Can a Texas appropriations rider force a state agency to competitively bid small contracts that general law exempts from bidding?

TX AG Opinion GA-0378: Can a budget rider force an agency to competitively bid contracts state law exempts?

Plain-English summary

The Texas Legislature funds state agencies through the General Appropriations Act, and it often attaches "riders" to a particular agency's appropriation to tell the agency how it may or may not spend the money. A rider can limit or restrict the use of funds, but there is a constitutional line it cannot cross: article III, section 35 of the Texas Constitution bars putting general legislation into an appropriations bill. Courts and the Attorney General have long read that to mean a rider cannot repeal, amend, or rewrite a general statute that applies statewide.

The State Board of Dental Examiners got a rider (called "Rider 3") attached to its 2006-07 appropriation. The rider declared the Legislature's intent that none of the agency's appropriated funds be used on any contract of any kind, "without regard to amount," unless the contract went through competitive bidding and other open-contracting steps. The Board's general counsel asked the Attorney General whether that rider conflicted with Government Code section 2155.132, the general statute on delegated purchasing, which lets a state agency buy goods and services without competitive bidding when the purchase does not exceed a threshold (set by rule at $5,000), and whether the rider violated article III, section 35.

The Attorney General concluded that to the extent Rider 3 required competitive bidding on contracts worth less than $5,000, it attempted to repeal section 2155.132(e) as applied to the dental board. Because a rider cannot amend a general law, that application of the rider was unconstitutional under article III, section 35. For contracts above $5,000, the analysis was more nuanced: provisions of the rider that simply duplicated existing bidding law were valid, but any provision that conflicted with the general bidding statutes, or that added competitive-bidding requirements those statutes did not contemplate, was invalid.

Currency note

This opinion was issued in 2005. 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.

Who this opinion affected (as of 2005)

The State Board of Dental Examiners: The opinion told the Board that it could not treat Rider 3 as forcing competitive bidding on its smallest contracts. As to purchases of $5,000 or less, the rider was unconstitutional, so the general law that exempted those purchases from bidding still governed.

State agencies generally and the Texas Building and Procurement Commission: It reaffirmed that the delegated-purchasing rules in section 2155.132, including the no-bidding threshold the Commission set by rule, controlled over a contrary spending rider aimed at one agency.

Legislators and budget drafters: It restated the limit on appropriations riders. A rider could detail, limit, or restrict the use of appropriated funds, but it could not be used to rewrite a statute of general application. A rider that did so risked being struck under article III, section 35.

Lawyers advising agencies on procurement: It illustrated the line-by-line approach to a rider that overlaps general law. A provision merely declarative of existing bidding law survived; a provision that conflicted with or supplemented the bidding statutes did not.

Common questions

What did Rider 3 actually try to do?
It declared that none of the dental board's appropriated funds could be used on any contract "without regard to amount" unless the contract was awarded through competitive bidding and other open-contracting steps, such as advertising the contract and soliciting requests for proposals.

Why was part of it unconstitutional?
Government Code section 2155.132(e) lets a state agency make a purchase without competitive bidding if the purchase does not exceed a set amount (the Commission set it at $5,000 by rule). By demanding bidding even on those small purchases, the rider tried to repeal that exemption for the dental board. A rider in an appropriations bill cannot amend a general statute, so article III, section 35 was violated.

Was the whole rider thrown out?
No. The Attorney General drew a line. For contracts over $5,000, parts of the rider that merely repeated what the bidding statutes already required were valid. Only the parts that conflicted with general law, or added bidding requirements the statutes did not contemplate, were invalid.

What is the "one subject" rule in article III, section 35?
It generally says a bill may contain only one subject. Read together with a separate clause allowing appropriations bills to cover many accounts, courts have used it to bar general legislation from being smuggled into an appropriations bill, which is why a rider cannot rewrite a standalone statute.

Did this opinion decide whether the dental board could use block contracts or any specific contract?
No. It addressed the validity of the rider against the general bidding statute and the constitution. It did not approve or disapprove any particular dental board contract.

Background and statutory framework

Government Code section 2155.132 governs delegated purchasing by state agencies. Subsection (a) delegates to a state agency the authority to purchase goods and services if the purchase does not exceed $15,000; subsection (b) lets the Texas Building and Procurement Commission delegate purchasing above $15,000 after weighing relevant factors; and subsections (c)-(d) have the Commission monitor agencies' purchasing and prescribe procedures by rule (Tex. Gov't Code Ann. § 2155.132(a)-(d) (Vernon 2000)). Subsection (e) declares that competitive bidding "is not required for a purchase by a state agency if the purchase does not exceed $2,000, or a greater amount prescribed by commission rule," and the Commission set that amount at $5,000 (id. § 2155.132(e); 1 Tex. Admin. Code § 113.11(c)(1) (2004)). Subsections (f)-(h) exclude certain items, bar splitting large purchases into small lots to evade the statute, and set rules for agencies that do bid (id. § 2155.132(f)-(h)).

Article III, section 35(a) of the Texas Constitution provides that "No bill, (except general appropriation bills, which may embrace the various subjects and accounts, for and on account of which moneys are appropriated) shall contain more than one subject" (Tex. Const. art. III, § 35(a)). The Attorney General explained that this "one subject rule" has long been construed to prohibit enacting general legislation in an appropriations bill (Moore v. Sheppard, 192 S.W.2d 559, 562 (Tex. 1946); Tex. Att'y Gen. Op. No. V-1254 (1951)). Under the rule stated in Opinion V-1254, a general appropriation bill may contain riders that "detail, limit, or restrict the use of the funds" so long as they are "necessarily connected with and incidental to the appropriation" and "do not conflict with general legislation," and the riders most often struck are those that "attempt to modify or amend a general statute." The office cited a line of opinions invalidating such riders (Tex. Att'y Gen. Op. Nos. JC-0178 (2000); DM-93 (1992); JM-167 (1984); H-321 (1974)).

Applying that framework, the office concluded that subsection (b) of Rider 3, by applying competitive bidding to all dental board purchases regardless of amount, attempted to repeal section 2155.132(e) as to the Board for purchases of $5,000 or less, conflicting with general law and contravening article III, section 35. For contracts exceeding $5,000, the office took a provision-by-provision view: requirements that merely duplicated section 2155.132 (such as using the master bidder list) were valid, while any provision conflicting with the bidding statutes or supplementing them in a way not contemplated by those statutes was invalid (General Appropriations Act of May 29, 2005, 79th Leg., R.S., ch. 1369, S.B. 1, art. VIII-16, 2005 Tex. Sess. Law Serv. 4327, 5041; Tex. Att'y Gen. Op. Nos. DM-93 (1992), V-1254 (1951)).

Citations

Statutes and constitutional provisions:

• Tex. Gov't Code Ann. § 2155.132(a)-(h) (Vernon 2000)
• 1 Tex. Admin. Code § 113.11(c)(1) (2004) (Tex. Bldg. & Procurement Comm'n, Delegated Purchases)
• Tex. Const. art. III, § 35(a)
• General Appropriations Act of May 29, 2005, 79th Leg., R.S., ch. 1369, S.B. 1, art. VIII-16, 2005 Tex. Sess. Law Serv. 4327, 5041 ("Rider 3")

Cases:

• Moore v. Sheppard, 192 S.W.2d 559 (Tex. 1946)

Other authorities:

• Tex. Att'y Gen. Op. Nos. V-1254 (1951), JC-0178 (2000), DM-93 (1992), JM-167 (1984), H-321 (1974)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0378
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2005/ga0378.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS

GREG ABBOTT

November 28, 2005

Ms. Sherri Sanders
Interim Executive Director
State Board of Dental Examiners
333 Guadalupe, Tower 3, Suite 800
Austin, Texas 78701-3942

Opinion No. GA-0378

Re: Construction and constitutionality of a rider to the 2006-07 biennial year appropriation to the State Board of Dental Examiners (RQ-0351-GA)

Dear Ms. Sanders:

You ask through your general counsel about the construction and constitutionality of a rider to the 2006-07 biennial year appropriation to the State Board of Dental Examiners ("SBDE").[1] That provision states:

             (a) It is the intent of the Legislature that none of the funds appropriated above may be used for entering into a contract or agreement or for amendment or extension of a contract or agreement or for administration or oversight of a contract or agreement of any kind or for direct payment to a vendor for goods or services including the administration of examinations unless the vendor is selected following competitive bidding procedures and openness in contracting including:

                     (1) appropriate advertisement by the agency of the availability of the contract including using the internet and services available for the Texas Building and Procurement Commission;

                     (2) solicitation by the agency of requests for proposals;

                     (3) selection of a vendor based on the best value for the state;

                     (4) multiple bidders;

                     (5) use of the master bidder list compiled by the Texas Building and Procurement Commission; and

                     (6) other good contracting principles,

             (b) It is the intent of the Legislature that this rider apply to all contracts and agreements and to all amendments or extensions of a contract or agreement or for administration or oversight of any contract or agreement of any kind and for direct payment to a vendor for goods or services including the administration of examinations without regard to amount.

General Appropriations Act of May 29, 2005, 79th Leg., R.S., ch. 1369, S.B. 1, art. VIII-16, 2005 Tex. Sess. Law Serv. 4327, 5041 ("Rider 3") (emphasis added). You ask, first, whether "the terms of the rider . . . conflict with the general law set out in Government Code § 2155.132 with regard to delegated purchases and the competitive bidding requirement" or if, on the other hand, the rider "merely direct[s] the SBDE to . . . follow the contracting principles and requirements of law as set out in Government Code § 2155.132." See Request Letter, supra note 1, at 2. You ask, more specifically, whether the rider attempts to "alter or amend the competitive bidding requirement of Government Code § 2155.132(e) as it applies to the SBDE." Id. at 2. Finally, you ask whether the provisions of the rider violate article III, section 35 of the Texas Constitution. See id. at 2. Because the questions are so interrelated, we will answer them together.

Section 2155.132(a) of the Government Code delegates to a state agency "the authority to purchase goods and services if the purchase does not exceed $15,000." TEX. GOV'T CODE ANN. § 2155.132(a) (Vernon 2000). Subsection (b) permits the Texas Building and Procurement Commission ("TBPC") to delegate purchasing to a state agency when the purchase exceeds $15,000, but it requires the TBPC to consider particular relevant factors in delegating that authority. See id. § 2155.132(b). Subsection (c) directs the TBPC to "monitor the purchasing practices of state agencies that are making delegated purchases . . . to ensure that the certification levels of the agency's purchasing personnel and the quality of the agency's purchasing practices continue to warrant the amount of delegated authority provided by the commission to the agency" and authorizes the TBPC to revoke its delegated authority. Id. § 2155.132(c). Subsection (d) requires the TBPC to prescribe, by rule, procedures by which state agencies may make delegated purchases. See id. § 2155.132(d). Subsection (e) declares that "competitive bidding, whether formal or informal, is not required for a purchase by a state agency if the purchase does not exceed $2,000, or a greater amount prescribed by commission rule." Id. § 2155.132(e). We note that the TBPC has by rule set the current prescribed amount for delegated purchases to state agencies at $5,000. 1 Tex. ADMIN. CODE § 113.11(c)(1) (2004) (Tex. Bldg. & Procurement Comm'n, Delegated Purchases). Subsection (f) lists certain items which are excluded from delegated purchasing under section 2155.132. See id. § 2155.132(f). Subsection (g) prohibits the division of related large purchases into small lot purchases in order to evade the statute. See id. § 2155.132(g). Finally, subsection (h) requires a state agency making purchases by competitive bidding to (1) "attempt to obtain at least three competitive bids from sources listed on the master bidders list that normally offer for sale the goods being purchased" and (2) "to comply with Subchapter E" of chapter 2155, which relates to the master bidders list. Id. § 2155.132(h).

Article III, section 35 of the Texas Constitution provides, in relevant part:

             (a) No bill, (except general appropriation bills, which may embrace the various subjects and accounts, for and on account of which moneys are appropriated) shall contain more than one subject.

TEX. CONST. art. III, § 35(a). This provision, denominated the "one subject rule," has long been construed by the courts and this office to prohibit the enactment of general legislation in an appropriations bill. See Moore v. Sheppard, 192 S.W.2d 559, 562 (Tex. 1946) (rider that prescribes fees charged for unofficial copies and the disposition thereof conflicts with article III, section 35); Tex. Att'y Gen. Op. No. V-1254 (1951) at 10 (rider attached to a general appropriation bill cannot repeal, modify or amend an existing, general law).

In an opinion stating the rules for determining the validity of riders to appropriations bills, the attorney general, more than a half-century ago, declared:

             In addition to appropriating money and stipulating the amount, manner, and purpose of the various items of expenditure, a general appropriation bill may contain any provisions or riders which detail, limit, or restrict the use of the funds or otherwise insure that the money is spent for the required activity for which it is therein appropriated, if the provisions or riders are necessarily connected with and incidental to the appropriation and use of the funds, and provided they do not conflict with general legislation.

Id. at 8 (emphasis added). "The majority of the riders which have been stricken are those which attempt to modify or amend a general statute." Id. at 10. Attorney general opinions since the issuance of Opinion V-1254 have consistently held such riders invalid. See Tex. Att'y Gen. Op. Nos. JC-0178 (2000) (rider may not impose on distribution of emergency medical services and trauma care funds a formula inconsistent with general law); DM-93 (1992) (rider may not enact exceptions to competitive bidding that are not expressly recognized by the competitive bidding statutes affecting school districts); JM-167 (1984) (rider may not impose on state agency an affirmative duty to enter into contract with a particular organization where statute places decision within discretion of agency); H-321 (1974) (rider may not limit inmate's choice of provider of dental plates where statute permits discretion in selection).

Subsection (b) of Rider 3, in attempting to apply competitive bidding procedures to all purchases by the SBDE, regardless of amount, attempts to repeal as to the SBDE subsection (e) of section 2155.132 of the Government Code which, as implemented by the TBPC, permits a state agency to make any purchase without competitive bidding where the amount of the contract does not exceed $5,000. See TEX. GOV'T CODE ANN. § 2155.132(e) (Vernon 2000). Thus Rider 3, to the extent it applies to purchases that do not exceed $5,000, conflicts with general law and, as a result, contravenes article III, section 35 of the Texas Constitution.

To the extent that Rider 3 applies to contracts the amounts of which exceed $5,000, a more subtle analysis is required. Subsection (a) of Rider 3 does not distinguish between contracts on the basis of amount, whereas section 2155.132 distinguishes between contracts the amounts of which do not exceed $15,000 and those which exceed $15,000. See id. § 2155.132. Some provisions of Rider 3, such as the requirement that the SBDE use the master bidder list, appear merely to duplicate requirements of section 2155.132. Other portions may run afoul of statutory competitive bidding provisions or TBPC rules. To the extent that a provision of Rider 3 is merely declarative of existing law, it is not invalid under article III, section 35 of the Texas Constitution. To the extent, however, that a provision of Rider 3 conflicts with general law or attempts to supplement the competitive bidding statutes in a manner not contemplated in those statutes, it contravenes that constitutional provision. See Att'y Gen. Op. No. DM-93 (1992) (rider may not enact exceptions to competitive bidding that are not expressly recognized by the competitive bidding statutes affecting school districts); Tex. Att'y Gen. Op. No. V-1254 (1951) (rider may not conflict with or improperly supplement general law).

                                   SUMMARY

                    To the extent that a rider to the 2006-07 appropriation to the State Board of Dental Examiners purports to require competitive bidding on the agency's contracts which are valued at less than $5,000, the rider attempts to amend section 2155.132(e) of the Government Code and thus contravenes article III, section 35 of the Texas Constitution. To the extent that other provisions of the rider are merely declarative of the general law regarding competitive bidding, they are valid. To the extent that they conflict with or supplement general law, they are invalid.

                                         Very truly yours,

GREG ABBOTT
Attorney General of Texas

BARRY R. McBEE
First Assistant Attorney General

NANCY S. FULLER
Chair, Opinion Committee

Rick Gilpin
Assistant Attorney General, Opinion Committee

Footnotes

[1] See Letter from Fred Houston, General Counsel, State Board of Dental Examiners, to Honorable Greg Abbott, Texas Attorney General (June 20, 2005) (on file with Opinion Committee, also available at http://www.oag.state.tx.us) [hereinafter Request Letter].