The Honorable Homer A. Foerster Opinion No. H-921

Executive Director- _.,., State'Hoard'of'Control .?Re,: '. Whether sheltered P.~0.Box::l3047,Capito?Station. worksho$brganised by Austin,'Texas '.70711-;"- theDepartment of Mental H'ealthand Mental Retarda- ~tionmay bid on state contracts.
bear'Mr."',Fo'erstert,:
Several unsheltered $orkshops'organized"by-.the.-'Texas Department of,,MentalHealth and Mental Retardation under article 5547~202; section 2.17(b), V.T.C.S., havesasked to be placed on the bid list maintained by the~Board.,ofControl so that:they,willtbe::jnvited tobid on',statecontracts; YOU wish to'know,whether 'suchsheltered workshops may.;bid'on state contracts'under:the State Purchasing Act-of.1957, article 664-3,;V.T.C.S.; and if theymay, whether~~the'goods they.produce are entitled to the preference'set:out in section 13 of article 664-3. ~~.. Articles5547-202, section 2.17(b),..read.s‘in pertinent part:
(1)From funds available to it the

Department [ofMental Health and Mental Retardation] is authorized toprovide mental'health andmental retardation. services through the operation of sheltered workshops and to contract with individuals or public or private entities for all or any part of such services.The Honorable Homer A. Foerster -page 2 (H-921)

(2)The Department is authorized to contractwith individuas or public E private entities for the sxe of @ and servrces oroducedor made=iEble by the sheltered workshop programs. The goods and servicesmay be sold on a cash or credit basis.
'(3)An operating fundmay be established for each sheltered workshop operated by the Department

. . .and all proceeds from the sale of sheltered workshop goods and services shall be~deposited in the operating fund .,. . . Money in theoperating funds may only~be expended ,inthe operation of sheltered'workshops for thepurchase of supplies, materials, services, and equipment

. . . . (Emphasisadded).

These provisions authorize the Department of Mental Health and Mental Retardation to establish sheltered workshops and make bindina contracts to sell the coeds theyproduce to public entities. __ See Stauffer v. San Antonio, 344 S.W.2d

-- 158 (Tex.Sup. 1961); State v. Ra land Clinic-Hospital, 159 S.W.2d 105 (Tex.Sup.m. -"Xi&-entity" hasbeen defined to include the state and its political and administrative subdivisions. Wade v. New Jersey Turn ikeAuthorit

- -~ + di %2d A.2d 232 (N.J.Sup. 19m SeeAn erson v. 227 (Tex..Civ.App. --Austin953, mandssdenied). We find nothing in the State Purchasing Act of 1957 that orevents the Department from contractinq through the Board of-Control to sellproducts of the sheltered public entities. Article 664-3, subsections provide standards for evaluating bidders for the bidders list and for awarding contracts. do not distinguish between private firms andworkshops to 8(b)and (c), inclusion on These standards state agencies. employees, or Section 12 of article 664-3 forbids members, appointees of the Board from being interested ina contract or bid, but there isno comparable statute limiting state agencies from having an interest in contracts or bids with the Board. See also Attorney General Opinion M-743 (1970). We take noteof thePrison-Made Goods Act of 1963,which does notmerely permit the Board of Control to contract with
a state agency, but actually requires it topurchase goods from the Texas Department of Corrections. V.T.C.S. art. 6203c, § 9. SeeAttorney General Opinion M-126 (1967).

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P- 3861The Honorable Homer A. Foerster -page 3 (H-921)

Other states have enacted laws requiring state agencies to purchase goods produced by state owned and operated workshops for the handicapped. See Ga. Code Ann. § 99-801 et seq.; Md. Code Ann. art. 30.X 4-6A; Mass. Ann. Laws cr 6, 99 134, 143.

InAttorney General Opinion M-743 (1970)this office decided that theBoard of Control could award the Department of Corrections a contract to refurbish and rebind textbooks for the State, provided that the competitive bid provisions of article 664-3were complied with. The opinion discussed article 16, section 21 of the Texas Constitution, which requires that certain articles be purchased under competitive bids, and stated~that-"[slection 21 contains no statement nor implication of distinction between bids by private enterprise and a state agency." **Nor** dowe note any such distinction inarticle 664-3. The Department of Mental Health and Mental Retardation may contract through the Board of Control to sell goods produced by sheltered workshops, and itmay bidon state contracts under article 664-3 as a step in contract formation.
Section 13of article 664-3 reads as follows:
The following manufactured products, if theymeet the state specifications as to quantity, quality, and price, shall have preference in purchases made of those types of itemsby the Board: Products of workshops, organizations, or corporations whose primary purpose is training and employingmentally retarded persons or physically handicapped persons.

We believe that this preference isvalid. See Attorney - General Opinions O-3312 (1941)and O-1678 (1939). It embodies the legislative intent to prefer goods produced by "workshops

. . .whose primary purpose is training and employing mentally retardedpersons . . . " if thegoods meet state specifications. See also V.T.C.S. arts. 664-5, 664-6. -- Sheltered workshops are organized'under article 5547-202, section 2.17(b) to "provide mental health andmental retardation services." Themoney they earnmust go back into operating andmaintenance expenses. The primary purpose of the workshop isnot tomake profits, but tobenefit the participants. We conclude that the sheltered workshops established formentally retarded people by the Department qualify for thepreference givenby section 13 of article 664-3.

P. 3862The Honorable Homer A. Foerster - page 4 (H-921)

SUMMARY
The Department ofMental Health and Mental Retardation may contract to sell the products of its sheltered workshops to the State under article 664-3, V.T.C.S. The goods produced by such sheltered workshops formentally retarded persons are entitled to the preference set out in section 13 of article 664-3.

APPROVED: Very truly.yo,urs,

8f JOLL<@

.

Attorney General of Texas

DAVID M. KENDALL, First Assistant

Opinion Committee jwb

p. 3863