August 30, 1990

Honorable Hugh Parmer Opinion No. JM-1213 Chairman Intergovernmental Relations Re: Authority of amunicipalCommittee ity to require health benefit Texas State Senate provisions to be included in P. 0. Box 12068 specifications for contract Austin, Texas 78711 security guards (RQ-1991)

Dear Senator Parmer:

You ask whether the City of Houston can authorize specifications requiring that the city's independent contractors provide their employees with basic health insurance benefits. We understand that the question relates specifically to independent contractors providing security guard services under contracts with the city. We also understand that the city formerly employed itsown security guards and has ceased thepractice. The city attorney's office has rendered itsopinion on thematter and concluded that such arequirement would contravene competitive bidding requirements. We agree. Chapter 252 of the Local Government Code isthe law that governs city purchases. With certain exceptions that do not appear tobe relevant here, that chapter requires that cities with 50,000 ormore inhabitants let contracts foramounts over $10,000 bymeans ofcompetitive bidding. Local Gov't Code 3252.021(a). We are advised that the Houston city charter contains a complementary provision.
Competitive bidding laws aredesigned to ensure that thepublic receives "the bestwork andmaterials at the lowest practicable price." v, 240 S.W.2d 516, 520 (Tex.Civ.App. -Dallas 1951,nowrit); see also, Texas Hihwa a omm'n-v. Imnorters Inc.. 372 S.W.2d 525, 527 ITex. 19631. This end isachieved bydisallowance of specifications that areunrelated to the quality or quantity of the goods or services or that otherwise restrict competition. In Texas Hishwav Commission, suvra, the court determined that a highway commission minute order requiring that construction material

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used by the commission bedomestically manufactured violated the competitive bidding statute. The court said "Matters of quality should be fixedby quality specifications and not by proscriptions as to localities of manufacture or fabrication." Id. at 529.
By the same token, we believe that matters of quality inthe provision of security guard services should not be fixedby requiring that contractors provide their employees with health insurance benefits. Such a requirement may result inawork force that is less dependent on publicly supported health care, but ithas nodirect relation to the quality of security guard services.

This office has noted that the legislature may alter thegeneral competitive bidding rules by adopting exceptions
or authorization thatwould otherwise contravene themandate that goods and services be purchased through unrestricted competition. Attorney General Opinion JM-712 (1987) (statutory exception forout-of-state bidders found in article 601g,V.T.C.S.); see also Local Gov't Code 5 262.025(d) (authority for certain political subdivisions to require that 25% ofwork be performed bybidder): Attorney General Opinion JM-881 (1988) (requirement that 25% of work be performed bybidder's employees violates statute). We have found no similar exception for a requirement of health insurance benefits.

Ithas been suggested that the city isapublic health agency, and inthat capacity, ithas the authority to enact such an exception to the competitive bidding statute. As this office noted inAttorney General Opinion JM-712 (1987), the state lawmay only be overcome by anexception defined by the state legislature.

SUMMARY

The City of Houston may not require, either through an ordinance or through job specifications, that itscontractors provide their security guards with basic health insurance benefits,.

JIM MATTOX Attorney General of Texas

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MARY KELLER FirstAssistant Attorney General

LOUMCCREARY Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY Special Assistant Attorney General

RENEA HICKS Special Assistant Attorney General

RICK GILPIN Chairman, Opinion Committee
Prepared by Karen C.Gladney Assistant Attorney General

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