Judges: W.A. DREW EDMONDSON, Attorney General of Oklahoma
Filed Date: 6/19/2006
Status: Precedential
Modified Date: 7/6/2016
Dear Senator Corn:
This office has received your request for an official Attorney General Opinion in which you ask, in effect, the following questions:
1. The State Use Committee, which was created in the Department of Central Services ("DCS") pursuant to 74 O.S. Supp. 2005, § 3001[
74-3001 ](A), has the duty to designate a procurement schedule of products and services provided by qualified nonprofit agencies for the severely disabled. 74 O.S. 2001, § 3004[74-3004 ]. State agencies are required to purchase any needed items on the procurement schedule from the designated nonprofit agencies. Id. § 3007(A). The following questions pertain to the State's purchases of items on the procurement schedule:a. Does the Director of DCS have the authority to cancel the State's current contracts with State Use Committee vendors and implement an internet-based system of purchasing goods that requires vendors with current contracts to subcontract with an entity under contract with DCS to facilitate the purchase of goods through the internet-based system in order for such vendors to be able to make sales to state agencies?
b. May the Director of DCS contract with an outside vendor to provide an internet-based service which allows state agencies to place orders over the internet for goods listed on the procurement schedule?
c. Does the State Use Committee have the authority to authorize the Director of DCS to issue a Request For Proposal for items listed on the procurement schedule?
2. May an entity sell software to a state agency if the entity has, through a professional services contract, provided assistance to the agency in developing a Request for Proposal for the purchase of such software?
3. May an entity sell services to a state agency if a partner of the entity has, through a professional services contract, provided assistance to the agency in developing a Request for Proposal for the purchase of such services?
The Committee performs duties that implement a statute which requires state agencies to purchase goods and services from nonprofit agencies "providing employment to people with severe disabilities at the fair market price determined by the Committee if the product or service is available within the period required by the entity." 74 O.S. 2001, § 3007[
The Committee consists of five voting members, including the Director of DCS or designee and one "nonvoting member, a person employed by the Department of Central Services as a contracting officer in the purchasing division, appointed by the State Purchasing Director with the advice of the Committee and designated specifically to solicit, develop and negotiate contracts. . . ." 74 O.S. Supp. 2005, § 3001[
You first ask whether the Director of DCS has the authority to cancel current contracts with Committee vendors and implement an internet-based system of purchasing goods that requires vendors with currently existing contracts to subcontract with an entity which has contracted with DCS to facilitate the purchase of goods through the internet-based system in order for such vendors to be able to make sales to state agencies. Public officers or agencies may only exercise those powers that are expressly given by statute and "such powers as are necessary for the due and efficient exercise of the powers expressly granted, or such as may be fairly implied from the statute granting the express powers." Marley v. Cannon,
The DCS is "under the administrative control of the Director of Central Services." 74 O.S. 2001, § 61.2[
The Director of DCS has the authority to promulgate rules on various matters relating to state purchasing including, among others, the "time, manner, authentication, and form of making requisitions for acquisitions"; and "compliance with provisions of Section[s] 3001 et seq. of this title, which relate to the State Use Committee." Id. § 85.5(C)(1), (11). The rules promulgated by the Director include a provision requiring state agencies to make acquisitions from suppliers on the Committee procurement schedule, which provides:
(2) State Use Committee. State agencies shall make acquisitions from suppliers on the State Use Committee procurement schedule regardless of the acquisition purchase price if the supplier's delivery date meets state agency requirements. State Use Committee statewide contracts are mandatory statewide contracts. State agencies shall reference the State Use Committee procurement schedule to ensure all acquisitions are pursuant to 74 O.S., Section 3007. An agency may make an open market acquisition of a specified commodity or class of commodities on the State Use Committee procurement schedule upon receipt of a written waiver from the State Use Committee contracting officer.
OAC
The State Purchasing Director is required to "review state agency acquisitions for the purposes of: . . . [e]nsuring state agency compliance with provisions of Section[s] 3001 et seq. of this title pertaining to the State Use Committee[.]" 74 O.S. Supp. 2005, § 85.5[
The three components of your first question will be addressed separately. With respect to the question of whether the DCS Director may cancel contracts with current vendors, such contracts may only be cancelled for reasons specified in DCS rules or as specified in the contract itself. DCS rules provide a list of circumstances in which the State Purchasing Director may cancel contracts with vendors. See OAC
The second part of your first question is whether the Director may implement an internet-based ordering system of purchasing goods by state agencies. The Purchasing Director, who is under the supervision of the DCS Director, has "the authority and responsibility for all acquisitions used or consumed by state agencies." 74 O.S. Supp. 2005, § 85.5[
The final part of your first question is whether such a system may be implemented if it requires vendors with currently existing contracts to subcontract with an entity under contract with DCS to facilitate the purchase of goods through the internet-based system in order for such vendors to be able to make sales to state agencies.3 The Director may implement an internet-based system of ordering goods and services if the system directs the orders for items on the procurement schedule to State Use vendors as specified in 74 O.S. 2001, § 3007[
You next ask whether the Director of DCS may contract with an outside vendor to provide an internet-based service which allows state agencies to place orders over the internet for goods listed on the procurement schedule established pursuant to Section 3004 of Title 74. Section 3004 directs the Committee to designate a procurement schedule consisting of the products manufactured, produced, processed or assembled by any severely disabled person or qualified nonprofit agency for the severely disabled which are suitable for procurement by the state. Id. State agencies are required to purchase from the procurement schedule if the product is available within the period required by the agency. Id. § 3007(A). State agencies may make an open market acquisition for a commodity on the procurement schedule "upon receipt of a written waiver from the State Use Committee contracting officer." OAC
Because of his authority over state acquisitions (74 O.S. Supp. 2005 § 85.5[
The Committee has the specific statutory authority to (1) designate a procurement schedule (74 O.S. 2001, § 3004[
The Committee was "created in the Department of Central Services." 74 O.S. Supp. 2005, § 3001[
The Committee itself has no statutory authority to issue or authorize RFPs or to enter into contracts. The Committee qualifies the vendors, prepares the procurement schedule and establishes the fair market price of goods and services on the schedule, but does not enter into contracts with vendors. Unless otherwise provided by law, the Purchasing Division of DCS has the sole authority and responsibility for state purchasing contracts.Id. § 85.3(D). The State Purchasing Director has authority to issue RFPs for acquisitions by state agencies. OAC
Although items on the procurement schedule must be purchased from vendors on the schedule, there are circumstances under which agencies may purchase such items from other vendors, such as where the item is not available within the time frame needed by the agency and the agency has a waiver from the DCS contracting officer assigned to the Committee. 74 O.S. 2001, § 3007[
The Act requires state agencies to purchase products exceeding $25,000.00 through DCS pursuant to a competitive bidding procedure, except as otherwise provided by the Act. 74 O.S. Supp. 2005, §§ 85.4[
It would not be a fair competition if a bidder had advance notice of the terms of an RFP, such as would be the case if the bidder assisted in preparing the RFP. The basis for finding a conflict of interest in such situations was explained by the court in Medco Behavioral Care Corp. v. State of Iowa Department ofHuman Services,
The analysis would be similar where an entity bids on an RFP for services which was prepared with the assistance of a partner of the entity; however, it would be necessary to examine the facts surrounding the relationship between the partners to determine if a conflict of interest actually existed. If a partner of an entity that has assisted in the preparation of an RFP is in a position to obtain advance information about the terms of an RFP from such entity, then the prohibition against bidding on the RFP would extend to the partner of the entity. "Partnership" is defined in the Oklahoma Revised Uniform Partnership Act as "an association of two or more persons to carry on as co-owners a business for profit formed under . . . this act. . . ." 54 O.S. 2001, § 1-101[
It is, therefore, the official Opinion of the Attorney Generalthat:
1. The Director of the Department of Central Services may only cancel contracts with State Use Committee vendors for reasons specified by OAC
580:15-4-17 or as authorized by the terms of the contract. The Director may implement an internet-based system of purchasing goods as long as the orders for products on the State Use procurement schedule are routed to State Use vendors. The Director may not require State Use vendors to subcontract with the entity under contract to operate the internet-based purchasing system in order for such vendors to be able to make sales to state agencies. See 74 O.S. 2001, § 3007[74-3007 ](A); OAC580:15-6-5 (2) (2005).2. The Director of the Department of Central Services may contract with an outside vendor to provide an internet-based service that allows state agencies to place orders over the internet for goods listed on the State Use Committee Procurement Schedule if the orders are directed by the internet-based service to State Use vendors for those products that are available from such vendors within the period required by the state agencies. 74 O.S. Supp. 2005 §§ 85.5[
74-85.5 ](A), 3007(A); OAC580:15-6-5 (2) (2005).3. Unless otherwise provided by law, the State Purchasing Director, under the supervision of the Director of the Department of Central Services, has sole authority over state purchasing contracts, including the issuance of Requests for Proposals ("RFP") for acquisitions by State agencies. 74 O.S. Supp. 2005, § 85.5[
74-85.5 ](A); OAC580:15-4-5 (b). The State Use Committee does not have authority to enter into contracts or to issue or authorize RFPs. State contracts with State Use vendors for items on the procurement schedule are not awarded through an RFP process, but rather, are awarded by the Purchasing Division after approval of the vendor by the State Use Committee and the inclusion of the vendor's products on the procurement schedule. Because state agencies may purchase items on the procurement schedule from other vendors where the items are not available from State Use vendors within the time frame required by the agency, the Director of the Department of Central Services may issue an RFP for items listed on the procurement schedule.4. An entity may not be awarded a contract for the sale of software to a state agency if the entity has, through a professional services contract, provided assistance to the agency in developing a Request for Proposal for the purchase of such software. Medco Behavioral Care Corp. v. State of Iowa Dep't of Human Serv.,
553 N.W.2d 556 ,565 (Iowa 1996).5. Depending upon the particular facts and circumstances of the business relationship, it may be a conflict of interest for an entity to sell services to a state agency if a partner of the entity has, through a professional services contract, provided assistance to the agency in developing a Request for Proposal for the purchase of such services. Whether any particular business relationship would create a conflict of interest under circumstances where a partner of an entity has assisted in the development of an RFP is a question of fact that is outside the scope of an Attorney General's Opinion. 74 O.S. 2001, § 18b[
74-18b ](A)(5).
W.A. DREW EDMONDSON Attorney General of Oklahoma
KATHRYN BASS Assistant Attorney General