Untitled Texas Attorney General Opinion

April 25, 1958 Honorable Wm. J. Burke Opinion No. N-424 Executive Director State Board of Control Re: Methods of handling Capitol Station contracts by the Board Austin, Texas of Control. Dear Mr. Burke: You have requested an opinion on the following question: In awarding a contract for the purchase of supplies, must the term of the contract be co- extensive with the fiscal year of the State? Under the facts submitted with your request, the contract obligates the State to use the supplies of the contractor for the term of the contract, but the State is not obligated to purchase a fixed quantity. Section 49, Article III of the Constitution of Texas, prohibits the creation of debts. However, obligations that run current with revenues are not debts within the mean- ing of Section 49 of Article III, Charles Scrlbnerss Sons v. Marrs, 114 Tex. 11, 262 S.W. 722, 725 (1924) and authorities m therein. Therefore, a contract creating an obligation of the State, payable out of State funds other than current revenues would violate the provisions of Section 49 of Article III of the Constitution of Texas, while obligations payable out of current revenues are authorized. Under the facts submitted in your request, the obligation of the State Is payable out of current revenues, regardless of the term of the contract. Charles Scrlbner's Sons v. Marrs, supra. In that case, the Court upheld a contract for the pume of textbooks, where the term of the contract was for a period of five years. It was pointed out by the Court: Honorable Wm. 'J. Burke,:Page 2,,(WW-424), "This contraat obligates the state to intro- duce into and use relator's books in the public free schools for a period of five years. It obligates relator to furnish, offer, and sell these books to the state each year for five years, upon the requisition of the school authorities each year for such books as may be needed. Pay- ment for them Is to be made out of the current fund each year as they are purchased. The obllga- tion of the contract Is not to buy a fixed number or amount of books, but only so many as are needed by the schools of the state. Liability Is fixed only for such amounts as are requisitioned by the trustees of the schools. The number of books purchased for any year and the amount of money applied thereto Is wholly within the control of the school authorities. "The contract is for uniform text-books for a period of five years. No quantity is stipulated and no promise to pay, only an agreement to use the books in the schools. The statute and the contract provide that no debt is created. The obligation to pay arises only upon the purchase and delivery of books for the year when needed, and according to the purchase. The books so fur- nished and so purchased during any year do not make a charge on the future resources of the state, but are paid for each year as the purchases are made." (Emphasis ours). Sections 2 and 7 of Article 664-3, Vernon's Civil Statutes (State Purchasing Act of 1957) provide as follows: "Sec. 2. It is the purpose of this Act to give the Board of Control authority to institute and maintain an effective and economical system for purchasing supplies, materials, services, and equlp- ment for the State of Texas." "Sea. 7. The Board (of Control) may determine the purchasing methods to be used in buying any supplies, materials, services, and equipment. It may use, but Is not limited to, the contractpurchase Honorable Wm. J. Burke, Page 3 (W-424) procedure and open market purchase procedures set out in thisAct. The Board shall have the author- ity to combine orders in a system of saheduled purchasing, and It shall at all times try to benefit from purahasing in bulk. All purchases of and contracts for supplies, materials, servicea, and equipment shall, except as provided herein, be based whenever possible on competitive bids." (Parenthesis ours). Under the above quoted provisions of the State Pur- chasing Act of 1957, the Board of Control la authorized to purchase supplies for the State of Texas, using the most effective and economical system. Therefore, you are advised that the State Board of Control Is authorized to enter into contracts for the purchase of supplies, the terms of such contracts to exceed the fiscal year of the State, provided suah contracts do not create an obligation of the State to purchase a fixed quantity of supplies. SUMMARY The State Board of Control Is authorized, under the provisions of the State Purchasing Aat of 1957, to enter into contracts for the purchase of supplies under any of the prooedurea out- llned therein; and the terms of the contracts may be for a longer term than the fiscal year of the State, provided that such con- tracts do not create an obliga- tion to purchase a fixed quantity, but merely obligate the State to purchase any supplies needed Honorable Wm. J. Burke, Page 4 (WW-424) from the contractor for the term of the contract. Yours very truly, WILL WILSON Attorney General of Texas 'John Reeves Assistant JR:jl APPROVED: OPINION COMMITTEE Gee. P. Blackburn, Chairman J. Arthur Sandlin B. H. Tlmmins, Jr. J. Mark McLaughlin Tom I. McFarling REVIEWED FOR THE ATTORNEX GENERAL BY: W. V. Geppert