. . . .
. :
The Attorney General of Texas
June 5, 1978
JOHN L. HILL
Attorney General
Honorable Ben F. McDonald, Jr. Opinion No. H- 1173
Executive Director
Texas Department of Community Affairs Re: Whether article 6252-11~.
Box 13166, Capitol Station V.T.C.S., applies to audits.
Austin, Texas 78711
Dear Mr. McDonald:
You ask whether a contract by the Texas Department of Community
Affnirs with an accounting firm for auditing local entities receiving federal
funds is subject to the requirements of article 6252-11~. Article 6252-llc,
enacted by the 65th Legislature, governs the employment of private
consultants by State agencies. Acts 1977, 65th Leg., ch. 454, at 1185. It
authorizes the use of private consultants only when there is a substantial need
for consulting services that agency personnel cannot perform. Sec. 3. Before
an agency can enter a contract for consulting services valued in excess of
$10,000 it must publicly invite offers of the proposed services. Sec. 6. The
act &fines “consulting service” as follows:
the practice of studying an existing or a proposed
operation or project of an agency and advising the
agency with regard to the operation or project.
Sec. 1 (1). “Private consultant” is defined as “an entity that performs
consulting services.” V.T.C.S. art. 6252-llc, 6 l(2).
The answer to your question thus depends on whether an audit
constitutes a “consulting service” within the definition in section 1 (1). This
definition is phrased in general terms. In determining its scope, we m*v
consider the legislative history of article 6252-11~. See Texas & N. 0. R. Co.
v. Railroad Commission, 260 S.W.2d 626 (Tex. 1947). Legislative debates and
committee reports may be considered. National Carloading Corp. v. Phoenix-
El Paso Express, Inc., 178 S.W.?d 133 (Tex. Civ. App. - El Paso). aff’d, 176
S.W.Zd 564 (Tex. 1943), cert. denied, 322 U.S. 747 (1949) (federal stam. In
addition, the stntute must be interpreted in light of the purpose sought to be
accomplished. Hollan v. State, 308 S.W.2d 122 (Tex. Civ. App. - Fort Worth
1947, writ ref’d n.r.e.).
P. 4739
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Honornble Ren F. McDonald, Jr. - Page 2 (H-1173)
The legislative history of article 6252-11~ indicates that it was directed at
management consultants. The sponsor of the bill, stated that it referred to the
management survey that determines whether an ngency’s programs were good or
bad. Tape recording of public hearing of Senate State Affairs Committee, March 9,
1977, filed in Senate Staff Services Office. He also noted that it concerned
management and efficiency consultants. The bill was recommended by the Joint
Advisory Committee on Government Operations established by the 64th
Legislature. V.T.C.S. art. 4413 (32e); see Joint Advisory Committee on Government
Operations, Legislative Proposals 6 (January 1977). The Committee’s final report
notes that State agencies enter into contracts for management consulting services
for a variety of projects. Joint Advisory Committee on Government Operations,
Final Report to the Governor 15-17 (January 1977). Many of the studies appeared to
be directed at management improvement. The Committee recommended legisla-
tion “that outlines state policy on the utilization of private management consulting
firms by stnte agencies and prescribes procedures for the selection of managemenl
consultants.” Final Report to the Governor, Recommendation 4.
In view of the legislative history of article 6252-llc, we believe that its
definition of “consulting services” refers to management or program consulting.
The dictionary defines “management consultant” in terms similar to the statutorv
definition:
management consultant . . . one that advises business or
industrial firms in the conduct of their affairs and in
devising and installing more satisfactory procedures for
their use.
Webster’s Third International Dictionary at 1372. In our opinion, neither the
dictionary definition of management consultant nor the statutory definition of
private consultant includes a person employed to perform the routine work
necessary to the functioning of an agency’s programs, even though his work may
involve studying the agency’s records. The consultant renders opinions on the value
of an agency’s projects and the efficiency in achieving its goals.
An audit has been defined as a formal examination and verification of the
books of account by an auditor. May v. Wilcox Furniture Downtown, Inc., 450
S.W.2d 734 (Tex. Civ. App. - Corpus Christi 1969, writ ref’d n.r.e.). In our opinion,
the typical audit, which tests the accuracy of financial records, is not a consulting
service subject to article 6252~UC. Moreover, it is highly unlikely that this
legislation was designed to control the use of outside auditors by Stnte agencies. A
provision which has appeared in each appropriations act for many years forbids the
expenditure of appropriated funds on outside audits except in narrow circum-
stances. See, e.g., General Appropriations Act, 4~1s 1977, 65th Leg., ch. 872, art.
V, S 30, at 3157; Appropriations-Executive nnd 4dministrative Departments, Acts
p. 4740
Honorable Ben F. McDonald, Jr. - Pige 3 (H-1173)
1941, 47th Leg., ch. 571, S 2(16) at 1292. See also Attorney Genera) Opinion H-1063
(1977). Thus, the determination that routine audits are not subject to article 6252-
UC would not conflict with the Legislature% purpose in approving it.
The Department of Community Affairs administers many federally funded
contracts with local entities. The federal grant requires audits of local
contractors, and the Department has provided these by contracting with private
accounting firms. In our opinion, these contracts are not subject to the
requirements of article 6252~UC. You inform us that the Legislative Budget Board
which must be notified of any agency’s employment of a private consultant, see
V.T.C.S. art. 6252-UC, SS 4, 5, has also reached the same conclusion with regard to
auditing services. We note, however, that the statute provides no blanket
exception for accountants, as it does for engineers, architects, and legal counsel.
Sec. 2. Thus, a contract with an accountant would be subject to the act if it
involved management or program consulting services, for example, a study which
evaluated accounting procedures in order to recommend improvements.
You suggest that article 6252-UC, if applicable to contracts with accountants,
would conflict with article 664-4, which provides that State agencies shall not
select accountants on the basis of competitive bidding. In our opinion, the two
statutes are not in conflict. Article 6252-UC does not require that contracts for
consulting services be let on competitive bids. It does require the agency to
publicize its intent to enter into a consulting contract valued in excess of $10,000,
so that private consultants may offer to perform the required services. Both
statutes require that selection be based on competence, qualifications, and
reasonableness of fee. V.T.C.S. art. 664-4, S 3; V.T.C.S. art. 6252-UC, S 3(b).
SUMMARY
The Department of Community Services may employ a
private accountant to audit recipients of federal grant funds
without complying with the requirements of article 6252-UC,
V.T.C.S. Article 664-4, V.T.C.S., and article 6252-UC are
not in conflict.
APPROVED:
DAVID M. KENDA:LL, First Assistant
p. 4741
Honorable Ben F. McDonald, Jr. - ?age 4 (~-1173)
C. ROBERT HEATH, Chairman
Opinion Committee
jsn
D. 4742