937,as amended (see 42 U.S.C. 501437-1437j)are found in chapter IX of.Ticle 24 of theCode of FederalRegulations. SubpartG, thereof, dealswith theConsolidatedSupplyProgram. Section 965.601(a),under subpartG, states:

Under the [Consolidated Supply Program], the Department of Housing and Urban Development (HUD) furnishes technical assistance to [PublicHousing Agencies 1 in purchasing certain supplies, material, equipment,and servicesnecessary in the development, operation and maintenance of lowincomehousing by entering into and administering contractsfor thevoluntaryuse of thoseagencies. (Emphasisadded). 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/servicesis purchasedatminimum cost.

We do not believe the terms of theAnnual ContributionsContract 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 requiringmore stringentprocedures. Participation, if any,by a housing authority in theConsolidated Supply Program is on a voluntary basis. Where the laws of Texas require competitivebidding instead, a housing authority is not free co participate in the federalprogram 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 situationswhere housing authoritiesmay 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; seeAttorney General Opinion Nos. JM-573 (1986);MU-132 (1980)] certain procurements are exempted from competitive bidding

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requirements. Among them, for citieswith a population above 50,000, are contracts of procurement calling for an expenditure of $10.000 or less. SeeV.T.C.S. art. 2368a, 951, 2(a). - When procedures respecting particular procurements are not regulatedby 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 authoritiesmust first look to state law to determinewhat 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 coeflictwith Texas competitivebidding 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 tobe let in thatmanner. Section 965.603(e)(3) of Title 24 of the Code of FederalRegulationsprovides:

If the [PublicBousingAgency] invites competitive bids for procurement of a [Consolidated Supply ContractI item or proposes to negotiate for procurement of such an item. the [Consolidated Supply Contract] contractors shall be included in such invicacionsor negotiations.

We advise thatpurchaseswhich a housing authoritywishes tomake 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 competitivebids.

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 competitivebids.



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MATTOX AttorneyGeneral of Texas

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JACK HIGRTOWER FirstAssistantAttorneyGeneral

MARY KELLER ExecutiveAssistantAttorneyGeneral

JUDGE ZOLLIE STRARLET SpecialAssistantAttorneyGeneral

RICK GILPIN Chairman,OpinionCommittee Preparedby BrucePoungblood AssistantAttorneyGeneral

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