# The Attorney General of Texas

JIMMAlTOX , llarch 24, 1986 Attorney

General

Supreme Cowl Building P. 0. BOX 12548 Austin. TX. 78711. 2548 5121475-2501 Telex 91olB74.1387 Telecopier 512I475-0266

714 Jackson. Suite 700 Dallas. TX. 75202-4506 214il428944

4B24 Alberta Ave.. Suite 180 El Paso, TX. 799052793 9154533.3484

1001 Texas, Suite 700 Houston, TX. 77002-3111 713/223-5888

806 Broadway, Suite 312 Lubbock. TX. 79401.3479 806/747-5238

4309 N. Tenth. Suite B McAllan, TX. 78501-1685 5121882.4547

200 Main Plaza. Suite 400 San Antonio. TX. 78205-2797 51212254191

An Equal Opportunity/ Affirmative Action Employer Mr. JamesKenNewman Opinion No. ~~-457 Chairman Texas StateBoard of Registration Re: Validity of proposed disfor Professioni:Engineers ciplinary rule of the Board of P. 0. Drawer 1832') Austin, Texas 7:3760 Registration for Professional Engineers

Dear **Mr.** Newman:

You wish to !mow whether a proposed amendment to the Board of Registration for Professional Engineers Rule 131.151, revising Disciplinary Rule 5.4, is within the authority of the board to promulgate. We conclude **that** it is not.
Disciplinary :Rule5.4 presently reads as follows:

(iv) DR 5.4.. It shall be a violation of the Texas EngineeringPracticeAct for a registrantto submit or request a competitive bid to perform engineering services for any state agency, political stibdivision, county,municipality,district, authority, or publicly owned utility of the State ofTexas, or for any agency of dther entityof the federal government,when the procurement of such professional services is in violation of the state's Professional Services Procurement-Act or the Federal Property and Administrative Services Act of 1949,as amended, respectively.
(I) For purposes of this disciplinary rule, the board has adopted the Supreme Court of Texas' definition of competitive bidding, which in part is as follows:
Compe,titive bidding

. . . contemplates a bidiiingon the same undertaking upon each of the **same** material items covered by the contract.;

upon the same thing. It requires that all bidders be placed upon the same plane of equality and that they each bid upon the same terns and conditions involved in all the items and parts of the contract, and that the

p. 2082Mr. James Ken Nwman - Pa& 2 (J&457)'* )

proposal specify as to all bids the same, or substantiallys.imilar specifications.
(TexasEighway C~~wissionv. Texas Association of Steel Importers: Inc., 372 S.W.2D 525, Texas 1963);however, *
(II) the engineer shall not be considered in violation of the **Act** in cases where his engineering serr:lcesmay legally be offered, furnished, or plxformed as an integral part of research and development programs, construction projects, manuflxtured products, processes, or devices, which are to be offered, performed, supplied, or obts:Lned on the basis of competitive bids.

The proposed amendmentreads as follows:

(iv) DR 5.4. As public policy, competitive bidding for professional engineering services for public works is ,prohibitedby state and federal law, and particip~ation in such bidding activities by any engineer registered in this state shallbe considered a.vi~~:lation of the Texas Engineering PracticeAct.

I. Where there is a competitive situation in the procurement of professional engineering services by aqy state agency. political subdivision, coulty, municipality, district, authority, or publicly owned utility of the State of Texas, or by any agency or other entity of the federal govermect, all registered engineers involved will sseure that such professional contracts are awarded in conformance with the .approprlate procurement laws; that selection of the best engineer for the contract is sought and made on the bas.lsof demonstrated competence and overall qualifications, subject to negotiation of
a fair and reescoable fee; that only after selection by the pub:.icagency on the basis of demonstrated compete& and overall qualificationswill the engineer pr&de proposed or estimnted costs for that project-and enter into negotiationswith thepublic agene; concerninga fair and reasonable fee for the eng$eering services to be rendered; and that if an **zpeement** cannotbe reached on the amount of a fair and reasonable fee, **the** engineer shall terminate-negotiations and withdraw from consideration, ;Ildthe next best engineer max

p. 2083Mr. **James Ken**  Newman - Page :3 (JM-457)

iwarded. (Emphasisadded).
Essentially theproposed amendmentto Disciplinary Rule 5.4would require a bifurcatedprocesswhenever a professional engineer is tobe selected to work on a publLc project. The first stage of theprocess involves selectionof an er.gineer by **the** public **agency** on the.basis of "demonstrated skill and overall qualifications"; only after selection may the engineerprovide ir.formation as toproposed or estimated costs and then enter intonegotlr.tions with thepublic agency.

The process set forth in **the** proposed amendment substantially tracks the process set f#orthin the federal statutes governing selection by federal agemies of architects and engineers. See 40 U.S.C. 55541 et seq. IO **1:h.e**first stage of the federal processeach agency head requests data from architectural and engineering firms and, for eachproposedpro:e:ct, evaluates such data, togetherwith any such information submitted **by** other firms. After discussionswith no less than three firms, ani,on the basis of established and published criteria, the agency selectano less than three firmsdeemed tobe the **most** highly qualified to provide the servicesrequired. In **the** second stage of the process, the agency head then enters into negotiation with the firm selected a3 the most qualified. If the agency head cannotnegotiate a satisfactorycontractwith the first firm selected, he shall enter into negotj.ations with the second firm chosen, and so onwith the third.
Generally, the power:3of an administrative agency are derived entirely from legislative **enactment.** Corzelius v. Railroad Commission, 182 S.W.2d 412, 415 (Tax. Civ. App. - Austin 1944, no writ); broad Commission v. Fact Worth & Denver City Railway Co., 161 S.W.2d 560. 561 (Tex.Civ.App. - Austin 1942,writ ref'dw.o.m.). An agency has only such powers as are expressly conferred on it by statute, Stauffer v. City IofSan Antonio, 344 S.W.2d 158. 160 (Tex. 1961); Railroad Commissior~v. Fort Worth h Denver City Railway Co., s, togetherwith those powersnecessarily implied from powers and duties expressly given or imposed. City of ShermanV. Public Utility Commission~of Texas, 643 S.W.2d 681, 686 (Tex. 1983);Brown v. Humble Oil & Refining Co., 83 S.W.2d 935, 941 (Tex. 1935). If the statutes do not grant an agency thts power fo do a thing, then it has no such power. Nueces County Water Control and ImprovementDistrict v. Texas Water Rights Commission, 4gl S.W.2d 924, 929 (Tex.Civ. App. -Austin 1972. writ ref'd n.r.e.). You contend that **the** board is conferred authority to promulgate.the rule you propose by section 8(b) of article 3271a. V.T.C.S.. the Texas Engineering Practice Act, which contains **the** following in pertinent part: "The [bloard may

p. 2084**Mr.** James Ken N-n - Page 4 (m-457) ,

promulgate rules restricting competitive bidding." We conclude for two reasons that the above sentenceconfersno such authority.
First, without specif>%ngthe contourswhich eny rulepromulgated by the board to restrict c,ompetitive bidding may take, we conclude that any rule so promnlglltedcannot reach a situation in which a political subdivision of the state seeks to procure the profrssional services of an engineer.

The procedure by which political subdivisions of this state are governed with respect to l:he procurement of professional services is article 664-4,V.T.C.S., **which** provides the following:

Section 1. Th!isAct shall be known andmay be cited as the 'Irofessioaal Services Procurement Act.'

Sec. 2. **For** 'purposesof this Act the term 'professional services' shall mean those within the scope of thepractice of accounting,architecture, optometry, medicine or professional engineering as defined by the laws of the State of Texas or those performed by any licensed architect, optometrist, physician, surgeon, certified public accountant or professional engineer in connection with his professional employment or practice.

Sec. 3.No state agence

-- ,political subdivision, county, municipality, district, authority or publicly-ownedutility of the State of Texas shall make any contract for, or engage the professservices of.~any-licensed physician, optometrist, surgeon,archite&, certifiedpublic accountsntz registered engio&, or any group or association thereof, selectezx thebasis of competitivebids submitted contract services submitted for su+ contract or for such services to be performed!-but shall select and award such performed!-but contractsand enE:agesuch serviceson thebasis of contracts enE:age services demonstratedcompetence qualificationsfor the demonstratedcompetenceand qualifications type of professIona services to be performed and

professIona services performed at fair and rearznableprices, as long as professional fees are-consistent with and ndt higher

are-consistent publi&:d recommended practices than the publi&:d recommended practices and fees

various~%pplicable professional associa-. of the various~%pplicable professional associa-. maximum provided tions and do nc; exceed the maximum provided by any state law.

Sec. 4. Any and all such contracts,agreements or arrangements for professional services negotiated, made or entered into, directly or

p. 2085Mr. JamesKenN-n - Page 5 (JM-457)

indirectly, by any agency or department of the State of Texas, county, municipality, political subdivision,district, authorityor publicly-owned utility in any wilyin violation of the provisions of this Act or any part thereof are hereby declared to be void as contrary to the public policy of this State and shallnotbe given effect
or enforced by any Court of this State or by any of its public of:ficersor employees. (Emphasis added).

Section 8 ofActs 1971, Sixty-secondLegislature,chapter 38.page 73, the emergencyprovision of the Act, contains the following language detailing the public policy considerationsprompting the passage of theAct:

BY procure

. . The fact thatf:he selectionof certifiedpublic

accountants,architects,physicians,optometrists, surgeons and professional engineers on the basis of the lowestbitiplaces a premium on incompetence and is themost l&sly procedure for selectingthe least able or qt;lified and the most incompetent practitioner fo:; the performance of services vitally affecting the health, welfare and safety of **the** public .uldthat; in spite of repeated expressions of the legislature excepting such professional serrices from statutesproviding for competitive bii,ding procedures, some public officers contints to apply competitive bidding procedures to the selection of such professional personnel, creates an **emergency** of the greatest public importan~x to the health, safety and welfare of the people of Texas.

. . . (Emphasis added)..

whatever phrase the means by which political subdivisions professional serxlces is called, it is manifestly not "competitivebidding." The legislaturehas unequivocallydeclared its intent that political subdivisions of this state not procure professional services through the process commonly known as "competitive bidding." **Any** statute which confers to a licensing agency the authority to restrict the competitive btdding practices of its licenseescouldnot reach itsituation inwhich a political subdivision seeks the professional se,rvlcesof an engineer because political subdivisions cannot procure professional services by competitive bidding. Section 8(b) can logically only reach those situations in which the practice of competitive bidding is not otherwise forbidden by law or is affirmatively permitted or required; such a rule could
z reach a situation in which competitive bldding is affirmatively prohibited.

p. 2086Ur. JamesKen Newman - Page 6 **m-4571**

There is a second, ev~1mar+ **compelling,** reason. Even ifwe were to assume arguendo **that** se:lclon8(b) somehow provides authority'for theboard topromulgate the amendmentwhfch you propose,we wouldhave to declare that the rule is in violation of Texas statutory law, specificallyarticle 664-4,V.T.C.S. The rulemakingpower of administrative agencies does not permit the promulgation of ruleswhich are inconsistent with the expression of the legislature's intent ic statutes other than **those** under which the rules are promulgated. Thus, when the legtslature acts with respect to a particularmatter, the administrativeagencymyy not so actwith respect to themarter as to nullify the legislature'sactions, even though thematter iswithin the agency's regulatory f:Leld. State v. Jackson, 376 S.W.2d 341, 344-45 (Tex. 1964); Hartjnez v. Texas Employment Commission, 570 -- S.W.2d 28, 31 (Tex. Civ. QI. - Corpus Christ1 1978,no writ). In a brief submitted to this ofMce in support of your proposed amendment, It is suggested that thazproposed rule governs the conduct of registrants of your board only, that it in no way regulates the procedures to be employed by the political subdivisions themselves. This suggestion is disingaluous at best. The amendment which you propose would effectively tislpose on state and local **governments** the
same procedures which the United States Congress has imposed on the federalgovernment.

The proposed rule vio:latasthe Professional Services Procurement Act in at least two ways. **First, article**  **664-4,** V.T.C.S.. does not contemplate a bifurcated Iprocess;rather, the act requires that political subdivisionsmusl:award contracts for professional services in a one-stepprocess to a professionalwho is selected

on the basis of demonstratedcompetence and qualifications for thlrtype of professional services to be performed and at fair and reasonableprices, as long 8s professiolaalfees are consistent **with** and not higher than **t,h,e**publishedrecommendedpractices and fees of th<!various applicable professional associations and d,o not exceed the **maximum**provided by any state law.

V.T.C.S. **art. 664-4,**  **53.** If the Texas Legislature had intended that state agencies and local governments amploy a two-step procedure similar to that set forth in the federal act when procuringprofessional services, it could have done so. But it clearly did not. Second, the proposed ruk, would effectively eviscerate the clear statutory requirement tha: fees be considered as a factor in the awarding of such contracts forprofessionalservices. As we stated in AttorneyGeneral Opinion JN-155 (1984).

The clear terns of theAct itselfdo notmerely p+rmit the considerationby the agency of the fees charged for certain professional services, but

it. require Whi:letheAct expresslyprohibits the

p. 2087Hr. JamesKenNewman - Page 7 (Jl'f-452)

awarding of contracts for **certain** professional services on the **‘ basis**  of competitive bids, it clearlyrequires an agency to award such **contracts** 'on the basis oE demonstrated competence and quallflcatlons for the type of professional services to be plarformedand **at** fair and reasonable prices.' V.T.C.S. art. 664-4, 03 (emphasis added). Section 3 goes on to require that such professional fees be 'consistent with and not higher than the 'published recommended practices and fees for the various applicable professional associations ani. do not exceed, the maximum provided by any state law.' Therefore, the imposition of fees must be one factor considered by any agency in awardingacontract for such professional **services;** however, it cannot be the
a factor tobe cousidered.
Accordingly, we conclude that the proposed amendment to Disciplinary Rule 5.4 by the board is not authorized by the Texas EngineeringPracticeAct.

S U-M M ARY

The Board of Registration for Professional Engineers is not (conferred authorityby the Texas Engineering Pra,:tices Act to promulgate its proposed amendment to board Rule 131.151revising DisciplinaryRule 5.4.

JIM HATTOX Attorney Generalof Texas

JACK HIGETOWFR First AssistantAttorney Goneral

MART KZLLBR ExecutiveAssistant **Attormy** General

ROBERT GRAY SpecialAssistantAttorney General

RICK GILPIN Chairman.Opinion Committe~z
Preparedby JimMoellinger AssistantAttorney General

p. 2088