                              QBffice of tfie 1ZIttotnep Qheral
                                        SLtatt of Qtxas


                                          March 28,199l


Dr. Thomas Anderson                            Opinion No. DM-14
Interim Commissioner
Texas Education Agency                         Re: Whether competitive bidding is required
1701 N. Congress Ave.                          for a contractor selected to operate food ser-
Austin Texas 78701-1494                        vices in a public school district (RQ-2096)

Dear Dr. Anderson:

       Your predecessor requested our opinion on issues relating to contracts
between school districts and food service management companies. The first
question was whether the selection of a contractor for a food service management
contract must be accomplished pursuant to competitive bidding. The sample
contracts provided indicate that the food service management company shall
provide services in conjunction with the school districts’ participation in federal
school nutrition programs, including the National School Lunch Program, 42 U.S.C.
$3 1751- 1763; 7 C.F.R. pt. 210, the School Breakfast Program; 42 USC. 0 1773; 7
C.F.R. pt. 220, and the Summer Food Service Program. 42 U.S.C. 5 1761; 7 C.F.R.
pt. 225. We will therefore assume for purposes of this opinion that the questions
refer to contracts with food service management companies that are governed by
federal law and regulations implementing these programs.1 We conclude that
federal laws and regulations governing such contracts require school districts to
award them pursuant to competitive procedures.

       Federal regulations adopted pursuant to the provisions referenced above
authorize and govern contracts between school districts and food service manage-
ment companies. See 7 C.F.R. $3 210.16 (National School Lunch Program),


         IA food service management company is d&cd                by relevant federal regulations as *a
commercial enterprise or a nonprofit organization which is or may be contracted with by the school
food authority to manage any aspect of the school food service.’ 7 C.F.R. 5 210.2. A school food
authority is “the governing bcdy which is responsible for the administration of one or more schools”
and has the legal authority to operate the federal school nutrition program or is otherwise approved by
the Food and Nutrition Service of the United States Department of Agriculture to participate in the
program. Id Administration of school nutrition programs in Texas public schools is expressly
delegated to public school districts. 19 TAC. 5 gS.lll(b); see u/so Educ. Code 3 21.914 (governing
board of school district responsible for participation in national school breakfast program).




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Dr.l’homasAnderson-Page2          (DM-14)




220.7(d) (School Breakfast Program), rrS.lS(g) (Summer Food Program). The
regulations impose certain procurement polides on partidpating agendes, including
school districts. Under the National School Lunch Program, for example, a school
district

         may use its own procurement procedures which reflect applica-
         ble State and local laws and regulations, prvvkkd th&
         procurements made with Program funds adhere to the standards
         set forth in 7 CFR. Part 3015.

7 CF.R. g 21021(c). Regulations implementing the School Breakfast Program and
the Summer Food Service Program contain an identical requirement. See id
$9 220.16(c),225.17(c).

      A school district participating in the federal programs must also

         [aldhere to the procurement standards specified in 0210.21
         [quoted above] when contracting with the food service
         management company.

Id 0 210.16(a)(l). One such standard provides the followings

             All procurement transactions, regardless of whether by
         sealed bids or by negotiation and without regard to dollar value
         shah be conducted in a manner that provides maximum open
         and free competition.

Id. 0 3015.182.

       The cumulative effect of these regulations is to require ah contracts with
food service management companies to be open to competition, either through
competitive bidding or competitive proposal procedures. See, eg., L&&&J&
y, New yprk, 442 N.Y. S2d 265 (N.Y. App. Div. 1981) (contract for summer school
food program awarded pursuant to competitive bidding). In the case of the Summer
Food Program, competition for food service management contracts is expressly
required by statute. 42 U.S.C. 0 1761(0(l) (contracts with food service management
companies may be made “on a competitive basis only”). The federal regulations
identify maximum open and free competition as the guiding standard in the




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DrThomasAnderson-Page3            W-14)




a&ding of a food service management contract, but leave it to state and local law
and regulations to determine what spedtIc proced~es shah be employed.

        Aside from contracts for non-professional services related to the
construction, maintenance-, repair, or renovation of public school buildings, Texas
law does not compel public school boards to award contracts for services on a
competitive basis. The two provisions of the Education Code that supply
procedures governing competition for school district contracts, sections 21.901 and
21.9012, do not apply to contracts with food service management companies.
Section 21.901 of the Education Code attaches a general competitive bidding
requirement to a public school board’s award of three types of contracts valued at
$lO,tHlOor more: (1) contracts for the purchase of personal property, (2) contracts
for the construction, maintenance, repair or renovation of any building; and (3)
contracts for the purchase of materials used in the construction, maintenance, repair
or renovation of a building. Section 21.9Ol2 of the Education Code governs a
school boards contracts for services relating to the hMallation of energy
conservation devices in school buildings. Because these provisions are inapplicable
in this instance, it is unneas~ary to consider your predecessor’s argument that food
service management contracts are professional services for purposes of the
competitive bidding exception contained in section 21.901.

       The absence of applicable state law and regulations, however, does not
relieve local school boards participating in federal school nutrition programs from
compliance with the mandate of the federal regulations. To the contrary, we believe
local school boards are required to adopt procedures that ensure food service
management contracts are awarded on a competitive basis, either by competitive
bidding or competitive proposal procedures, In the absence of applicable state
regulations, the selection of specific procedures is within the sound discretion of
local school boards.2

       The second inquiry is whether a school district may delegate to a food service
management company the authority to purchase food and supplies required under a
food services management contract. Your agency proposes a procedure whereby
the food service management company supervises the bidding process for the school




                                        p.   66
Dr. Thomas Anderson - Page 4         (DM-141




district in conformity with section 21.901,but vests final decision-making authority
intheboardoftnwtees,“eitherbymrimandappmval~theprocess,orbyadirea
decision.” Contracts for the purchase of consumable items - food, for example -
are subject to section 21.901. See Erwin           228 S.WJd 882 (‘Rx. Civ. App.-
Dallas 1950, writ ref’d n&e.) (“personal property” generally includes everything
subject to ownership that does not come under the denomination of real estate).

       In the absence of statutory authorization, a public body may not delegate,
surrender, or barter away statutory duties that hwolve the exercise of judgment and
discretion, See w                       239 S.W.2d 91s (Tex. Civ. App.-San Antonio
                                                   .
1951, no writ); Q                                               45 s.wa 714,p-x.
Civ. App.-Waco 1931,no writ). The power to make purchases for a public body has
been included among such nondelegable powers. Home
     of DaJ&, supm The public body may, however, appoint agents to perform
ministerial, nondiscretionary tasks relating to nondelegable powers. Id

       Section 21.901 places the ulthnate power and duty to make contracts in the
board of trustees. It does not expressly require the board to perform every task
associated with the procurement funcdon, but the duty to make contracts clearly
requires the exercise of considerable discretion in all phases of the bidding process,
including the assessment of the needs of the district, the formulation of
specifications, the evaluation and selection of products and bids, and the negotiation
of contract terms. Some aspects of these functions might be delegable to
administrative personnel of a school district or to consultants employed to provide
professional advice on specialiae-dor technical matters, provided no discretionary
authority is delegated to the consultant and the employment of the consultant is
carefully monitored to avoid conflicts of interest” See, cg., Attorney General
Qpiions JM-1189 (1990); JM-940 (1988). However, in view of the significant
discretion that must be exercised on behalf of a school district in all phases of the
competitive bidding process, we conclude that the purchasing turmtion may not be
delegated to a food service management company by contract or otherwise.


       %cdtksampkecmtr~delqatwthepwchasiqfuauthtothefoods&xs
mmagcmeot amputy ml mdorked it to give preferenceto local suppliers and to take haatage of
bcattmdcdi6amqadvultagcsttlatnuywtbc~lcon          amtmc&thUuewmpetitivclybid.         The
conttaet~~thecomplnyto~~ownintmstrbygnntineittbc~tto~creditfor
discountsnot8ttributabletoit4operatknuoathedStricl’~pemim.        TbeoxtnUthusimponcsa
stmium that add be interpreted to encourage a reduction or etimiin      of competition in the
interelt d wouomy and allowthe companyto act in its own interest.




                                           p.   67
Dr. Thomas Anderson - Page 5       ( DM-14 )




                                   SUMMaRY

             Public school districts participating in federal school
         nutrition programs must award contracts for the management of
         school food services on a competitive basis. In the absence of
         applicable state regulations, local school boards have discretion
         to determine whether competitive bidding or competitive
         proposal procedures shag apply. A school board may not
         delegate the purchase of food products and supplies to a food
         service management company by contract or otherwise.




                                                    DAN      MORALES
                                                    Attorney General of Texas

WILL PRYOR
First Assistant Attorney General

MARYKELLRR
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY (Ret)
Special Assistant Attorney General

RENEAHIcKs
Special Assistant Attorney General

SUSAN GARRISON
Acting Chairmaq Opinion Committee

Prepared by’Steve Aragon
Assistant Attorney General




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