OFFICE or THE ATTORNEY GENER*L STATE OF TBXI\S 

JOHN CORNYN 

April 28,1999 

The Honorable Ken Armbrister 

Chair, Criminal Justice Committee 

Texas State Senate 

P.O. Box 12068 

Austin, Texas 78711 

The Honorable Bill Ratliff 

Chair, Finance Committee 

Texas State Senate 

P.O. Box 12068 

Austin, Texas 78711 

Dear Gentlemen: 

Opinion No. JC-0037 

Re: How a school district should determine that 

a design/build contract will provide the school 

district with the best value for purposes of 

Education Code section 44.031(a), and related 

questions (RQ-870) 

You ask a series of questions concerning competitive bidding or procurement requirements, 

if any, that may apply to school district contracts under chapter 44, subchapter B of the Education 

Code. Section 44.031, part of subchapter B, generally requires a school district to contract for all 

purchases valued at $25,000 or more in the aggregate for a twelve-month period using the 

purchasing method, of eight listed in the statute, that provides the best value to the school district. 

You raise the following issues: 

1. How does a school district determine that a design/build 

contract provides the “best value” to the school district and 

must it follow competitive procurement requirements to let a 

design/build contract? 

2. With respect to a construction contract valued at more than 

$15,000, must a school district comply with Local 

Government Code sections 271.021 through 271.030, which 

provide for competitive bidding on certain public-work 

contracts, in addition to any requirements in Education Code 

sections 44.031 through 44.051, which pertain to school 

district purchases and contracts? 
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The Honorable Bill Ratliff 

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3. Must an interlocal contract entered on behalf of a school 

district be competitively bid? 

4. If a school district participates in a cooperative purchasing 

program, as provided in Local Government Code sections 

271.081 through 271.083, must the school district follow 

competitive procurement procedures? 

Chapter 44, subchapter B of the Education Code governs a school district’s purchases and 

contracts. Section 44.031 particularly regulates a school district’s purchasing contracts “valued at 

$25,000 or more in the aggregate for each 12-month period,” unless the contract is for the purchase 

ofproduce or vehicle fuel. TEX. EDUC. CODE ANN. 5 44.031(a) (Vernon Supp. 1999). In general, 

a school district must enter such a contract using the method, of eight listed methods, that provides 

the district with the “best value”: 

(a) Except as provided by this subchapter, all school district 

contracts, except contracts for the purchase ofproduce or vehicle fuel, 

valued at $25,000 or more in the aggregate for each 12-month period 

shall be made by the method, of the following methods, that provides 

the best value to the district: 

(1) competitive bidding; 

(2) competitive sealed proposals; 

(3) a request for proposals; 

(4) a catalogue purchase as provided by Subchapter B, 

Chapter 2157, Government Code; 

(5) an interlocal contract; 

(6) a design/build contract; 

(7) a contract to construct, rehabilitate, alter, or repair 

facilities that involves using a construction manager; or 

(8) a job order contract for the minor repair, rehabilitation, or 

alteration of a facility. 

Id. (footnotes omitted). 
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Section 44.03 1 establishes a bifurcated process for letting a contract, separating the selection 

of a purchasing method from the ultimate award of a contract using the chosen method. Under 

subsection (a), a district first must evaluate which ofthe eight listedpurchasingmethods will provide 

the best value. Then, after the district has chosen the purchasing method it will use, it is to adhere 

to the procedures applicable to that purchasing method. Accord Tex. Att’y Gen. Op. No. DM-387 

(1996) at 3 (stating that once school district has determined that competitive bidding will provide 

best value, school district then must begin competitive bidding process). Subsequent provisions in 

chapter 44, subchapter B provide some procedures for procurement and criteria for selecting a 

vendor with respect to particular purchasing procedures. See TEX. EDUC. CODE ANN. $5 44.03 l(b), 

.035, ,037, ,038, ,039, ,040, ,041 (Vernon Supp. 1999). In the absence of specific procurement 

procedures or evaluation criteria, the district may evaluate vendors’ submissions using the criteria 

listed in section 44.03 l(b): 

(1) the purchase price; 

(2) the reputation of the vendor and of the vendor’s goods or services; 

(3) the quality of the vendor’s goods or services; 

(4) the extent to which the goods or services meet the district’s needs; 

(5) the vendor’s past relationship with the district; 

(6) the impact on the ability of the district to comply with laws and rules 

relating to historically underutilized businesses; 

(7) the total long-term cost to the district to acquire the vendor’s goods 

or services; and 

(8) any other relevant factor that a private business entity would consider 

in selecting a vendor. 

With this background, we turn to your specific questions. 

I. Determinine that a desienkmild contract constitutes the “best value” under 

Education Code section 44.031(a)f6) and awarding design/build contracts 

You ask how a school district determines that a design/build contract provides the “best 

value.” Section 44.03 1 does not define the term “best value.” Nor does it or any other provision in 

chapter 44, subchapter B of the Education Code prescribe the method by which a school district is 

to determine which purchasing method will afford the district the best value. Section 44.031(b) 

expressly lists factors for “determining ro whom to award a contract.” TEX. EDUC. CODE ANN. 

3 44.03 l(b) (Vernon Supp. 1999) (emphasis added). Determining to whom to award a contract is 
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different than determining which type of contract will afford the best value. Accordingly, section 

44.03 l(b) does not purport to define how a school district is to determine which purchasing method 

affords it the best value, although these factors indeed may be relevant. 

Because nothing in the statutes expressly defines or directs a school district in determining 

best value, we conclude that a school district should establish, by rule, its own procedure and criteria 

to determine the purchasing method that will provide the best value in a particular instance. Section 

44.031(d), authorizing a school district to adopt rules and procedures for the acquisition of goods 

or services, encompasses the power to adopt rules governing the procedure by which a school district 

will evaluate the eight possible purchasing methods. See id. 5 44.03 l(d) (Vernon 1996). The criteria 

listed in section 44.031(b) may be relevant to determining the purchasing method that will provide 

the best value and could inform a district’s decision in choosing one type of contract over another. 

See id. 5 44.040(c) (Vernon Supp. 1999) (stating that criteria established by school district for 

determining bidder offering best value to school district may include criteria in section 44.03 l(b)). 

Assuming that a school district properly has determined that a design/build contract will 

provide the best value, you also ask whether a school district must competitively procure a 

design/build contract. See id. $ 44.031(a)(6). You suggest that a school district should use a 

combination of competitive bidding with requests for proposal on professional services when 

awarding a design/build contract so as not to circumvent the Professional Services Procurement Act, 

TEX. GOV’T CODE ANN. ch. 2254, subch. A (Vernon 1999); see id. 5 2254.001 (naming act), which 

prohibits competitive bidding on professional services contracts. We conclude that a school district 

selecting the design/build purchasing method must comply with section 44.036 of the Education 

Code, which effectively adopts a mechanism for competitive procurement-but not competitive 

bidding--of design/build contracts, and that compliance with section 44.036 does not conflict with 

the Professional Services Procurement Act. 

The Professional Services Procurement Act forbids a school district to competitively bid a 

contract for “professional services,” which term is defined as the following services: (1) accounting; 

(2) architecture; (3) land surveying; (4) medicine; (5) optometry; (6) professional engineering; or 

(7) real-estate appraising. See id. $5 2254.002(2)(A) (Vernon 1999) (defining “professional 

services”), 2254.003(a) (forbidding competitive bidding for professional services); see also Tex. 

Att’y Gen. LO-96-l 17, at 1 (noting that contract for professional services may not be competitively 

bid). With respect to a contract for the professional services of an architect, professional engineer, 

or land surveyor-three professions we imagine are most likely involved in a design/build 

contract-a school district must: 

(1) first select themost highly qualified provider ofthose services 

on the basis of demonstrated competence and qualifications; and 

(2) then attempt to negotiate with that provider a contract at a fair 

and reasonable price. 
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UC-0037) 

TEX. GOV’T CODE ANN. 5 2254.004(a) (Vernon 1999). A professional-services contract entered in 

contravention of the Professional Services Procurement Act is “void as against public policy.” Id. 

5 2254.005. Prior attorney general opinions have concluded that, under the Professional Services 

Procurement Act, a contract for the construction of a public work may not be awarded on the basis 

of competitive bids if architectural or engineering services comprise part of the contract. See Tex. 

Att’y Gen. Op. No. JM-1189 (1990) at 4,5; Tex. Att’y Gen. LO-98-060, at 10-11; LO-96-l 17, at 

1. 

Section 44.036 of the Education Code effects a competitive procurement scheme for 

design/build contracts that differs from competitive bidding. Section 44.036 requires a school 

district to prepare two items in connection with each project: a request for qualifications and a 

design criteria package. See TEX. EDUC. CODE ANN. 5 44.036(d) (Vernon Supp. 1999); see also id. 

5 44.036(a)(3) (defining “design criteria package”). The request for qualifications must contain 

information to assist a design/build firm that wishes to submit a proposal for the project, such as 

“general information on the project site [and] scope, budget, special systems, [and] selection 

criteria .” See id. 5 44.036(d). The design criteria package includes more detailed information 

about the project, see id., such as a legal description and survey ofthe site; requirements for interior 

space, special materials, special equipment, quality assurance, site development, and parking; 

material quality standards; time schedules, applicable codes and ordinances; and provisions for 

utilities. See id. 5 44,036(a)(3). The district or its representative, using a two-phased process, must 

first narrow the list of finalist-offerors to no more than five and then select the proposal that will 

provide the best value to the district: 

(1) In phase one, the district shall evaluate each offeror’s 

experience, technical competence, and capability to perform, the past 

performance of the offeror’s team and members of the team, and 

other appropriate factors submitted by the team or firm in response to 

the request for qualifications, except that cost-related or price-related 

evaluation factors are not permitted. . The district shall qualify a 

maximum of five potential offerors to submit additional information 

regarding technical proposals, implementation, and costing methodologies in response to a formal request for proposals based on the 

design criteria package. 

(2) In phase two, the district shall evaluate offerors on the basis 

of demonstrated competence and qualifications, considerations of 

the safety and long-term durability of the project, the feasibility of 

implementing the project as proposed, the ability of the offeror 

to meet schedules, costing methodology, or other factors as 

appropriate. The district shall select the design-build firm that 

submits the proposal offering the best value for the district. 
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Id. § 44.036(e). Once the district has selected a design/build firm, section 44.036(f) requires the 

“winning” firm’s engineers or architects to complete the design and, prior to or concurrently with 

beginning construction, to submit all design elements “for review and determination of scope 

compliance by the district’s engineer or architect.” 

The requisites of section 44.036(e) of the Education Code are not inconsistent with the 

requisites ofthe Professional Services Procurement Act, sections 2254.001- ,005 ofthe Government 

Code. The two phases of the evaluation process established in section 44.036(e) both are relevant 

to weighing the qualifications of the various offerors, which a public entity must do under section 

2254.004(a)(l) of the Government Code. Section 44.036(e) of the Education Code therefore 

instructs a school district how it must fulfill section 2254.004(a)(l) of the Government Code. After 

the school district has completed the two-phased analysis section 44.036(e) of the Education Code 

sets forth and thereby selected, “on the basis of demonstrated competence and qualifications,” TEX. 

GOV’T CODE ANN. 5 2254.004(a)(l) (Vernon 1999), the design/build firm submitting the proposal 

offering the best value to the district, the school district must “attempt to negotiate with that provider 

a contract at a fair and reasonable price, ” id. 5 2254.004(a)(2). Should the negotiations fail, the 

school district should attempt to negotiate with the second most highly qualified offeror selected 

under section 44.036(e) of the Education Code. See id. $ 2254.004(c). Given this construction 

harmonizing section 44.036 of the Education Code and the Professional Services Procurement Act, 

it is our opinion that a school district opting to proceed with a design/build contract can and must 

comply with both statutes. 

II. Comuetitive bidding on construction contract 

You next ask whether, when a school district lets a construction contract, it must comply with 

sections 271.021 through 271.030 of the Local Government Code (“chapter 271, subchapter B”), 

which prescribe competitive bidding for a contract requiring an expenditure greater than $15,000 to 

construct, repair, or renovate a structure, road, highway, or other improvement or addition to real 

property. See TEX. LOCAL GOV’T CODE ANN. 5 27 1.024 (Vernon Supp. 1999). This office has 

concluded that a school district deciding under section 44.031 to competitively bid a contract 

governed by chapter 271, subchapter B of the Local Government Code must comply with the 

competitive bidding procedures articulated there. See Tex. Att’y Gen. Op. No. DM-387 (1996) at 

3. 

Although we believe Attorney General Opinion DM-387 correctly interpreted the law as it 

existed at the time the opinion was issued, its conclusion has been superseded by the 1997 adoption 

of section 44.040 of the Education Code. See Act of May 29, 1997,75th Leg., R.S., ch. 1179, sec. 

2, 5 44.040, 1997 Tex. Gen. Laws 4533, 4538. Under section 44.040, a school district nray 

competitively bid a contract to construct, rehabilitate, alter, or repair a facility, and if it chooses to 
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do so, may bid the contract without complying with Local Government Code chapter 271, 

subchapter B in its entirety: 

(a) Except to the extent prohibited by other law and to the extent 

consistent with this subchapter, a school district nzay use competitive 

bidding to select a contractor to perform construction, rehabilitation, 

alteration, or repair services for a facility. 

(b) Sections 271.021, 271.022, 271.026, 271.027(a), and 

271.0275-271.030, Local Government Code, apply to a competitive 

bidding process under this section. 

(c) A school district shall award a competitively bid contract at 

the bid amount to the bidder offering the best value to the district 

according to the selection criteria that were established by the district. 

The selection criteria may include the factors listed in Section 

44.031(b). 

TEX. EDUC. CODE ANN. 3 44.040 (Vernon Supp. 1999) (emphasis added). 

Section 44.040 does two things. First, it permits, but does not require, a school district to 

competitively bid a contract for construction services. Second, if a school district chooses to 

competitively bid the contract, section 44.040 directs which sections of the Local Government Code 

apply to the bid process. Because subsection@) explicitly lists those sections ofLocal Government 

Code chapter 271, subchapter B that “apply to a competitive bidding process under” section 44.040, 

the sections not listed-i.e., sections 271.024,271.025, and 271.027(b)-do not apply. Where the 

competitive bidding statutes would require compliance with all provisions ofchapter 271, subchapter 

B, section 44.040 of the Education Code would not. If the procedures mandated by chapter 271, 

subchapter B conflict with chapter 44, subchapter B of the Education Code, the Education Code 

prevails. See id. (citing Educ. Code 8 44.03 l(e)). 

With the enactment of section 44.040, Attorney General Opinion DM-387 has been 

superseded by statute to the extent the opinion is inconsistent with the current section 44.040. We 

now conclude that a school district may competitively bid a contract to construct, rehabilitate, alter, 

or repair a facility, but it is not required to do so under section 44.040. When choosing to 

competitively bid a construction contract, a school district must comply with all provisions of 

chapter 271, subchapter B of the Local Government Code except sections 271.024, 271.025, and 

271.027(b). 

III. Interlocal Coooeration Contracts 

Your last two questions concern cooperative purchasing methods. You first ask whether an 

interlocal contract entered on behalf of a school district must be competitively bid. We conclude that 
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neither the Education Code nor the Interlocal Cooperation Act, chapter 79 1 ofthe Government Code, 

require it. 

Nothing in section 44.031of the Education Code mandates that a school district require a 

representative contracting on the district’s behalf to competitively procure the contract. Subsection 

44.031(a) lists an interlocal contract as a purchasing method a school district may select as an 

alternative to a contract made by the competitive procurement methods listed. In addition, while 

section 44.03 l(b) lists factors a school district may consider in selecting the vendor to whom to 

award a particular contract, the list is optional and does not necessarily apply to the individual or 

entity purchasing goods or services on the school district’s behalf in an interlocal contract. We find 

nothing else in the Education Code that obligates a school district to insist that goods or services 

purchased for the district through an interlocal cooperation contract be competitively procured. 

Nor does the Interlocal Cooperation Act, which allows a school district to contract with 

another local government, the state, or a state agency to purchase goods or services, require 

competitive bidding. See TEX. GOV’TCODEANN. 4 79 1.025(a) (Vernon Supp. 1999). The Interlocal 

Cooperation Act does not require a local government to impose competitive procurement methods 

on the local government’s representative who purchases goods or services on the local government’s 

behalf. To the contrary, the Interlocal Cooperation Act could be construed to permit parties to 

choose not to competitively bid a contract for the purchase of services if one of the local 

governments that was a party to the contract was not required to competitively bid such a contract. 

See id. 5 791.012 (Vernon Supp. 1999) (“Local governments that are parties to an interlocal contract 

for the performance of a service may, in performing the service, apply the law applicable to a party 

as agreed by the parties.“). 

A school district may, of course, direct its agent to competitively procure the contract, but 

state law does not require it to do so. A school district also may require its agent to evaluate the 

vendors’ submissions using the criteria listed in section 44.031(b) of the Education Code, but the 

school district again is not required to do so. Finally, we note that federal law may impose 

competitive procedures on the purchase in certain circumstances. See 34 C.F.R. 5 80.36(d) (1998) 

(setting policies and procedures for procurement made with federal funds). State law, however, does 

not. 

IV. Cooperative purchasing proeram 

Lastly, you ask whether a school district that participates in a cooperative purchasing 

program under chapter 271, subchapter F of the Local Government Code must follow competitive 

procurement procedures to satisfy the “best value” requirements section 44.03 l(a) of the Education 

Code imposes. 

At the outset, we note that it is not clear that school district purchases under a local 

cooperative purchasing program are subject to section 44.031 of the Education Code. A school 

district’s contract under chapter 27 1, subchapter F of the Local Government Code is not squarely 
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a contract “valued at $25,000 or more in the aggregate” for purposes of section 44.031(a) of the 

Education Code. Instead, a contract under chapter 271, subchapter F of the Local Government Code 

is a contract with other local governments or a local cooperative organization, whereby a school 

district (or other local government) agrees to participate in a cooperative purchasing program. See 

TEX. Lot. GOV’TCODEANN. 5 271.101(l), (2) (v emon Supp. 1999) (defining “local cooperative 

organization” and “local government,” respectively). Under section 271.102(a) of the Local 

Government Code, a school district may participate in a cooperative purchasing program by 

“sign[ing] an agreement with another participating local government or local cooperative 

organization” that the school district will: 

(1) designate a person to act under the direction of, and on behalf 

of, that local government in all matters relating to the program; 

(2) make payments to another participating local government or 

a local cooperative organization or directly to a vendor under a 

contract made under this subchapter, as provided in the agreement 

between the participating local governments or between a local 

government and a local cooperative organization; and 

(3) be responsible for a vendor’s compliance with provisions 

relating to the quality of items and terms of delivery, to the extent 

provided in the agreement between the participating local 

governments or between a local government and a local cooperative 

organization. 

Id. 3 27 1.102(b). Accordingly, the nature ofthe agreement contemplated under the local cooperative 

purchasing program does not obviously fall within the scope of section 44.031 of the Education 

Code. 

While it is not obvious that a local cooperative purchasing program agreement falls under 

section 44.03 1, there is practical and intuitive logic that such agreements are covered by section 

44.03 1. As local cooperative purchasing programs have as their sole function procuring goods and 

services, such agreements may be “school district contracts” subject to section 44.03 1. Construed 

in this light, cooperative purchasing programs are a kind of interlocal contract, which section 

44,031(a)(5) explicitly permits a school district to enter if it represents the best value. Given the 

ambiguity in the law, the safest course for school districts to follow is to adhere to section 44.031 

when evaluating whether to purchase goods and services through a local cooperative purchasing 

program. 

Once a school district has determined that a local cooperative purchasing program will afford 

the district the best value, it need not follow any specific competitive procurement process. Section 

271.102(c) of the Local Government Code declares that a local government that purchases items 

through a cooperative purchasing program “satisfies any state law requiring the local govemrnent 
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to seek competitive bids for the purchase of the goods or services.” Accordingly, any purchases 

made through a cooperative purchasing program necessarily are deemed to be the result of 

competitive procurement. 

Your questions and our answers demonstrate the complexity of the law relating to school 

district contracts. It is our opinion that section 44.031 of the Education Code does not require 

competitive procurement methods for all school district contracts. To the extent that you, as active 

participants in the Seventy-fourth Legislature’s efforts to overhaul the Education Code, intended 

something different, we hope this opinion helps you determine whether the current language 

accomplishes your goals. 

SUMMARY 

Under section 44.03 1 ofthe Education Code, a school district 

may establish by rule a procedure to select the one purchasing 

method, of the eight listed in that subsection, that will provide the 

best value to the school district. The district should use the procedure 

it adopts to determine when a design/build contract will provide it 

with the best value. When a district determines that a design/build 

contract will provide the best value to a school district, the district 

must award the contract in accordance with both section 44.036 ofthe 

Education Code and section 2254.004(a) of the Government Code. 

Attorney General Opinion DM-387 (1996) has been 

superseded to the extent it is inconsistent with section 44.040 of the 

Education Code. With respect to a contract to construct, rehabilitate, 

alter, or repair a facility, a school district may, but is not required to, 

competitively bid the contract. If it competitively bids the contract, 

the school district must comply with all provisions ofthe competitive 

bidding statutes in chapter 271, subchapter B of the Local 

Government Code except sections 271.024,27 1.025, and 271.027(b). 

An interlocal contract executed on behalf of a school district 

need not be awarded on the basis of competitive procurement 

methods unless the school district requires it. 

A school district may use the cooperative purchasing method, 

provided in chapter 271, subchapter D of the Local Government 

Code, to purchase items. Contracts made through a cooperative 

purchasing program are deemed to comply with state laws requiring 
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competitive bidding so that a school district need not undertake 

separate competitive purchasing procedures. 

Attorney General of Texas 

ANDY TAYLOR 

First Assistant Attorney General 

CLARK KENT ERVIN 

Deputy Attorney General - General Counsel 

ELIZABETH ROBINSON 

Chair, Opinion Committee 

Prepared by Kymberly K. Oltrogge 

Assistant Attorney General