Honorable GeorgePierce                Opinion No.   JM-687
Chairman
Urban Affairs Committee               Re:   Whether purchases made by
Texas Eouse of Representatives        a housiug authority under the
P. 0. Box 2910                        Consolidated Supply Program are
Austin, Texas   78769                 exempt from competitive biddiug
                                      requirements

Dear Representative Pierce:

     Tout letter requesting an opinion of this office asks:

            Under the terms of the Annual Contributions
         Contract (ACC) between the United States Depart-
         ment of Housing and Urban Development (HUD) aud a
         housing authority, are purchases which a housing
         authority makes under the Consolidated Supply
         Program (CSP) exempted from the competitive
         bidding requirements of state law?

     The same question was posed last year by the chairman of the
Eouse Committee on Judiciary. It was answered in Attorney General
Opinion JR-573 (1986), where it was said:

            You inquire whether the competitive bidding
         requirements of the Department of Housing and
         Urban .Development [RUD] 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 compocitive
         bids. We conclude that participation in the CSP
         would not constitute compliance with the requirr-
         meuts of competitive bidding specified in Texas
         statutes.

     That opinion decided that housing 'authorities in Texas must
comply with Texas statutes governing competitive bidding, and chat
purchases which could coma within the federal Consolidatrd Supply
Program under the terms of an Annual Contributions Contract were not
exempted from the Texas requirements. See generally V.T.C.S. art.
1269k. We adhere to that view.

     Ue have been again supplied - as we were in connection with
consideration of Accorney General Opinion JM-573 -- with a portion of


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the Annual Contributions Contract between the Department of Housing
and Urban Development and the San Antonio Housing Authority [section
306. part 21. It reads:

          (A)   In the purchasing of equipment, materials,
                and supplies, and in the award of contracts
                for services or for repairs, maintenance,
                and replacements, the Local Authority shall
                comply with all applicable State and local
                laws, and in any event shall make such
                purchases and award such contracts  only to
                the lowest responsible bidder after adver-
                tising a sufficient time previously for
                proposals, except:

                (1) When the amount involved in any one
                case does not exceed $10,000; or

                (2) When the public exigencies require the
                immediate delivery of the articles or per-
                formance of service; or

                (3) Whca only one source of supply is
                available and the purchasing or contracting
                officer of the Local Authority shall so
                certify; E

                (4) The contract is for (a) professional,
                technical or other kinds of services, or
                (b) to be performed under Local Authority
                supervision and paid for on a time basis; 01

                (5) The purchase is made under a consoli-
                dated supply contract entered into between
                HUD and the contractor pursuant to HUD
                regulations. (Emphasis added).

     It has been suggested that subparagraph (A)(S) above specifically
provides that purchases made under the Consolidated Supply Program
fall within "the category of purchases that are specifically exempted
from state law requirements." In our view, the import of the para-
graph is somewhat different.

     The initial words of paragraph A above establish two contractual
requirements regarding procurements. First. housing authorities are
contractually bound to "comply with all applicable State and local
laws." Second, "in any event," they are required to award procurement
contracts "only to the lowest responsible bidder" except in five
specified situations. The subparagraph A(1) through A(5)   exceptions
are intended to modify only the contractual responsibility to award
contracts to the lowest responsible bidder, not the contractual
obligation to comply with all state and local laws - which laws might



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also statutorily require awards     to   be   made   only   to   the   lowest
responsible bidder.

     Participation by housing authorities in the Consolidated Supply
Program is not mandatory under federal law.           The regulations
promulgated by the office of the Assistant Secretary for Public and
Indian Housing, Department of Housing and Urban Development, for the
implementation of applicable sections of the United States Housing Act
of 1937, as amended (see 42 U.S.C. 501437-1437j) are found in chapter
IX of.Ticle 24 of theCode of Federal Regulations. Subpart G, thereof,
deals with the Consolidated Supply Program. Section 965.601(a), under
subpart G, states:

          Under the [Consolidated Supply Program], the
          Department of Housing and Urban Development (HUD)
          furnishes technical assistance to [Public Housing
          Agencies 1  in    purchasing   certain   supplies,
          material, equipment, and services necessary in the
          development, operation and maintenance of low-
          income housing by entering into and administering
          contracts for the voluntary use of those agencies.
          (Emphasis added).

     Again, the HUD Consolidated Supply Program Randbook           (7460.9.
dated 7/86) states on page l-l:

          The use of the [Consolidated Supply Program] is
          voluntary and requires careful consideration in
          order to assure that the best product/services is
          purchased at minimum cost.

     We do not believe the terms of the Annual Contributions Contract
set out above have either the effect or the intent of superseding
state laws requiring competitive bidding. Those provisions merely
bind the housing authority contractually to employ purchasing
safeguards and procedures as responsible as those set forth-there in
the absence of state law requiring more stringent procedures.

     Participation, if any, by a housing authority in the Consolidated
Supply Program is on a voluntary basis. Where the laws of Texas
require competitive bidding instead, a housing authority is not free
co participate in the federal program in lieu of following the Texas
statutes because, in those situations. thxegislature     has deprived
housing authorities of the power to voluntarily make that choice.
However, there will be many situations where housing authorities may
participate in the federal program in conjunction with the Texas
statutes.

     Under article 236ga. V.T.C.S.. the Texas statute governing the
procurement practices of Texas cities [and. thus, public housing
authorities; see Attorney General Opinion Nos. JM-573 (1986); MU-132
(1980)] certain procurements are exempted from competitive bidding


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requirements. Among them, for cities with a population above 50,000,
are contracts of procurement calling for an expenditure of $10.000 or
less. -See V.T.C.S. art. 2368a, 951, 2(a).

     When procedures respecting particular procurements are not
regulated by statutes (or, are otherwise exempted from state compel
tive bidding requirements). the contractual restraints imposed on
public housing authorities by the Annual Contributions Contract with
the federal government come into play. In other words, housing
authorities must first look to state law to determine what procurement
practices they must follow. If no state law decides the matter in a
particular situation, they must then look for guidance to the con-
tractual terms of the Annual Contributions Contract. Often, par-
ticular procurements made under the Consolidated Supply Program will
not coeflict with Texas competitive bidding statutes.

     We also note that when state competitive bidding statutes do
apply, housing authorities are not precluded from giving Consolidated
Supply Contractors an opportunity to participate as bidders on
contracts to be let in that manner. Section 965.603(e)(3) of Title 24
of the Code of Federal Regulations provides:

          If the [Public Bousing Agency] invites competitive
          bids for procurement of a [Consolidated Supply
          Contract I item or proposes to negotiate for
          procurement of such an item. the [Consolidated
          Supply Contract] contractors shall be included in
          such invicacions or negotiations.

     We advise that purchases which a housing authority wishes to make
under the Consolidated Supply Program administered by the federal
government are not exempted by the terms of the authority's Annual
Contributions Contract from the requirements of Texas law requiring
competitive bids.

                             SUMMARY

               Purchases which a housing authority wishes
          to make under the Consolidated Supply Program
          administered by the federal government are not
          exempted by the terms of the authority's Annual
          Contributions Contract with the Department of
          Housing and Urban Development from the require-
          ments of Texas law requiring competitive bids.

                                      JZ)$&
                                                  MATTOX
                                          Attorney General of Texas




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    Honorable George Pierce - Page 5     (JM-687)




    JACK HIGRTOWER
    First Assistant Attorney General

    MARY KELLER
    Executive Assistant Attorney General

    JUDGE ZOLLIE STRARLET
    Special Assistant Attorney General

    RICK GILPIN
    Chairman, Opinion Committee

    Prepared by Bruce Poungblood
    Assistant Attorney General




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