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                                      June 20, 1957

         Wr. William J. Burke                Opinion No. WW-168.
         Executive Director
         Board of Control                    Re:   Shall the Boar-d of~~Contro1
         Austin, Texas                             fbllow”the‘satlie policy in
                                                   awarding Contiacts~‘for   -
                                                   Armory constructU.in as ‘is
                                                   followed in making -awards
                                                   for other construction
                                                   handled by the’ Board of
                                                   Control and/or purchases -
                                                   making award to the over-all
         Dear Mr. Burke:                           low bidder?

                      you have requested   an opinion   on the following     ques-
         tion:

                       “Shall the Board of Control follow the s’ae
                 policy in awarding contracts   for Brmory’construc-
                 tion as is followed   in making awards forother       ~-
                 construction  handled~~bp the Board’of Control ‘and/or
                 purchases - making award to the over-all    low bid-
                 der?”
                    The facts upon which this      question   is based,    as stated
         In your request,   are as follows:
                       “Bids were received for the construction   of a
                 National Guard Armory at Luling, Texas, under file
                 #NC-41-292-57-32.     Copy of tabulation of bids is
                 attached.    Two bids have been considered,  namely
                 that of Horace C. Howard and Zunker Construction
                 Company. On the basis of the tabulations     it has
                 been determined by the 4rmory and the Board of Con-
                 trol that the bid of ‘Zunker Construction   Company is
                 the over-all   low bid, while the bid of Mr. Howard
                 is the second low over-all    bid.
                        “The question is raised because the Federal
                 Government at the present time agrees only to
                 participati   to the extent of 754 of the low base
                 bid.    Under the base bid formula, the Howard bid
                 is the low w       bid, while the Zunker bid is the
                                                   --   -.                -   .




Mr. William   J. Burke,   page 2   (WW-168)



     second low &g& bid.      Certain necessary alter-
     nates in construction    contract,  ‘asp per copies
     of the alternate    schedule attached,    reveal that
     the alternate   costs, which are of necessity       in-
     cluded in the total costs submitted by Mr. Row-
     ard, are considerably    in excess of those submit-
     ted by Zunker Construction     Company. Therefore,
     the low base bid submitted by Howard plus the
     alternates,   produced a higher over-a I 1 or total
     cost than the base bid of Zunker Construction
     Company, plus alternates.      The net result is
     that the apparent second high base bid when com-
     bined with necessary alternate     items in which
     the State participates     lOO$, produces the lowest
     total bid and results in a saving to the State
     of Texas.
           “I am also attaching a copy of H.R. 2107 of
     the 84th Congress, First Session,   and call your
     attention  to Page 4, lines 3 through 8 inclusive,
     which relates to this transaction   and the atti-
     tude of the Federal agency involved.
            “The Armory Board has advised that funds for
     this construction     project will expire as of June
     30, 1957, hence it is necessary to expedite this
     transaction    in order to make the award in ade-
     quate time to clear for approval prior to the ex-
     piration    of the allocated  funds.”
             In 1952 the United States government proposed to the
Texas National Guard Armory Board alternative           contracts covering
construction     of Armory facilities      to be erected in the State of
Texas.     The Texas National Guard Armory Board accepted the op-
tion, which provided that the State of Texas would contract for
all work, materials and/or services          required for construction   of
facilities    for armories and in October 1952 entered into such an
agreement.     See Attorney General’s Opinion MS-179 (19551, copy
of which is attached hereto.          Section 3 of the National Defense
Facilities    Act of 1950 (Ch. 945, P.L. 783) provides:
          “Subject to the provisions   of section 4 of
     this Act, the Secretary of Defense may, in an
     amount not to exceed $25O,OOO,OOOover a period of
     the next five fiscal  years, after consultation
     with the respective  Armed Services Committees of
     the Congress- . . .
.   .,




         Mr. William    J. Burke, page 3     (W-168)


                     ‘l(b) contribute  to any State such funds as
              he shall determine to be necessary to expand, re-
              habilitate,   or convert facilities  owned by such
              State to the extent required for the joint ntlli-
              zation of such facilities;     and

                     “(cl    contribute   to any State such funds for
              the acquisition,      construction,   expansion, rehabili-
              tation,     or conversion by such State of such addi-
              tional facilities       as he shall determine to have
              been made essential       by any increase in strength of
              the National Guard of the United States or the Air
              National Guard of the United States.”
                    The first session of the 84th Congress amended the
         provisions  of the National Defense Facilities Act of 1950 by
         enacting Ch. 662, P.L. 302, by adding Section 6(b), which pro-
         vides:
                    “All construction,    expansion, rehabilitation
              or conversion of facilities      in each State pursuan 4
              to sections  3 (b) or 3 (c) of this Act shall be
              done in accordance with the laws of such State and
              under the supervision    of officials   of such State,
              subject to the inspection     and approval of the Sec-
              retary of Defense .”
                   Paragraph 3 of Article I of the agreement entered into
         by the United States Government and the State of Texas in 1952,
         provides:
                       “ARTICLE I.    The State   agrees:
                     "3* To execute construction    or supply con-
              tracts under regulations,    procedures,  and policies
              in current use by the Government insofar as these
              do not conflict  with the requirements of State law.
              All such contracts,   subcontracts,   and change orders
              shall be subject to prior approval of the Govern-
              ment . I1
                       Article   II of the agreement provides:
                       “The GOVERNMENT
                                    agrees:

                   “1.   To reserve funds for the purpose of pay-
              ments directly  to the construction contractor or to
Mr. William   J. Burke, page 4    (WW-168)


     the State for its shares of the cost       of construc-
     tion of buildings and appurtenances        thereto
     during the life of the contract for        said con-
     struction.
             “2 0 To pay the construction   contractor   or
      the State as the work progresses    for the Govern-
     merit’s share of said cost on the basis of the
     percentage which its portion bears to the total
      cost, PROVIDED,the total amount paid to the con-
      struction   contractor or to the State or to both,
      by the Government shall at no time exceed 75 per
      centum of the cost of each facility     constructed
      under this agreement.”
           Paragraph 3 of   Article   III   of the agreement provides:
           “3. The Government shall determine what
     costs incurred by the State are allowable under
     the terms and conditions  of this agreement.”
           Similar provisions   are contained in individual   agree-
ments for the construction    of various armories in the State of
Texas, including the Armory involved in your request,      entered
into in May, 1956.
           In view of the foregoing   it is noted that pursuant to
the agreements between the United States Government and the State
of Texas, and pursuant to the provisions     of the National Defense
Facilities  Act, 1950, as amended, by the first     session of the
84th Congress, the letting   of construction   contracts   for the con-
struction  of armories are to be let pursuant to State Law. See
Attorney General’s Opinions MS-179 (1955) and S-183 (1956).
           Therefore,   you are advised that it is the duty of the
Board of Control to follow the same policy in awarding contracts
for armory construction     as is followed in making awards for
other construction    handled by the Board of Control.
             According to your letter  bids were received for the
construction    of the National Guard Armory at Luling, Texas.      On
the basis of the tabulation     it has been determined by the Texas
National Guard Armory Board and the Board of Control that. the
bid of Zunker Construction     Company is the low bid.   Zherefore,
you are advised that the contract     should be awarded to such bid-
der if it is a responsible     bidder and under the agreement the
United States Government’s share is 75% of the base bid of Zunker
Mr. William   J. Burke, page 5   (W-168)


Construction  Company, and the State's  share is 25% of the~'base
bid of Zunker Construction  Company plus 100% of the remainder
of the contract.


           It is the duty of the Board of Control to
     follow the same policy in awarding contracts
     for armory construction  as is followed in making
     awards for other construction  handled by the
     Board of Control.
                                 Yours very truly,
                                 WILL WILSON
                                 Attorney General of Texas




JR:st:wb
APPROVED:
OPINION COMMITTEE:

II. Grady Chandler, Chairman
Jas. H. Rogers
Jack Goodman
John H. Minton, Jr.
REVIEWEDFOR THE ATTORMEY
                       GENERAL
BY: Geo. P. Blackburn
