## THE ATJXXZNEW GENERAL OF TEXAS

**CWAWPOLPD Ce**  **MART=&-** AUSTIN,TEXAR 787ll A1TDRNEY DICNSRAI. November '21,1967

Ron. Graves W. Landrum Vice Chancellor forAdministration Office of the Chancellor The University of Texas System Austin, Texas

Dear Mr. Landrum: Opinion No. M-160

Re: Interagency contracts between the University ofTexas and the Coordinating Board, Texas college and university system for the utilization of certain data processing equipment.

Your request foran opinion reads, inpart, as follows:
,I

. . . "Chapter 325, page 685, 59th Legislature, 1965, R.S., provided for the development and management ofautomatic 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 atAustin established adata communication systembetween the two agencies which
was evidenced by an Interagency Contract numbered IAC (66-67) - 338and approved by the State Board ofControl 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 ofControl onJuly 24, 1967, in furtherance ofamore efficient data system and in conformity with the expressed legislative intent referred to above. Copies of the three agreements are enclosed foryour information.Hon. Graves W. Landrum, page 2 (M-160)

"Weunderstand that payment under the approved interagency contracts will be deferred until thevalidity of such arrangement to furnish data equipment is approved by you. As you are aware, The University of Texas atAustin 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 availablebasis. The Coordinating Board has been a user of the data equipment under the above conditions. After the transition period the University continued torent the IBM 1401 in order to provide continued backup for the new system and continued useby theCoordinating Board. The Boardwas desirous ofupdating its equipment for greater capabilities and more efficient data processing at a lesser cost. Where

### upon, tobe compatible with the IBM 360 Series equipment located at the University, itwas agreed that rental of IBM 360-20 Series equipment tobe located at the Coord'inatingBoard would be thebest ultimate arrangement. The fourmonths' rental on the IBM 1401was 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 atAustin submitted orders for the rental of IBM 360-20 equipment, thereby providing compatibility with the new IBM 360 Series, particularly the IBM 360-40. Itwas assumed that the joint use of equipment, people, services and programs to increase efficiency would be inconformity with Article 4413(32), Vernon's Civil Statutes, which provides that a state agency may contract for the furnishing ofnecessary technical services, services of employees, and the services ofmaterials 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 ofControl approved Interagency Contracts numbered IAC (66-67) - 338, IAC (68-69)

- 007 and IAC (68-69) - 008by and between The University of Texas atAustin and the Coordinating Board, Texas College and University System, which provide anarrangement for the utilization ofcertain data processing equipment for thebenefit of the State ofTexas, valid obligations uponwhich the State Comptroller can issuewarrants inpayment of such services?"

Under the contract, theUniversity ofTexas as the performing agent has agreed to provide certain data processing systems and theCoordinating Board, Texas College and University System as the receiving agent has agreed to pay to the University ofTexas the cost of such services. The interagency contracts referred to inyour request have been approved by the State Board ofControl.

Section 3 ofArticle 4413(32), Vernon's Civil Statutes, provides inpart:

"Any State agency may enter into and perform awritten 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 ofrendering the services, or thenearest estimate of the cost that is practicable, shall be reimbursed, except in the case of service rendered in the fields ofnational defense ordisaster relief, or incooperative 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 ofArticle 4413(32), itwas stated inAttorney General's Opinion S-138 (1954):

"Itshould be noted that the three types ofauthorized services - services of employees, services ofmaterials, and services of equipment - are listed disjunctively. Thus, a contract maybe 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' isused in thebroad
sense ofmaking the particular commodity (labor, materials orequipment) available for thebenefit oruse of the receiving agency instead of in thenarrow 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'."

Inanswer to a similar question, itwas held inAttorney General's Opinion C-78 (1963):

"Section 6 ofArticle 4413(32), Vernon's Civil Statutes, reads as follows:
"'Payments for such services by areceiving agency shall be made from the appropriation items oraccounts of the receiving agency fromwhich like expenditures would normally be made, based uponvouchers drawn for this purposeby 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 ofArticle 4413(32) to enter into agreements orcontracts 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 themeaning ofArticle 4413(32).

"Inregard to the specific problem of the installation of the IBMmachine, the Building Commission and theDepartment 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 inArticle 4413(32), and payment would have tobe made inaccord with Section 6 ofArticle 4413(32) asquoted above." Applying the foregoing principles to the interagency contracts inquestion, we note that the equipment inquestion is for the joint use ofdata processing, services and programs to increase efficiency, and thus is inconformity with the provisions ofArticle 4413(32). You are, therefore, advised that the interagency contracts referred to inyour request arevalid and constitute valid obligations upon which theComptroller of PublicAccounts may issuewarrants in payment of the services rendered pursuant to the contract.

SUMMARY

UnderArticle 4413(32), Vernon's Civil Statutes, the University ofTexas may enter into interagency contracts with theCoordinating Board, College and University System whereby itwill furnish theCoordinating Board at cost certain data processing equipment and services.

C. MARTIN rney General ofTexasHon. 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 LegalAssistant

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