Untitled Texas Attorney General Opinion ( 1958 )

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