The Honorable Homer A. Foerster        Opinion No. H- 921
Executive Director- _.,.,
State'Hoard'of'Control                .?Re,:
                                          '.Whether sheltered
P. ~0. Box::l3047, Capito?Station.     worksho$brganised    by
Austin,'Texas '.70711-;"-              the Department of Mental
                                       H'ealth and Mental Retarda-
                                      ~tion may bid on state
                                       contracts.

bear 'Mr."',Fo'erstert,:

     Several unsheltered$orkshops'organized"by-.the.-'Texas
Department of,,Mental Health and Mental Retardation under
article 5547~202; section 2.17(b), V.T.C.S., haves asked to
be placed on the bid list maintained by the~Board.,of Control
so that:they,willtbe::jnvited to bid on',statecontracts;    YOU
wish to'know,whether 'such sheltered workshops may.;bid'on
state contracts'under:the State Purchasing Act-of.1957,
article 664-3,;V.T.C.S.; and if they may, whether~~the'goods
they.produce are entitled to the preference' set:out in
section 13 of article 664-3.
                   ~~..
        Articles 5547-202, section 2.17(b),..read.s‘inpertinent
part:

                 (1) From funds available to it the
             Department [of Mental Health and Mental
             Retardation] is authorized to provide
             mental'health and mental retardation.
             services through the operation of sheltered
             workshops and to contract with individuals
             or public or private entities for all or
             any part of such services.
The Honorable Homer A. Foerster - page 2      (H-921)



             (2) The Department is authorized to
          contractwith individuas or public E
          private entities for the sxe of @      and
          servrces oroducedor made=iEble      by the
          sheltered workshop programs.  The goods and
          services may be sold on a cash or credit
          basis.

             '(3) An operating fund may be established
          for each sheltered workshop operated by the
          Department . . . and all proceeds from the
          sale of sheltered workshop goods and services
          shall be~deposited in the operating fund .,. . .
          Money in the operating funds may only~be
          expended ,in the operation of sheltered'workshops
          for the purchase of supplies, materials,
          services, and equipment . . . . (Emphasis added).

These provisions authorize the Department of Mental Health
and Mental Retardation to establish sheltered workshops and
make bindina contracts to sell the coeds they   _ produce
                                                   _        to
public entities. See Stauffer v.--  San  Antonio,    344 S.W.2d
158 (Tex. Sup. 1961); State v. Ra land Clinic-Hospital, 159
S.W.2d 105 (Tex. Sup. m.     -"Xi&-entity"         has been defined
to include the state and its political and administrative
subdivisions. Wade
                -    v.
                     -~ New Jersey Turn ike Authorit
A.2d 232 (N.J. Sup. 19m      See An + erson v. di           %2d
227 (Tex..Civ. App. -- Austin953,      mandssdenied).
We find nothing in the State Purchasing Act of 1957 that
orevents the Department from contractinq through the Board
of-Control to sell products of the sheltered workshops to
public entities. Article 664-3, subsections 8(b) and (c),
provide standards for evaluating bidders for inclusion on
the bidders list and for awarding contracts.       These standards
do not distinguish between private firms and      state  agencies.
Section 12 of article 664-3 forbids members, employees, or
 appointees of the Board from being interested in a contract
or bid, but there is no comparable statute limiting state
 agencies from having an interest in contracts or bids with
 the Board. See also Attorney General Opinion M-743        (1970).
 We take noteof thePrison-Made    Goods Act of 1963, which
 does not merely permit the Board of Control to contract with
 a state agency, but actually requires it to purchase goods
 from the Texas Department of Corrections.     V.T.C.S. art.
 6203c,  § 9. -
              See Attorney General Opinion M-126 (1967).

                          P- 3861
The Honorable Homer A. Foerster - page 3   (H-921)



Other states have enacted laws requiring state agencies to
purchase goods produced by state owned and operated workshops
for the handicapped. See Ga. Code Ann. § 99-801 et seq.;
Md. Code Ann. art. 30.X   4-6A; Mass. Ann. Laws cr 6, 99
134, 143.

     In Attorney General Opinion M-743 (1970) this office
decided that the Board of Control could award the Department
of Corrections a contract to refurbish and rebind textbooks
for the State, provided that the competitive bid provisions of
article 664-3 were complied with. The opinion discussed
article 16, section 21 of the Texas Constitution, which
requires that certain articles be purchased under competitive
bids, and stated~that- "[slection 21 contains no statement
nor implication of distinction between bids by private
enterprise and a state agency."   Nor do we note any such
distinction in article 664-3. The Department of Mental
Health and Mental Retardation may contract through the Board
of Control to sell goods produced by sheltered workshops,
and it may bid on state contracts under article 664-3 as a
step in contract formation.

     Section 13 of article 664-3 reads as follows:

          The following manufactured products, if
          they meet the state specifications as to
          quantity, quality, and price, shall have
          preference in purchases made of those types
          of items by the Board: Products of workshops,
          organizations, or corporations whose primary
          purpose is training and employing mentally
          retarded persons or physically handicapped
          persons.

     We believe that this preference is valid. - See Attorney
General Opinions O-3312 (1941) and O-1678 (1939). It embodies
the legislative intent to prefer goods produced by "work-
shops . . . whose primary purpose is training and employing
mentally retarded persons . . . " if the goods meet state
                 See also V.T.C.S. arts. 664-5, 664-6.
specifications. --
Sheltered workshops are organized'under article 5547-202,
section 2.17(b) to "provide mental health and mental retarda-
tion services." The money they earn must go back into
operating and maintenance expenses.   The primary purpose of
the workshop is not to make profits, but to benefit the
participants. We conclude that the sheltered workshops
established for mentally retarded people by the Department
qualify for the preference givenby   section 13 of article
664-3.

                        P. 3862
The Honorable Homer A. Foerster - page 4       (H-921)



                      SUMMARY

            The Department of Mental Health and
            Mental Retardation may contract to
            sell the products of its sheltered
            workshops to the State under article
            664-3, V.T.C.S. The goods produced by
            such sheltered workshops for mentally
            retarded persons are entitled to the
            preference set out in section 13 of
            article 664-3.

                                  Very truly. yo,urs,



                                  JOLL<@ .
                                  Attorney General of Texas
                        8f
APPROVED:




DAVID M. KENDALL, First Assistant




Opinion Committee

jwb




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