THE ATJXXZNEW GENERAL 

OF TEXAS 

CWAWPOLPD Ce MART=&- 

AUSTIN,TEXAR 787ll 

A1TDRNEY DICNSRAI. 

November '21, 1967 

Ron. Graves W. Landrum 

Vice Chancellor for Administration 

Office of the Chancellor 

The University of Texas 

System 

Austin, Texas 

Dear Mr. Landrum: 

Opinion No. M-160 

Re: Interagency contracts 

between the University 

of Texas and the Coordinating Board, Texas 

college and university 

system for the utilization of certain data 

processing equipment. 

Your request for an opinion reads, in part, as follows: 

,I . . . 

"Chapter 325, page 685, 59th Legislature, 

1965, R.S., provided for the development and 

management of automatic data processing systems 

in state agencies in an efficient and economical 

manner. The Coordinating Board, Texas College 

and University System, and The University of 

Texas at Austin established a data communication system between the two agencies which 

was evidenced by an Interagency Contract numbered 

IAC (66-67) - 338 and approved by the State Board 

of Control on February 15, 1967. 

"Subsequently, Interagency Contracts numbered IAC (68-69) - 007 and IAC (68-69) - 008 

were executed by the parties and duly approved by 

the State Board of Control on July 24, 1967, in 

furtherance of a more efficient data system and 

in conformity with the expressed legislative 

intent referred to above. Copies of the three 

agreements are enclosed for your information. 
Hon. Graves W. Landrum, page 2 (M-160) 

"We understand that payment under the approved interagency contracts will be deferred 

until the validity of such arrangement to furnish data equipment is approved by you. As you 

are aware, The University of Texas at Austin 

changed from the IEM 1401 System to the IBM 

360 Series System in the fall of 1966. The 

University has cooperated with other state 

agencies in the use of University data processing equipment for official use on a time available basis. The Coordinating Board has been a 

user of the data equipment under the above conditions. After the transition period the 

University continued to rent the IBM 1401 in 

order to provide continued backup for the new 

system and continued use by the Coordinating 

Board. The Board was desirous of updating its 

equipment for greater capabilities and more efficient data processing at a lesser cost. Whereupon, to be compatible with the IBM 360 Series 

equipment located at the University, it was 

agreed that rental of IBM 360-20 Series equipment to be located at the Coord'inating Board 

would be the best ultimate arrangement. The 

four months' rental on the IBM 1401 was continued 

while awaiting the installation of the IBM 360-20. 

In furtherance of this arrangement contracts were 

executed, orders for the rental of said equipment were issued, and the required approvals 

obtained. Under the arrangement The University 

of Texas at Austin submitted orders for the 

rental of IBM 360-20 equipment, thereby providing compatibility with the new IBM 360 Series, 

particularly the IBM 360-40. It was assumed 

that the joint use of equipment, people, services and programs to increase efficiency would 

be in conformity with Article 4413(32), Vernon's 

Civil Statutes, which provides that a state agency 

may contract for the furnishing of necessary 

technical services, services of employees, and 

the services of materials and equipment. 

-149- 
Hon. Graves W. Landrum, page 3 (M-160) 

"Based upon the above facts, we would appreciate your advice as to the following question: 

"Are Board of Control approved Interagency 

Contracts numbered IAC (66-67) - 338, IAC (68-69) 

- 007 and IAC (68-69) - 008 by and between The 

University of Texas at Austin and the Coordinating Board, Texas College and University 

System, which provide an arrangement for the 

utilization of certain data processing equipment for the benefit of the State of Texas, 

valid obligations upon which the State Comptroller can issue warrants in payment of such 

services?" 

Under the contract, the University of Texas as the 

performing agent has agreed to provide certain data processing systems and the Coordinating Board, Texas College and 

University System as the receiving agent has agreed to pay 

to the University of Texas the cost of such services. The 

interagency contracts referred to in your request have been 

approved by the State Board of Control. 

Section 3 of Article 4413(32), Vernon's Civil Statutes, provides in part: 

"Any State agency may enter into and 

perform a written agreement or contract 

with other agencies of the State for furnishing necessary and.authorized special 

or technical services, including the services of employees, the services of materials, 

or the services of equipment. The actual 

cost of rendering the services, or the nearest 

estimate of the cost that is practicable, 

shall be reimbursed, except in the case of 

service rendered in the fields of national 

defense or disaster relief, or in cooperative efforts, proposed by the Governor, to 

-7.50. 
Hon. Graves W. Landrum, page 4 (M-168) 

promote the economic development of the 

State. . . .II (Emphasis added.) 

In construing the provisions of Article 4413(32), 

it was stated in Attorney General's Opinion S-138 (1954): 

"It should be noted that the three types 

of authorized services - services of employees, 

services of materials, and services of equipment - are listed disjunctively. Thus, a contract may be for each type separately or for 

any combination of the three. Looking to the 

complete language of the statute, we think the 

term 'furnishing services' is used in the broad 

sense of making the particular commodity (labor, 

materials or equipment) available for the benefit or use of the receiving agency instead of in 

the narrow sense of performance of labor or 

useful work. It is our opinion that either 

materials or equipment may be furnished without 

any further attendant 'services'." 

In answer to a similar question, it was held in Attorney General's Opinion C-78 (1963): 

"Section 6 of Article 4413(32), Vernon's 

Civil Statutes, reads as follows: 

"'Payments for such services by a receiving agency shall be made from the appropriation items or accounts of the receiving 

agency from which like expenditures would 

normally be made, based upon vouchers drawn 

for this purpose by the receiving agency payable to the furnishing agency. . . .' 

"It is the opinion of this office that 

the State Building Commission has the power 

and authority under Section 3 of Article 4413(32) 

to enter into agreements or contracts with 

other State agencies whereby the Commission 

performs services for the other agency. The 

services rendered by the State Building 

-7Sl- 
. 

Hon. Graves W. Landrum, page 5 (M-160) 

Commission would be 'special' or 'technical 

services' within the meaning of Article 4413(32). 

"In regard to the specific problem of the 

installation of the IBM machine, the Building 

Commission and the Department of Public Welfare 

may enter into a contract whereby the Building 

Commission will draw the plans and specifications for the installation and oversee the actual 

installation. The Building Commission could subcontract the actual installation work since this 

building is still under the control and management of the Commission. The contract would be 

subject to the limitations on interagency contracts and agreements contained in Article 4413(32), 

and payment would have to be made in accord with 

Section 6 of Article 4413(32) as quoted above." 

Applying the foregoing principles to the interagency 

contracts in question, we note that the equipment in question is for the joint use of data processing, services and 

programs to increase efficiency, and thus is in conformity 

with the provisions of Article 4413(32). You are, therefore, 

advised that the interagency contracts referred to in your 

request are valid and constitute valid obligations upon which 

the Comptroller of Public Accounts may issue warrants in payment of the services rendered pursuant to the contract. 

SUMMARY 

Under Article 4413(32), Vernon's Civil 

Statutes, the University of Texas may enter 

into interagency contracts with the Coordinating Board, College and University System 

whereby it will furnish the Coordinating 

Board at cost certain data processing equipment and services. 

C. MARTIN 

rney General of Texas 
Hon. Graves W. Landrum, page 6 (M-160) 

Prepared by John Reeves 

Assistant Attorney General 

APPROVED: 

OPINION~CCMMITTEE 

Hawthorne Phillips, Chairman 

Kerns Taylor, Co-Chairman 

W. V. Geppert 

Charles E. Morris 

Alan Minter 

Larry Craddock 

A. J. CARUBBI, JR. 

Staff Legal Assistant 

-753-