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        The Attorney                   General of Texas
                            February        21,    1980




     Honorable Charles Evans, Chairman               Opinion No. l~q- 14 2
     House Committee on Government
       Organizations                                 Re: Authority    of  the   Texas
     P. 0. Box 2910                                  Department of Community Affairs
     Austin, Texas 78769                             to enter    into an interagency
                                                     contract   with  the   Governor’s
                                                     Committee on Aging.

     Dear Representative    Evans:

           You ask two questions concerning an interagency contract entered into
     by the  Governor’s Committee on Aging and the Texas Department           of
     Community Affairs.      Your first question involves state law, while your
     second question involves federal law.

           You first ask:

                   May the Texas Department of Community Affairs
                and the Governor’s Committee on Aging enter into an
                interagency    contract under which the department
                performs the following services for the committee:
                ‘general administrative services, including fiscal and
                accounting     services,  legal  services,   personnel
                services, public information services, management
                auditing services, and other administrative services?’

     We believe both entities have authority to contract under the Interagency
     Cooperation Act, V.T.C.S. art. 4413(32). The Governor’s Committee on
     Aging is also described as a “state agency.” See Human Resources Code,
     S 101.025(a). The Interagency Cooperation Act authorizes any state agency,
     including a department, to enter into written contracts with other agencies
     of the state.     V.T.C.S. art. 4413(32), 5 3.       The Department  and the
     Committee have in fact entered into a contract to perform the services
     detailed in your question. It has been approved by the State Purchasing and
     General Services Commission pursuant to section 4 of article 4413(32),
     V.T.C.S., in exercise of responsibilities transferred to it from the Board of
     Control pursuant to section 1101 of article 601b, V.T.C.S., enacted by the
     66th Legislature, Acts 1979, 66th Leg., ch. 773, at 1908,1956.




                                       P.    457
Honorable Charles Evans    -   Page Two      (MW-142)


        Section 3 of the Interagency Cooperation Act authorizes contracts for furnishing
“necessary and authorized special or technical services, including the services of
employees, the services of materials, or the services of equipment,” a broad grant of
authority.    The validity of an interagency agreement is for the State Purchasing and
General Services Commission in the first instance. See Attorney General Opinion H-446
(1974). In reviewing administrative      action, the courts apply an abuse of discretion
standard. Railroad Commission v. Galveston Chamber of Commerce, 145 S.W. 573 (Tex.
1912). In view of the broad language describing the subject matter of interagency
contracts, we believe the action of the State Purchasing and General Services Commission
in approving the contract is valid.

      Your second question is as follows:

              If employees of the Texas Department of Community Affairs
           who are not employed under a merit system perform these services
           for the Governor’s Committee on Aging under an interagency
           contract, is the committee ineligible under federal law to receive
           federal funds for programs for older persons?

The Governor’s Committee on Aging is the state agency designated to handle federal
programs relating to the aging that require action within the state and that are not the
specific responsibility of another state agency. Human Resources Code, 5 101.025(a). The
Federal Older Americans Act, 42 U.S.C. Sections 3001 - 3037a, requires that the agency
receiving federal funds under the Act operate under a state plan which provides for a
merit system of personnel administration.         42 U.S.C. S 3027(a)(4).   Laws, rules,
regulations, and policy statements effectuating such methods of personnel administration
are part of the State plan, and are set out in 45 C.F.R. Part 1321. -See 45 C.F.R.
5 1321.37(a).

       If certain portions of the State plan are to be administered by an agency other than
the one designated for that purpose, the methods of administration required by federal
regulation are still applicable.    45 C.F.R. 5 1321.35(b). Whenever the Commissioner of
H.E.W. finds that there is a failure to comply substantially with any provision of the Older
Americans Act in the administration        of the state plan, he shall, after notice and an
opportunity to be heard, stop federal funds. 45 C.F.R. § 1321.20(a). Based on a reading of
these regulations, we conclude that the Committee incurs a risk of having federal funds
cut off when it contracts to have administrative services performed by persons who are
not employed under a merit system. Of course, any decision to interrupt funds is at the
option of the federal government, and action may be taken only after the Committee is
given notice and an opportunity to be heard. We note for your information that an opinion
on the validity of this contract under federal law can be obtained from the Federal Office
of Personnel Management.




                                            P.   458
Honorable Charles Evans - Page 3       (MW-142)




                                       SUMMARY

           The Governor’s Committee on Aging has authority under state law
           to enter into a contract with the Texas Department of Community
           Affairs for the performance      of administrative  services.  The
           performance    of such services must be consistent with federal
           regulations in order to avoid interruption of federal funds to the
           committee.




                                            MARK WHITE
                                            Attorney General of Texas

JOHN W. FAINTER, JR.
First Assistant Attorney General

TED L. HARTLEY
Executive Assistant Attorney General

Prepared by Susan Garrison
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

C. Robert Heath, Chairman
Bill Campbell
Bob Gammage
Susan Garrison
Rick Gilpin




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