                     THE     ATJXXZNEW              GENERAL
                                 OF TEXAS
CWAWPOLPD     Ce MART=&-
                              AUSTIN,TEXAR         787ll
  A1TDRNEY    DICNSRAI.
                                 November '21, 1967


     Ron. Graves W. Landrum                  Opinion No. M-160
     Vice Chancellor for Adminis-
        tration                              Re:    Interagency contracts
     Office of the Chancellor                       between the University
     The University of Texas                        of Texas and the Coordi-
        System                                      nating Board, Texas
     Austin, Texas                                  college and university
                                                    system for the utiliza-
                                                    tion of certain data
     Dear Mr. Landrum:                              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 communi-
             cation 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 num-
             bered 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 ap-
    proved interagency contracts will be deferred
    until the validity of such arrangement to fur-
    nish 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 process-
    ing equipment for official use on a time avail-
    able basis.       The Coordinating Board has been a
    user of the data equipment under the above con-
    ditions. 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 ef-
    ficient data processing at a lesser          cost.    Where-
    upon,  to  be    compatible with the  IBM    360   Series
    equipment located at the University, it was
    agreed that rental of IBM 360-20 Series equip-
    ment 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 equip-
    ment 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 pro-
    viding compatibility with the new IBM 360 Series,
    particularly the IBM 360-40. It was assumed
    that the joint use of equipment, people, serv-
    ices 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 ap-
     preciate your advice as to the following ques-
     tion:

            "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 Coordi-
    nating Board, Texas College and University
    System,    which provide an arrangement for the
    utilization of certain data processing equip-
    ment for the benefit of the State of Texas,
    valid obligations upon which the State Comp-
    troller 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 process-
ing 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 Stat-
utes, provides in part:

         "Any State agency may enter into and
    perform a written agreement or contract
    with other agencies of the State for fur-
    nishing necessary and.authorized special
    or technical services, including the serv-
    ices 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 coopera-
    tive 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 equip-
     ment - are listed disjunctively.   Thus, a con-
     tract 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 bene-
     fit 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 Attor-
ney 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 re-
     ceiving agency shall be made from the appro-
     priation 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 pay-
     able 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 specifica-
        tions for the installation and oversee the actual
        installation.  The Building Commission could sub-
        contract the actual installation work since this
        building is still under the control and manage-
        ment of the Commission.  The contract would be
        subject to the limitations on interagency con-
        tracts 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 ques-
    tion 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 pay-
    ment 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 Coordi-
         nating Board, College and University System
         whereby it will furnish the Coordinating
         Board at cost certain data processing equip-
         ment 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




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