                              ATTORNEY            GENERAL          OFTEXAS
                                           GREG        ABBOTT




                                                June 16,2006



Mr. James R. Huffines                              Opinion No. GA-0438
Chair, Board of Regents
The University of Texas System                     Re: Whether The University of Texas System and The
201 West Seventh Street                            Texas A&M University System may promulgate rules
Austin, Texas 78701-2902                           setting a dollar amount under which the university
                                                   systems may procure printing services without a
Mr. John D. White                                  competitive bidding process (RQ-042%GA)
Chair, Board of Regents
The Texas A&M University System
Post Office Box C-l
College Station, Texas 77844-9021

Dear Mr. Huf’rines and Mr. White:

        The Texas A&M University System and The University of Texas System (collectively, the
“university systems”) ask whether the university systems may promulgate rules setting a dollar
amount under which they may procure printing services without a competitive bidding process.*

         The university systems initially focus their inquiry on article XVI, section 21 of the Texas
Constitution, which provides that “[a]11        printing      shall be performed under contract, to be
given to the lowest responsible bidder, below such maximum price and under such regulations as
shall be prescribed by law.” TEx. CONST. art. XVI, 5 21. The request letter indicates that the
university systems currently construe article XVI, section 21 to require all printing that is~not
performed in-house to require competitive bidding. See Request Letter, supra note 1, at l-2. But
this “strict interpretation” has, you report, “led to questionable results”:

                 One of our employees was traveling in order to make a seminar
                 presentation and needed extra copies of the material to be distributed
                 to participants. He had the hotel run the necessary copies and was
                 charged less than $10.00.     His request for reimbursement        was




           ‘See Letter from Barry D. Burgdorf, Vice Chancellor and General Counsel, The University of Texas System,
and Scott A. Kelly, Deputy General Counsel, The Texas A&M University System, to Honorable Greg Abbott, Attorney
General of Texas (Dec. 20, 2005) (on file with the Opinion Committee, also available nf http://~.oag.state.tx.us)
[hereinafter Request Letter].
Mr. James R. Huffnes       and Mr. John D. White - Page 2              (GA-0438)




                  questioned because he had not secured three competitive bids before
                  asking the hotel to make the copies.

Id. at 2.

I.          Whether the university systems may rely on Government Code chapter2155 and TBPC
            rules

          You note that, in reliance on the constitutional phrase “under such regulations as shall be
prescribed by law” and in accordance with its statutory authority, the Texas Building and
Procurement Commission (“TBPC”) recently adopted a rule allowing state agencies generally to
purchase print jobs without competitive bidding if the estimated purchase price does not exceed
$5,000.* See id. at 2-3; see also TEx. BLDG. & PROCUREMENTCOMM’N, THE STATE OF TEXAS
PROCUREMENTMANUAL 5 2.21.3, “Printing and Copying Services,” available at http://www.tbpc
.state.tx.usistpurch/procmanual.pdf    (last visited June 14, 2006). TBPC’s rule is consistent ~with
Government Code section 2155.132(e), which authorizes a state agency to purchase goods or
services without competitive bidding “if the purchase does not exceed $2,000, or a greater amount
prescribed by [TBPC] rule.” See XX. GOV’T CODE ANN. 3 2155.132(e)           (Vernon   2000).


         Your letter suggests that the university systems are not subject to TBPC’s purchasing rule
or, apparently, section 2155.132(e) of the Government Code, but are governed instead by sections
51.9335, 73.115, and 74.008 of the Education Code. See Request Letter, supra note 1, at 3
(“Purchases by institutions of higher education       . are not regulated by TBPC but instead are
governed by” the Education Code.); see also TEX. EDUC. CODE ANN. 5 51.93,35 (Vernon Supp.
2005), id. $5 73.115,74.008 (Vernon 2002). We question this assumption. Section 51.9335(d) of
the Education Code expressly permits, but does not require, an institution of higher education to
“acquire goods or services as provided by Chapter[] 2155,      Government Code.“TEx. EDUC; CODE
ANN. 5 51.9335(d) (Vernon Supp. 2005). We accordingly believe that the university systems may
elect to purchase printing services in compliance with chapter 2155 and TBPC’s corresponding rules.

II.         Whether the university systems have statutory authority to adopt the proposed rule

        It is possible, however, that the university systems do not wish to comply with TBPC rules
but wish to adopt their own alternative rules. We thus understand you to ask whether the Education
Code authorizes the university systems to adopt their own roles, alternative to those TBPC has
adopted consistently with Government Code chapter 2155.

         Education Code section 5 1.9335 sets out rules for the acquisition of goods and services by
an institution of higher education generally. For purposes of section 5 1.9335, “institution of higher



        ‘TBPC’srules define the term “printing”in the context of state purchasingas “a means of word processing or
graphicreproductionof paper documentsusing a printing process.” TEX. BLDG. &PROCUREMENTCOMM’N,THE STATE
OF TEXAS PROCUREMENTMANUAL 5 2.2 1.3, “Printing and Copying Services,” mailable     at http://www.tbpc.state.tx.us/
stpurch/procmanual.p~f (last visited June 14,2006).
Mr. James R. Huffines and Mr. John D. White - Page 3               (GA-0438)




education” means a “public technical institute, public junior college, public senior college or
university, medical or dental unit, public state college, or other agency of higher education . . .”
Id. 5 61.003(8); see also id. 5 5 1.9335(e) (defining the term “institution ofhigher education” to have
the “meaning assigned by section 61.003”). Education Code sections 73.115 and 74.008 provide
similarly for the University of Texas at Houston and the University of Texas Medical Branch at
Galveston. See Request Letter, supra note 1, at 3; see also TEX. EDUC. CODEANN. $5 73.115,
74.008 (Vernon 2002). Because section 51.9335 pertains to the university systems generally, and
sections 73.115 and 74.008 do not add anything to the university systems’ authority, we discuss only
section 5 1.9335 here.

         Before we consider whether the university systems may adopt a rule similar to TBPC’s to
except certain purchases from article XVI, section 21’s competitive procurement requirement, we
will consider whether the university systems have statutory authority to adopt the rule. See 7”
Generation Co. v. Pub. Util. Comm’n, l65 S.W.3d 821,829 (Tex. App.-Austin                2005, pet. tiled)
(indicating that an agency rule’s validity may be challenged on constitutional and statutory grounds).
In general, The University of Texas System Board of Regents has authority to “govern, operate,
support, and maintain” the component institutions that comprise the system. TEX.EDUC.CODEANN.
5 65.3 1(a) (Vernon 2002); see also id. 3 65.11 (stating that the university system’s “government” is
vested in a board of regents). The University of Texas System’s board has express authority to
“promulgate . such             rules and regulations for the operation, control, and management of the
university system and the component institutions thereof as the board may deem either necessary or
desirable.” Id. § 65.31(c). The Texas A&M University System has similar express rule-making
authority: “The board shall make . rules[] and regulations it deems necessary and proper for the
government of the university system and its institutions, agencies, and services.” Id. 5 85.21(a).
This office previously has concluded that state universities have “broad authority to provide services
and perform fimctions” even if the services and functions are not expressly authorized by statute.
Tex. Att’y Gen. Op. No. DM-329 (1995) at 7. Moreover, rules adopted by a university system’s
board of regents in the exercise of the board’s delegated authority have the force and effect of law.
See Foleyv. Benedict, 55 S.W.2d 805,808 (Tex. 1932) (statingthat rules ofThe University ofTexas
 System’s Board of Regents “are of the same force as would be a like” legislative enactment); accord
Fuzekas v. Univ. ofHouston, 565 S.W.2d 299,304 (Tex. Civ. App.-Houston              [lst Dist.] 1978, writ
ref d n.r.e.) (stating that, given that the University ofHouston’s board has statutory authority to enact
rules as necessary to govern the university, “its rules are of the same force as would be a like”
legislative enactment).

        University system rules may not be contrary to the constitution or statutes, however. See R. R.
Comm ‘n v. Lone Star Gus Co., 844 S.W.2d 679,685 (Tex. 1992) (stating that a state agency’s rules
must be consistent with state law). Rules must therefore be consistent with applicable statutes,
including section 5 1.9335 of the Education Code. See GulfStates Utils. Co. v. Pub. Util. Comm ‘n,
784 S.W.2d519,527n.5      (Tex. App.-Austin   199O),uff’d,809 S.W.2d201 (Tex. 1991) (statingthat
an agency may not adopt a rule out of harmony with a statute).

       Under section 5 1.9335(a), “[alninstitution ofhigher education may acquire goods or services
by the method that provides” the best value, including:
Mr. James R. Huffines and Mr. John D. White - Page 4               (GA-0438)




                       (1) competitive    bidding;

                       (2) competitive    sealed proposals;

                       (3) a catalogue purchase;

                       (4) a group purchasing program; or

                       (5) an open market contract.

TEX. EDUC. CODE ANN. 5 51.9335(a)       (Vernon Supp. 2005).         In identifying   the best value, an
institution of higher education must consider:

                       (1) the purchase price;

                        (2) the reputation of the vendor and of the vendor’s goods or
               services;

                       (3) the quality of the vendor’s goods or services;

                         (4) the extent to which the goods or services meet the
               institution’s needs;

                       (5) the vendor’s past relationship with the institution;

                       (6) the impact on the ability of the institution to comply with
               laws and rules relating to historically underutilized businesses and to
               the procurement of goods and services from persons with disabilities;

                        (7) the total long-term cost to the institution of acquiring the
                vendor’s goods or services;

                       (8) any other relevant factor that a private business entity
                would consider in selecting a vendor; and

                          (9) the use of material in construction or repair to real
                property that is not proprietary to a single vendor unless the
                institution provides written justification in the request for bids for use
                of the unique material specified.

Id. 5 5 1.9335(b)

      The type of purchasing arrangement you ask about appears to be an open market contract,
which would be a permissible purchasing method under section 51,9335(a)(5).        See id. 3
Mr. James R. Huffines and Mr. John D. White - Page 5             (GA-0438)




51,9335(a)(5). No statute or Texas case law defines the phrase “open market contract.” Case law
from other jurisdictions indicates that an open market contract is a contract “open to all who wish
to purchase at the vendor’s prices, as contrasted, for example, with” a competitive bidding~situation.~
Albany Supply&Equip. Co. v. City of Cohoes, 262 N.Y.S.2d 603,605 (N.Y. Sup. Ct. 1965); accord
Guild Wineries &Distilleries v. Fresno County, 124 Cal. Rptr. 96,98 (Cal. Ct. App. 1975) (defining
the phrase “open market transaction” as “one where the sale price is negotiated between the buyer
and seller”); Harvey v. City &t County of Denver, 18 P.2d 321, 322 (Colo. 1932) (stating that a
purchase on the open market “conveys the idea of buying, at the dealer’s price, what he offers, as
distinguished from the idea of presenting to him a schedule of what you desire        and asking him
at what price he can meet your requirements”).        TBPC has defined the analogous phrase “open
market purchase” in its regulations as “[a] purchase of goods, usually of a specified quantity, made
by buying from any available source in response to an open market requisition.” 1 TEX. ADS.
CODE § 113.2(37) (2006) (Texas Building~and Procurement Commission, Definitions); c$ BLACK’S
LAW DICTIONARY983 (7th ed. 1999) (defining “open market” as “[a] market in which any buyer or
seller may trade and in which prices and product availability are determined by free competition”).
We accordingly construe the phrase “open market contract” in section 51.9335(a)(5) to mean a
contract that is not subjected to a competitive procurement process but that an institution of higher
education enters by agreeing to the same terms the vendor establishes for purchasers generally.

        Section 51.9335 expressly permits an institution of higher education to acquire goods or
services by means of an open market contract if such a contract is the “method that provides the best
value to the institution.” TEX. EDUC. CODE ANN. 5 5 1.9335(a)(5) (Vernon Supp. 2005). Because
the university systems thus have express authority to purchase services generally by means of an
open market contract, we conclude that, consistently with section 5 1.933 5, a university system may
adopt a rule that sets a dollar amount under which the system may procure printing services using
an open market purchase instead of a competitive procurement procedure. See Request Letter, supra
note 1, at 3.

III.    Whether the university systems’ proposed rule contravenes Texas Constitution article
        XVI, section 21

        We consider next whether such a rule would be consistent with article XVI, section 2 1 of the
Texas Constitution. Article XVI, section 21 requires that all printing “be performed under contract,
. given to the lowest responsible bidder,     under such regulations us shall beprescribed by law.”
TEX. CONST. art. XVI, 5 21 (emphasis added). Words within a constitution are given their natural
meaning. See Spradlin v. Jim Walter Homes, Inc., 34 S.W.3d 578,580 (Tex. 2000) (“[pIresuming
that the language of the Texas Constitution is carefully selected, we construe its words as they are
generally understood”); Markowskyv. Newman, 136 S.W.2d 808, 813 (Tex. 1940) (stating that a
court must interpret constitutional words “as the people generally understood them”); see tilso Tex.
Att’y Gen. Op. No. H-984 (1977) at 1 (construing the term “stationery” as used in article XVI,
section 21).

        Although the phrase “under such regulations as shall be prescribed by law” has not been
construed in the context of article XVI, section 21, analogous language has been construed~ in other
Mr. James R. Huftines and Mr. John D. White - Page 6              (GA-0438)




 constitutional contexts. Article V, section 5, for example, declares jurisdiction of the Texas Court
 of Criminal Appeals as “coextensive with the limits of the state        in all criminal cases . under
 such regulations        as prescribed by law.” TEX. CONST. art. V, 5 5(a). In 1924 the Court of
 Criminal Appeals construed article V, section 5 to enable the legislature to restrict the court’s
~jurisdiction to “persons convicted of offenses and those denied release under the writ of habeas
 corpus.” DeSilva v. State, 267 S.W. 271, 272 (Tex. Crim. App. 1924). In 1935 the Court of
 Criminal Appeals construed former article V, section 16, which provided county courts with
 appellate jurisdiction in criminal cases of which the justice courts have original jurisdiction “under
 such regulations as may be prescribed by law.” Kubish v. State, 84 S.W.2d 480,481 (Tex. Crim.
 App. 1935). The court noted that this language authorized the legislature to “entirely .divest the
 county court of criminal jurisdiction” if it “saw fit” to do so. Id. And in 1965 the Fort Worth court
 of civil appeals construed former article V, section 8, which provided a district court with “‘original
jurisdiction and general control over.     minors under such regulations as may be prescribed by [the
 legislature].“’ Hendricks v. Curry, 389 S.W.2d 181, 186 (Tex. Civ. App.-Fort               Worth 1965)
 (quoting former article V, section 8), rev’d on other grounds, 401 S.W.2d 796 (Tex. 1966). As the
 court said, “the qualifying phrase ‘under such regulations as may be prescribed by law’
 constituted a notice of the conferring of authority upon the Legislature to regulate and place
 limitations upon the rather broad authority conferred upon the court.” Id. at 187.

         Given this judicial guidance, we conclude that article XVI, section 2 1 permits a body to adopt
rules that limit a constitutional provision regarding the competitive purchasing of printing services.
It appears that the legislature has reached the same conclusion, having adopted a general statute
authorizing a state agency to make a purchase that does not exceed “$2,000, or a greater amount
prescribed by [TBPC] rule” without competitive bidding. TEX. GOV’T CODE ANN. 5 2155.132(e)
(Vernon 2000). Because rules of the university systems’ boards of regents have the force of law, see
Foley, 55 S.W.2d at 808 (stating that rules of The University of Texas System’s Board of Regents
“are of the same force as would be a like” legislative enactment), we believe the university systems
may, consistently with article XVI, section 21 of the Texas Constitution, adopt rules that exclude
certain purchases of printing services from the competitive procurement requirement.
Mr. James R. Huftines and Mr. John D. White - Page 7             (GA-0438)




                                        SUMMARY

                       The University of Texas System and The Texas A&M
              University System may “aqmre goods or services as provided by”
              Government Code chapter 215 5 and rules of the Texas Building and
              Procurement Commission adopted thereunder. TEX. EDUC. CODE
              ANN. 5 51.9335(d) (Vernon Supp. 2005). In the alternative, the
              university systems may adopt a rule that sets a dollar amount under
              which the system may procure printing services using an open market
              purchase instead of a competitive procurement procedure. See id.
              $5 51,9335(a)(5) (Vernon Supp. 2005), 65.31(c), 85.21(a) (Vernon
              2002).

                        The phrase “under such regulations as shall be prescribed by
               law” in article XVI, section 21 of the Texas Constitution, which
               provides that all “printing       shall be performed under contract, to
               be given to the lowest responsible bidder        . under such regulations
               as shall be prescribed by law,” authorizes the legislature or a state
               agency, such as a university system, with appropriate rule-making
               authority to adopt a rule that establishes a dollar amount under which
               a university system may procure printing services without a
               competitive bidding process. TEX. CONST.art. XVI, 5 21.




KENT C. SULLIVAN
First Assistant Attorney General

ELLEN L. WITT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Kymberly K. Oltrogge
Assistant Attorney General, Opinion Committee
