Could a Kentucky state agency use one design-build contract for an energy-saving project without following procurement rules?

Plain-English summary

In 1997, Kentucky's Attorney General said energy savings contracts authorized for state buildings remained subject to the Kentucky Model Procurement Code. The newer energy legislation concerned financing and did not expressly replace procurement requirements. The AG also said one contract could combine design and construction of an energy-saving installation.

The opinion addressed a separate selection issue: when a contractor's employees would perform architectural or engineering work as part of a larger energy project, the statutory selection procedures applied. It left the question of which selection committee or committees should handle a mixed contract to the Finance and Administration Cabinet.

Currency note

This opinion was issued in 1997. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical summary

State agencies buying energy improvements

KRS 56.770 to .784 allowed agencies to install energy-conserving equipment without a specific appropriation when its cost could be recovered through energy savings. The AG said those financing provisions supplemented the Model Procurement Code. It relied on KRS 45A.020's application to public spending and its direction against implied repeal, and noted that the energy legislation's preamble itself referred to the procurement code.

Design and construction contractors

The AG extended an earlier opinion on local design/build procurement to the state procurement code. That earlier analysis required bid solicitations with reasonably detailed project specifications so potential bidders could identify the product being sought. The AG also cited KRS 45A.135's permission to use contract types promoting the Commonwealth's best interests, subject to the statute's limits, and the specific construction methods in KRS 45A.045(10).

Architectural and engineering services

The opinion said the selection statutes had no energy-project exemption. If the proposed energy contractor used its own employees for architectural or engineering services, those statutes applied. The AG found no statutory direction on how to choose a selection committee when those services were only part of a larger contract; it assigned resolution of that issue to the Finance and Administration Cabinet.

Common questions

Did the energy savings statute exempt a state contract from the procurement code?

No. The AG concluded that the energy statute concerned financing, while the Model Procurement Code still governed procurement.

Could design and construction be included in a single energy savings contract?

Yes. The AG said the design/build method was available under its reading of the procurement code, while also discussing sufficiently detailed specifications for bidding.

Did combining services avoid architect or engineer selection rules?

The AG said no exemption existed for energy-saving projects. It said the selection statutes applied if the contractor's employees performed architectural or engineering work, and left the committee question for mixed contracts to the Finance and Administration Cabinet.

Background and statutory framework

Finance Cabinet counsel Karen Powell asked three questions about the energy savings legislation enacted in 1996. The opinion analyzed KRS 56.770 to .784 alongside KRS 45A.020 and the contract authority in KRS 45A.135. It referred to OAG 92-143 for design/build bidding specifications and discussed the architectural and engineering selection provisions in KRS 45A.800 to .835. It did not decide how the Cabinet should organize committee review of a particular mixed contract.

Citations and references

• KRS 56.770 to .784: energy savings contracts.
• KRS 45A.020 and KRS 45A.135: procurement code coverage and contract types.
• KRS 45A.045(10): construction delivery methods cited by the opinion.
• KRS 45A.800 to .835: architectural and engineering selection procedures discussed by the AG.
• Reeves v Adams Hat Stores, 303 Ky 633, 198 SW 2d 789 (1947): use of a preamble as an aid to interpretation.
• OAG 92-143: earlier design/build analysis.

Source

• Landing page: https://kdla.access.preservica.com/uncategorized/IO_5fd3c791-161e-4e0b-aced-cd6f6c61fa72/
• Original PDF: https://kdla.access.preservica.com/download/file/IO_5fd3c791-161e-4e0b-aced-cd6f6c61fa72

Original opinion text

OAG 97-24
August 6, 1997

Subject:

Energy savings contracts

Requested by:

Karen Powell, General Counsel of the Finance Cabinet

Written by:

Ross T. Carter

Syllabus:

Energy savings contracts authorized by KRS 56.770
to .784 are subject to the Kentucky Model Procurement Code and may be procured through design/build method

Statutes construed:
OAG cited:

KRS 56.770 to .784

OAG 92-143

Opinion of the Attorney General
In 1996, the General Assembly enacted KRS 56.770 to .784, a
set of laws intended to reduce the consumption of energy in state
buildings. The law allows state agencies to install energy-conserving
equipment without an appropriation to pay for it if the equipment cost
can be recouped through savings on energy consumption.

OAG 97-24
Page 2

The Finance Cabinet, which is responsible for implementing this
law, asks three questions. The first is whether purchases must comply
with KRS chapter 45A, the Kentucky Model Procurement Code.
Two observations support a conclusion that KRS 56.770 to .784
supplement, rather than supplant, the Kentucky Model Procurement
Code. First, the Kentucky Model Procurement Code contains this provision at KRS 45A.020: (1) This code shall apply to every expenditure of public funds by this Commonwealth under any contract or like business arrangement . . . . (2) Since this code is a general act intended to provide model coverage of its subject matter, no part of it shall be deemed to be impliedly repealed by subsequent legislation if such construction of the subsequent legislation can be reasonably avoided. Nothing in KRS 56.770 to .784 expressly indicates whether those statutes work in conjunction with the Kentucky Model Procurement Code, or as an alternative to it. The focus of the act is on the financing, not the procurement, of energy saving contracts. Because KRS 45A.020 prohibits restriction of the Kentucky Model Procurement Code by implication, the code must be presumed to apply to energy saving contracts. Second, the preamble of a legislative act, while not an essential part of the legislation, may be resorted to as an aid in construing the act. Reeves v Adams Hat Stores, 303 Ky 633, 198 SW 2d 789 (1947). The preamble to the legislation in question includes this language: WHEREAS, KRS 45A.045(11) promotes acquisition of energy efficient products . . . . Here is a direct reference to the Kentucky Model Procurement Code. It provides some indication of legislative intent that the Kentucky Model Procurement Code continue to govern procurements.

OAG 97-24
Page 3

We therefore conclude that the Kentucky Model Procurement
Code applies to procurements of energy saving contracts.
The second question is whether one contract may include both
design and construction of an energy-saving installation.
In OAG 92-143 we said that use of the design/build method of
construction by local governments does not violate KRS 424.260, the
statute governing most procurements by local governments. In order
that “competing potential bidders can know with particularity the
product for which a bid might be tendered,” we said that the solicitation of bids must contain “reasonable detailed specifications describing the scope of a project.” We see no reason why the analysis in OAG 92-143 should not be extended to the Kentucky Model Procurement Code, which states at KRS 45A.135, “Subject to the limitations of KRS 45A.125 and 45A.130 [prohibiting cost plus percentage and cost reimbursement contracts], any type of contract which will promote the best interests of the Commonwealth may be used.” For capital construction contracts, design/bid and turnkey projects are specifically authorized by KRS 45A.045(10). The third question is whether design/build energy saving projects must comply with the procedures set out in KRS 45A.800 to . 835 regarding architectural and engineering services. Those statutes establish architectural and engineering services selection committees that screen and rank prospective suppliers of architectural and engineering services. The statutes broadly apply to “any undertaking requiring the professional services of an architect or engineer.” KRS 45A.805(4). The purpose of the statutes is, among other things, to “award a contract for architectural or engineering services to the best firm, qualified to perform work on a project, on the basis of demonstrated competence and qualification for the type of professional services required and at a fair and reasonable price.” KRS 45A.805(1)(c). KRS 45A.800 to .835 contain no exemption for energy-saving projects. If a proposed contractor on an energy saving project provides a variety of services, including architectural or engineering work performed by employees rather than subcontractors, the statutes apply.

OAG 97-24
Page 4

Although energy saving projects are likely to require both architectural and engineering services, the statutes make no provision for contracts in which architectural or engineering services are but one component of the contract. The statutes give no guidance whether to convene an architectural selection committee, an engineering selection committee, or both. Resolution of this question is a

OAG 97-24
Page 5

matter to be determined by the Finance and Administration Cabinet
under KRS 45A.045. Promulgation of regulations under KRS 45A.045(2)
will also afford applicable legislative committees an opportunity to review the 1996 legislation and determine whether legislative clarification is desirable. Albert B. Chandler III Attorney General

Ross T. Carter
Manager of the Opinions Branch