Nowmber 5, 1986 

Honorable Bob Bush 

Chairman 

Committee on Judiciary 

Texas House of Representat:Lves 

P. 0. Box 2910 

Austin, Texas 78769 

Opinion No. JM-573 

Re: Whether a municipal housing 

authority may participate in the 

Consolidated Supply Program of the 

Department of Housing and Urban 

Development without complying with 

competitive bidding statutes 

Dear Representative Bush: 

You inquire whether t.he competitive bidding requirements of the 

Department of Housing and 1Jrban Development [HUD] for its Consolidated 

Supply Program [CSP] meet: the bidding requirements of state law, 

thereby allowing municipal housing authorities to participate in the 

Consolidated Supply Program in lieu of seeking competitive bids. We 

conclude that participation in the CSP would not constitute compliance 

with the requirements of competitive bidding specified in Texas 

statutes. 

The basic concept c,f the CSP is that HUD enters into an 

open-ended contract with suppliers of common use items under which 

housing authorities are entitled to make purchases. The housing 

authorities deal directly with the suppliers listed in a CSP contract. 

All purchase orders, bil:.ing. and payments are handled by direct 

contact between the hous::ng authorities and the suppliers without 

further HUD involvement. Copies of CSP catalogs listing current 

contracts and ordering in:iormation are published by HUD and distributed to housing authoritiw. - See HUD Handbook 7460.8. 

A contract between HUI) and a supplier normally is for a period of 

one year. It is awarded on the basis of competitive bids submitted by 

suppliers to HUD in response to formal invitations for bids published 

by HUD "in appropriate mei:La." The notice published in appropriate 

media announces that HUD will commence negotiating for the purchase 

agreements for the current year and that offers from suppliers will he 

received covering specified supply items until a closing date. The 

supplier certifies that tvr supply item is being made available to 

housing authorities through a purchase agreement at discounted prices 

that are lower than those at which the housing authorities could 

purchase comparable quawities of those items from the supplier 

through other purchasing ch,annels. Consolidated supply contracts are 

awarded to responsible bidders whose bids are at or below the average 

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Eonorable Bob Bush - Page 2 (JM-573) 

-, 

price for the supply item. If less than three bids are received, the 

average or below method of award is not used and the award is made to 

responsible bidders whose! prices are reasonable. A consolidated 

supply contract does not obligate HUD or any housing authority to 

purchase any number or anount of the supply items covered by the 

contract. If there are two or more consolidated supply contracts 

covering items supplied uder the same specification and the contracts 

provide for a price differential, a housing authority shall place in 

its files a justification if it purchases from a supplier other than 

the one offering the lowest price. See 24 C.F.R. PS965.601-965.605 - 

(1985) . 

This office prev1ousl.y concluded that housing authorities, as 

divisions of cities, are subject to the competitive sealed biddingrequirements of article 2368a. V.T.C.S. Attorney General Opinion 

MW-132 (1980). In addj.t:ion, article 2368a.3, V.T.C.S., which 

specifies competitive bidding procedure for public works contracts, 

expressly applies to housin:S authorities. It is our opinion that the 

bidding procedure used by HUD for consolidated supply contracts would 

not constitute compliance with the requirements of the state bidding 

statutes for contracts thai: are subject to those statutory procedures. 

The competitive sealed bidding procedure provided in article 

2368a for cities "shall be used for the award of all contracts subject 

to its provisions." with a different procedure provided for high 

technology procurements. V.T.C.S. art. 2368a 52(b). Article 2368a. 

section 2(b) provides, in part. that 

[wlhenever the competitive sealed bidding procedure applies to a proposed contract, notice of 

the time and plac#e when and where such a contract 

shall be let shaL:L be published in such city once 

a weak for two (2) consecutive weeks prior to the 

time set for 1elXing such contract, the date of 

the first publicittion to be at least fourteen (14) 

days prior to the date set for letting said 

contract; and sr.id contract shall be let to the 

lowest responsib:Le bidder. . . . If there is no 

newspaper published in such city, then the notice 

of letting such contract shall be given by causing 

notice thereof to be posted at the city hall for 

14 days prior to the time of letting such 

contract. 

Article 2368a.3, V.T.C.S., provides that a housing authority, 

among other governmental entities, is required to award a contract for 

the construction, repair, or renovation of a structure, road, highway, 

or other improvement or addition to real property, on the basis of 

competitive bids. the advertisement of which must be published locally 

and within specified dates. It also provides for mailing notices for 

bids to requesting organiz;~tions not later than the date on which the 

first newspaper advertisemczt is published and mandates the opening of 

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Honorable Bob Bush - Page 3 (JM-573) 

bids at a public meeting cr at the office of the governmental entity. 

See V.T.C.S. art. 2368a.:3:, 111-4. Unless all bids are rejected, 

Gtracts shall be awarded to the lowest responsible bidder, 

but a contract may not be awarded to a bidder who 

is not the lowest bidder unless prior to the award 

each lower bidder is given notice of the proposed 

award and is giv~$n an opportunity to appear before 

the governing bcdy of the governmental entity or 

the designated representative of the governing 

body and present evidence concerning the bidder's 

responsibility. 

- Id. 15. 

Article 2367a, secticn 1, V.T.C.S., provides that where bidding 

is required and two or more responsible bidders submit the lowest and 

best bids for the proposed city or district contract and the bids are 

identical, one bidder shall be selected by the casting of lots. 

Compliance with statutory procedure for competitive bidding is 

mandatory. See Limestone l:ounty v. Knox, 234 S.W. 131. 134 (Tex. Civ. 

APP. - Dallas921, no w&:). In Niles v. Harris County Fresh Water 

Supply District No. lA, 3:6 S.W.2d 637 (Tex. Civ. App. - Waco), writ 

ref'd, 339 S.W.2d 562 (19611:1. 

question to be let to the 

where a statute required the contract 

"lowest responsible bidder" after publication of notice, the court stated that "the prime purpose of such a 

provision is to stimulate competition and compliance with it is 

mandatory. The term 'lowest responsible bidder' involves compliance 

with statutory requiremen:rr relating to competitive bidding." The 

Texas Supreme Court has s,:ated that noncompliance with the mandatory 

statutory procedures for competitive bidding cannot be excused on the 

ground that no one is actually hurt by the violation. See Texas -- 

Highway Commission v. Texas Association of Steel Importers, Inc., 372 

S.W.2d 525, 529 (Tex. 1963). Earlier, another court in Headlee v. 

Fsyer, 208 S.W. 213. 217-18 (Tex. Civ. App. - Dallas 1918, writ 

dism'd) stated that 

[the competitive bidding] act requires the publication of notice of the intention to award the 

contract, either, in a newspaper or by posting 

notices at the courthouse door. . . . It follows 

then that the commissioners' court having adjudged 

that it would rc:ceive bids on February 14th. and 

having failed to make publication of that fact, 

there was in the legal sense no publication at 

all, and, there being no publication at all, the 

fact that bidde,rs did attend and no injury 

resulted is of no consequence, since by the act 

every contract let without publication is void. 

Otherwise, the purpose of the Legislature could in 

every similar case be defeated by showing that no 

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Honorable Bob Bush - Page 4 (JM-573) 

injury resulted. The lawmaking authority has 

decreed that the publication shall be made in any 

event, and while it may appear in this case that 

what was intended has been accomplished, we feel 

that the fact xi11 not warrant us in sweeping 

aside the vital r,equirement of the law. 

The legislature expressly has exempted certain contracts from the 

requirements of competitirr bidding. Article 2368a, section 2(a) 

provides that, except in the case of exempted procurements, no city 

with a population of 5O.OOC or more shall make a contract requiring an 

expenditure or payment exceeding $10,000 without submitting the 

proposed contract to competitive sealed bidding. In the case of a 

city with a population of less than 50,000, a contract for $5,000 or 

less is not subject to cmnpetitive sealed bidding. The statutory 

exempted procurements include: 

(1) procurements made in case of public 

calamity. where it becomes necessary to act at 

once to appropriate money to relieve the necessity 

of the citizens or to preserve the property of the 

city; 

(2) .procurements necessary to preserve or 

protect the put'lic health or safety of the 

citizens of the city; 

(3) procurements made necessary by unforeseen 

damage to public property, machinery, or equipment ; 

(4) procurements for personal or professional 

services; 

(5) procurements for work done and paid for by 

the day, as such ,irork progresses; 

(6) the purchase of land or right-of-way; and 

(7) procurements where the functional requirements of the city can be satisfied by only one 

source. 

V.T.C.S. art. 2368a. 91. ALno, section 122.014 of the Human Resources 

Code exempts the procurement of products or services of blind or other 

severely disabled persons from competitive bidding procedures. - See 

Attorney General Opinions .Jl4-444 (1986); JM-385 (1985). 

Accordingly, funds for 'purposes such as the protection of public 

health may be expended witbout competitive bids, and the requirement 

of publication of notice of the letting of a contract is dispensed 

with when such an exception exists. See Browning-Ferris, Inc. v. City - 

? 

p. 2556 
Eonorable Bob Bush - Page 5 (JM-573) 

of Leon Valley, 590 S.W.2d 729, 734 (Tex. Civ. App. - San Antonio 

1979, writ reffd n.r.e.). Obviously, as expressly provided by article 

2368a. the statutory procedures for competitive bidding do not apply 

to cities with a populatior. of 50,000 or more for contracts of $10,000 

or less or to cities with a population of less than 50,000 for 

contracts of $5,000 or less. 

The only exceptions to the competitive bidding requirements are 

those contained in the statutes themselves. See Attorney General 

Opinions JM-186 (1984); PICI-,535, MW-439 (1982). We are aware of no 

special exception from the state's bidding requirements that are 

applicable to municipal housing authorities for contracts to purchase 

common use items and equ!.pment. The Housing Authority Law itself 

contains no special bidd1r.g procedures for housing authorities that 

differ from the general law provisions for competitive bidding and no 

exceptions or exemptions from competitive bidding for housing 

authorities. See V.T.C.S. art. 1269k. While this office does not 

construe the chzer powers of a city in the opinion process, we point 

out that article 2368a, section 2(e), V.T.C.S., provides that provisions in reference to notlce, advertisements of notice, requirements 

as to the taking of sealed bids based on specifications for public 

improvements or purchases, and the manner of letting of contracts, as 

contained in the charter of a city, if in conflict with the provisions 

of article 2368a. shall be followed in such city notwithstanding any 

other provision of article 2368a. Also, article 2368a.3, section 7(a) 

provides that to the extent a municipal home-rule charter conflicts 

with that act, the charter prevails. 

SUMMARY 

As to contrz.cts that are subject to the 

competitive bidi.ing requirements specified in 

Texas statutes for contracts entered into by 

cities, the comIletltive bidding of the federal 

Department of Housing and Urban Develcpment for 

its Consolidated Supply Program would not constitute compliance with or a substitute for the 

state's bidding r,equiremants and would not permit 

municipal housin:g authorities to participate in 

the Consolidated Supply Program without seeking 

competitive bids. 

Very truly you L-l k /ili%h 

JIM MATTOX 

Attorney General of Texas 

JACK RIGHTOWRR 

First Assistant Attorney Gen,eral 

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Honorable Bob Bush - Page 6 (X4-573) 

MARY KELLER 

Executive Assistant Attorney General 

RICK GILPIN 

Chairman, Opinion Committee 

Prepared by Nancy Sutton 

Assistant Attorney General 

p. 2558