           .




      Hon. M. T. Harrington        Opinion No. S-138
      Chancallor
      Texan A. & M. College System Re: Interpretation of the Interagency
      College Station, Texas            Cooperation Act with respect to
                                        contracts between state agencies
                                        for furnishing materials, and
      Dear Mr. Barrington:              related questions.

                Your opinion request deals with the general problem of the
      authority of one state agency to furnish materials and supplies to
      another state agency and the methods by which this objective may be
      accomplished. You have presented two specific instances in which
      the Texas Agricultural Experiment Station has sought to contract with
      othar state agencies for the transfer of products from its farm opera-
      tions, wherein difficultias have bean encountered in finding a legal
      method to effectuate the transfer and to reimburse the Experiment
P..   Station for the products.

                The first instance which you mention concerns a proposed
      contract between two branches Of the A. & M. College System - the
      Agricultural Experiment Station and the MainnCoFblege- whereby the
      Experiment Station would furnish milk produced in its Dairy Husbandry
      Department to the College Creamery. Thin contract was submitted to
      the Board of Control for approval under the Interagency Cooperation
      Act (Chap$cr 340, Acts 53rd Leg., R.S., 1953, codified as Article 4413
      (32) in Vernon's Civil Statutes), but the Board of Control refused to
      approve it on the ground that the Act does not authorize a contract
      providing for the actual sale of agency property to another agency.

                In the second instance the Agricultural Experiment Station
      sold a quantity of seed rice which had been pro&cad on one of its
      substation farms to the Texas Prison System for crop planting on one
      of the Prison Synttem farms. This purchase was made on the open market
      through the Board of Control pursuant to Article 660 of Vernon's Civil
      Statutes. The Comptroller of Public Accounts refused to issue a mar%%&
      in payment for the rice on the ground that one state agency cannot sell
      to another state agency without express atatutory authority and no INCh
      authority existed for this contract. (The applicability of the Inter-
      agency Cooparatimn Act was not involved in the Comptroller's refusal,
      aa the agencies had not attempted to make the transfer in accordance
      vith that Act.)
Hon. M. T. Harrington, page 2 (S-138)



          The reason for the passage of the Interagency Cooperation
Act IS stated in the preamble as follows:

          '1.,.. efficiency and economy in the administration
     of the State Government are necessary to carry out effec-
     tively the duties of the government to its citizens, and
     good faith attempts to establish economical and efficient
     arrangements for th8 exchange of services, materials and
     equipmant between agencies of the State have sometimes been
     thwmrted."

          Section 3 of the Act provides that

          '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
     s@rvices, including the services of employees, the services
     of materials, or the services of equipment. . . ."

          In declining to approve the proposed milk contract, the
Board of Control has stated that they interpret this provision to
mean that service contract6 only are permissible under the Act.
Apparently it is their view that a contract which provides for the
furnishing of materials without the performance of an attendant
"service" either of employees or of equipment is not authorized.

          It should be noted that the three types of authorized ser-
vices - 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. Look-
ing to the complete language of the statute, we think the term
"furnishing services" is used in the broad sense of making the par-
ticular commodity (labor, materials or equipment) available for the
benefit ,or use of the receiving agency instead of in the narrow sense
of perfarmance of labor or useful work. It is our opinion that either
materials or equipment may be furnished without any further attendant
"services."

          In the case of equipment, the statute evidently wa5 intended
to permit temporary utilization of equipment belonging to another
agency where it is more economical and efficient to employ equipment
already owned by the other ggency than it is to llprchaseadditional
equipment or to make a contract with private concerns to have the work
performed. The equipment may be furnished either with or without a
concurrent furnishing of labor or materials. The services of eqUi~nINkt,
i.e., use of the equipment, can be furnished without a permanent transfer
of possession or ownership, and we would agree that this provision does
not contemplate a sale or permanent transfer of equipment.
        .    .




Eon. M. T. IEairington,page 3 (s-138)



          Similarly, we interpret the statute to mean that an agency
may furnish lneterialsto another agency without the furnishing agency's
performing any other type of service in connection with their use.
The Word "materials" obviously is used to mean consumable supplies and
commodities a# distinguished from equipment, which i# mot consumed or
expended through use. In the very nature of thing6 the furnishing of
Supplies and nterials contemplates apernment    rslinquiahment by the
furnishing agency. It is true that this is in practical effect a sale
or a gift, &pending on whether reimbursement is made, in that it is
a transfer of the full beneficial u#e to which the materials IM;Ybe
put. But a transfer of materials with an attendant service would also
be equivalent to a 6ale or gift so far as the materials themselves are
concerned. To hold that the statute does not permit a transfer of
ownership of'the materials would make thin provision meaninglers, simco
the furnishing ef materials, to be of any benefit, mu& necersarily k
accompanied by a nli.nquiShment of anr further claim to thw.

          Section 2 Af the Interagency Cooperation Act defines "sgancy"
as including "any se~ics or part of a State instttution of higher educa-
tion." Further, Section 6 provides for the handling of intraagency trans-
actionna. Clearly, then, authorized co&~cts   may bs entered into between
branches of the A. & H. Cellege System. It is our opinion that the pro-
posed contract between the Experiment Station and the Main College for
furnishing milk to the College Creamery is authorized by the Act. Of
course, the making of any authorized contract is a voluntary matter on
the part of the contracting agencies, and the approval of each particular
contract is within the discretion of the Board of Control.

          It follows from what has been said that the transaction between
the Experiment Station and the Texas Prison System for supplying seed
rice could have been accomplished under the Interagency Cooperation Act
with the approval of the Board of Control. But this i8 not the exclusive
method for effecting a transfer of property between state agencies. That
Act did not repeal existing statutes or supersede existing lawful means
for accomplishing the same result.

          The instances in which one state agency may sell to another in
the regular channels of commerce 1-i-e
                                     fairly rare, because very few State
agencies have any general authority to sell property which they own. The
inability to sell to other state Agencies is not because of a lack of
express authority to sell to another state agency but because of a general
lack of autkority to sell at all. It is our opinion that where one state
agency bar a general authority to sell and another agency has a general
authority to buy, it ia permissible for the ttroagencies to do business
with each other, provided each is able to comply with the conditions and
restrictions placed en transactions of that nature.
                                                                    .       .



. ,...

         Bon. l4.T. Eahngton,   pega 4 (8-e)



                   One such instance of a generalauthority to sell is found
         in Article 136, v.c.s., which authorizes the Agricultural Experiment
         Station System to sell or exchange its products. This is an authority
         to sell eithen6on the open market or through contract. We are of the
         opinion that the Experiment Station may become the seller in any trans-
         action wherein it can comply with the conditions and requisites for
         consummation of the sale, including a sale to another state agency.

                   This office has heretofore held that In the absence of
         express statutory authorization a state agency has no authority to
         make a bond guaranteeing performance of its contracts. Att$y .@n.
         CP.C-1033 (1939). Accordingly, the Experiment Station could not
         enter into a contract where a performance bond was required since
         it does not have express authority to give bond. This would be true
         whether the proposed contract was with another state agency or with
         a private concern.

                   Further, a state agency cannot,sell to another state agency
         where the statute regulating state purchases limi68 e~ligible~selfers
         to a class which excludes state agencies. Thus, in a 1931 opinion
         (Vol. 319, p. 918) this office held that Article 608, V.C.S., per-
         mitted printing contracts to be let only to "persons, firms, corpora-
         tions, or associations of persons, who hhall be residents of Texas,"
         and that a state agency did not come within the class of eligible
         sellers.

                   The purchase of the rice in question was made under,Article
         660, V.C.S.  This statute does not limit the class of eligible sellers
         or require the furnishing of a bond. We have pointed out that Article
         136, v.c.s., gives the Agricultural Experiment Station the authority
         to sell its products in the open market. Article 660 gives the Board
         of Control the authority to buy in the open market.' If the purchase
         in this inetance was properly of an emergency nature as required by
         Article 660 (and we have no reason to question its propriety), it is
         our opinion that the Comptroller should have issued the warrant in
         payment for the rice.

                   You have asked what other methods are available by which
         transfer of property between state agencies may be accompliehed. We
         call your attention to Articles 640 and 666-1, V.C.S., which authorlae
         interagency transfer of surplus supplies and property which ie unfit
         for use or no longer needed. In view of what has already been said,
         an extended discussion of these statutes is not necessary.

                                        S-Y

                   A state agency may contract to furnish materials to
              another state agency under the Interagency CooperfationAct
              (Chapter 340, Acts 53rd Leg., R.S., 1953; Article 4413(32),
     .      .




Hon. M. T. Herrington, page 5 (s-138)



     V.C.S.) vithout furnishing any other type of service
     in connection with the use of the materials.

          Apart from the Interagency Cooperation Act, a
     state agency which has general authority to sell
     property owned by it may make a sale to another
     state agency, provided each agency is able to com-
     ply with the condition6 and restrictions placed on
     transactions of that nature.

APPROVED:                       Yours very truly,

W. V. Ceppert                   JOHN BEN SHEPPERD
Reviewer                        Attorney General of Texas

Robert S. Trotti
First Assistant

                                By      tZ$?ta!F*-
                                            Assistant

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