Can a local mental health authority take part in the state's vendor selection for behavioral health services in Texas?

Plain-English summary

Collin County Auditor Jeff May asked whether the North Texas Behavioral Health Authority (NTBHA) had a legal right to take part in the state's process for choosing the vendor that actually delivers mental health and substance abuse services in its area. The NTBHA had been designated a "local behavioral health authority" under section 533.0356 of the Health and Safety Code to plan, oversee, and manage those services across a seven-county region. But the services themselves are delivered by a vendor that the Texas Department of State Health Services (DSHS) picks through competitive bidding, and DSHS told the NTBHA it could not participate in the bidding and scoring because that would be a conflict of interest. The auditor did not explain the basis for the conflict concern, and the AG declined to speculate about it. The AG read the real question as whether the NTBHA had a legal right to give DSHS guidance and input during the procurement.

The AG concluded the answer was no, unless the authority had been delegated that role. DSHS is responsible for administering mental health and substance abuse programs, and for any program it administers it may award contracts and select providers based on competitive proposals, demonstrated competence, and reasonable fees. Nothing in the statutes governing DSHS's procurement authority requires it to take input from, or include, a local behavioral health authority. The one exception in the procurement statute (considering other factors) applies only in an emergency.

The AG then walked through the statutes that empower local behavioral health authorities. DSHS may designate such an authority and may delegate to it responsibility for planning, policy development, coordination, resource allocation, and oversight of services. A designated authority also takes on the duties of a local mental health authority, which can include being given funds and the job of assembling a provider network and procuring services (by request for proposal or open enrollment), and which must then use a competitive procurement system and contract model developed by DSHS. The key point: those powers attach when an authority has been delegated procurement responsibility. None of the statutes say a local behavioral health authority must be allowed to participate in DSHS's own procurement when it has not been delegated that authority, and no statute grants it an independent right to participate. So, assuming the NTBHA had not been delegated DSHS's reserved procurement authority, the AG concluded DSHS had no legal obligation to let it take part.

Finally, the AG noted that the auditor had attached an "Operations Agreement" memorializing the NTBHA's creation, and that such an agreement might authorize the NTBHA to participate or provide input. But the AG explained that this office does not construe contracts, so it did not decide what the agreement provided.

Currency note

This opinion was issued in 2014. Subsequent statutory amendments, court decisions, or later Attorney General 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.

What the opinion meant for those who asked

County Auditor May and the NTBHA (as the opinion described it): The opinion concluded the NTBHA could take part in soliciting and procuring service providers in its area only to the extent it had been delegated that authority under section 533.035 or 533.0356 or by agreement or contract, and that otherwise DSHS had no legal obligation to allow it to participate. The opinion expressly declined to speculate about the basis for the conflict-of-interest concern DSHS had raised, and declined to construe the attached operations agreement.

Local behavioral health and mental health authorities (as the opinion described it): The opinion described a designated authority as able to take on planning, oversight, and procurement duties only when DSHS delegates them, in which case the authority must use a DSHS-developed competitive procurement system and contract model when contracting with state funds. It described the statutes as not granting an independent right to participate in DSHS's procurement absent such a delegation.

The Department of State Health Services (as the opinion described it): The opinion described DSHS as authorized to award contracts and select service providers through competitive proposals, with no statutory requirement to include or take input from a local behavioral health authority that has not been delegated procurement responsibility, except that DSHS may consider other factors only in an emergency.

Common questions

Could the North Texas Behavioral Health Authority join the state's bidding and scoring of vendors?
The AG concluded it could participate only if DSHS had delegated that authority to it under section 533.035 or 533.0356, or if an agreement or contract gave it that role. Without a delegation, DSHS had no legal obligation to let it participate.

Why does DSHS, not the local authority, run the procurement?
The AG explained that DSHS administers the mental health and substance abuse programs and is statutorily authorized to award contracts and select providers through competitive proposals. The provider here was selected by DSHS, not by the local authority.

Did the AG decide whether there was actually a conflict of interest?
No. The AG noted the auditor did not explain the basis for the conflict-of-interest concern and declined to speculate, pointing only to a rule that officers and employees of a local health authority must not have a conflict of interest in contract management.

What if the local authority's operations agreement gave it a role?
The AG acknowledged that the operations agreement might authorize the NTBHA to participate or provide input, but explained that the office does not construe contracts, so it did not decide that question.

When would a local behavioral health authority run its own procurement?
The AG explained that when an authority has been delegated the authority and funds to assemble a provider network and procure services, it does so using a competitive procurement system and contract model developed by DSHS.

Background and statutory framework

The AG construed the statutes by their plain language as the best indicator of legislative intent (Zanchi v. Lane, 408 S.W.3d 373, 376 (Tex. 2013)). DSHS is responsible for administering human services programs regarding mental health and substance abuse (Tex. Health & Safety Code Ann. §§ 1001.072, .073 (West 2010)), and for any program it administers it may award contracts and select providers based on competitive proposals, demonstrated competence and qualifications, and reasonable fees (id. §§ 12.012(a), .0121(c)), with authority to consider other factors only in an emergency (id. § 12.0121(d)).

Section 533.0356 authorizes DSHS to designate a local behavioral health authority to provide mental health and chemical dependency services in a local service area and to determine its functions if designated (id. § 533.0356(b), (g)), and to adopt rules governing such authorities (id. § 533.0356(i)). DSHS may delegate to the authority responsibility for planning, policy development, coordination, resource allocation, resource development, and oversight in that area (id. § 533.0356(b)). A designated authority has all the responsibilities and duties of a local mental health authority under section 533.035 and Subchapter B of chapter 534 (id. § 533.0356(b)(1)). Under section 533.035, the executive commissioner of the Health and Human Services Commission may delegate planning, management, and oversight authority to local authorities (id. § 533.035(a)), and a local mental health authority that is distributed funds must consider public input, cost-benefit, and client care in assembling a network of service providers, making treatment-alternative recommendations, and procuring services, including by request for proposal or open-enrollment method (id. § 533.035(c)). Subchapter B of chapter 534 directs a mental health authority to use a competitive procurement system and contract model developed by DSHS when contracting with state funds (id. § 534.055(a)-(d)).

Reading those provisions together, the AG concluded that a local behavioral health authority may be delegated the authority and funds to procure and assemble a provider network on its own, but that neither section 533.035 nor section 533.0356 requires an authority that has not been delegated that role to be allowed to participate in DSHS's procurement, and no other statute grants it an independent right to do so. Assuming the NTBHA had not been delegated the procurement authority reserved to DSHS, the AG concluded DSHS had no legal obligation to allow it to participate. The AG noted that the powers and conflict rules for local authorities are partly defined by reference to predecessor agencies (id. §§ 531.002(6), 533.0356(a)) and to a conflict-of-interest rule for contract management (25 Tex. Admin. Code § 412.54(b)(1) (2014)), but declined both to speculate about the conflict concern and to construe the attached operations agreement (Tex. Att'y Gen. Op. No. GA-0690 (2009) at 3-4).

Citations

Statutory and regulatory provisions:

• Tex. Health & Safety Code Ann. §§ 1001.072, .073 (West 2010) (DSHS administers mental health and substance abuse programs)
• Tex. Health & Safety Code Ann. §§ 12.012(a), .0121(c) (DSHS awards contracts and selects providers by competitive proposals)
• Tex. Health & Safety Code Ann. § 12.0121(d) (other factors only in an emergency)
• Tex. Health & Safety Code Ann. § 533.0356(b), (g) (West 2010) (designation and functions of a local behavioral health authority)
• Tex. Health & Safety Code Ann. § 533.0356(i) (West 2010) (DSHS rulemaking over such authorities)
• Tex. Health & Safety Code Ann. § 533.0356(b)(1) (West 2010) (duties of a local mental health authority)
• Tex. Health & Safety Code Ann. § 533.0356(a) (West 2010) (predecessor agencies)
• Tex. Health & Safety Code Ann. § 533.035(a) (West 2010) (delegation of planning and oversight authority)
• Tex. Health & Safety Code Ann. § 533.035(c) (West 2010) (network assembly and procurement duties)
• Tex. Health & Safety Code Ann. § 534.055(a)-(d) (DSHS competitive procurement system and contract model)
• Tex. Health & Safety Code Ann. § 531.002(6) (West 2010) (definitions referencing predecessor agencies)
• 25 Tex. Admin. Code § 412.54(b)(1) (2014) (conflict of interest in contract management)

Cases:

• Zanchi v. Lane, 408 S.W.3d 373, 376 (Tex. 2013)

Prior Attorney General opinions:

• Tex. Att'y Gen. Op. No. GA-0690 (2009)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-1081
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2014/ga1081.pdf

Original opinion text

Best-effort transcription from the official PDF. Minor extraction artifacts were corrected; the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT

September 23, 2014

Mr. Jeff May Opinion No. GA-1081
Collin County Auditor
2300 Bloomdale Road, Suite 3100 Re: Authority of a local behavioral health
McKinney, Texas 75071 authority designated under section 533.0356 of
the Health and Safety Code to participate in the
Department of State Health Services' vendor
selection process to provide services within the
authority's local service area (RQ-1193-GA)

Dear Mr. May:

You ask about the authority of the North Texas Behavioral Health Authority ("NTBHA") to participate in a vendor selection process.[1] As background, you tell us that the NTBHA has been designated as a "local behavioral health authority" under section 533.0356 of the Health and Safety Code to plan, oversee, and manage the provision of mental health and substance abuse services for a region that covers seven counties in North Texas. Request Letter at 1-2. You explain that these services are actually provided by a vendor selected by the Texas Department of State Health Services ("DSHS") through a competitive bidding process. Id. at 2. You indicate that DSHS will be seeking new proposals from qualified providers to provide the services under contract for 2015 and 2016. Id. You state that the NTBHA has been informed by DSHS that the NTBHA may not "participate in the bidding and scoring process" of these services because doing so would constitute a conflict of interest. Id. You do not explain on what basis a conflict of interest may exist, and we will not speculate in that regard. See 25 TEX. ADMIN. CODE § 412.54(b)(1) (2014) (providing that employees and officers of a local health authority shall not have a conflict of interest in contracts management). We understand you to ask whether the NTBHA has a legal right "to provide guidance and input to DSHS" during the procurement process in accordance with the NTBHA's "legislative mandates." See Request Letter at 2-3. Your question turns on a construction of the statutes that grant authority to the NTBHA. To that end, we focus on a statute's plain language, which is the best indicator of legislative intent. See Zanchi v. Lane, 408 S.W.3d 373, 376 (Tex. 2013).

At the outset, we note that DSHS "is responsible for administering human services programs regarding" mental health and substance abuse. See TEX. HEALTH & SAFETY CODE ANN. §§ 1001.072, .073 (West 2010). For any program that DSHS administers, DSHS is authorized to "award[] contracts" or "select[] service providers" on the basis of "competitive proposals," as well as the "demonstrated competence and qualifications" of potential providers and the reasonableness of the fees for the services to be performed. Id. §§ 12.012(a), .0121(c). Nothing in the statutory language governing DSHS's authority over the procurement process requires the input or participation of a local behavioral health authority. But see id. § 12.0121(d) (providing that DSHS may consider factors other than those provided in subsection 12.0121(c), but only in an emergency).

Section 533.0356 grants DSHS[2] the authority to "designate a local behavioral health authority in a local service area to provide mental health and chemical dependency services in that area," as well as the discretion to determine "the functions of the authority if designated." Id. § 533.0356(b), (g); see also id. § 533.0356(i) (providing that DSHS "may adopt rules to govern the operations of local behavioral health authorities"). Specifically, DSHS may delegate to a designated local behavioral health authority "the authority and responsibility for planning, policy development, coordination, resource allocation, and resource development for and oversight of mental health and chemical dependency services in that service area." Id. § 533.0356(b). In addition, section 533.0356 provides that a designated authority has "all the responsibilities and duties of a local mental health authority provided by Section 533.035 and by Subchapter B, Chapter 534." Id. § 533.0356(b)(1). Section 533.035 provides that the executive commissioner of the Health and Human Services Commission "may delegate to the local authorities the authority and responsibility of the executive commissioner, the commission, or a department of the commission" related to the planning, management, and oversight of services in the relevant area. Id. § 533.035(a). Section 533.035 also provides that a local mental health authority may be distributed funds

to ensure mental health, mental retardation, and chemical dependency services are provided in the local service area. The local authority shall consider public input, ultimate cost-benefit, and client care issues to ensure consumer choice and the best use of public money in:

(1) assembling a network of service providers;

(2) making recommendations relating to the most appropriate and available treatment alternatives for individuals in need of mental health or mental retardation services; and

(3) procuring services for a local service area, including a request for proposal or open-enrollment procurement method.

Id. § 533.035(c). Subchapter B of chapter 534 governs the provision of community-based services and directs a mental health authority to use a competitive procurement system and contract model developed by DSHS when contracting with state funds. Id. § 534.055(a)-(d).

Pursuant to sections 533.035 and 533.0356, a local behavioral health authority may be delegated the authority and funds to procure and assemble a network of service providers for its region on its own, in which case subchapter B of chapter 534 would require the use of a procurement system and contract model developed by DSHS. But neither statute indicates whether or to what extent a local behavioral health authority must participate in the process of procuring service providers when it has not formally been delegated that authority. Nor does any other statute we are aware of expressly grant a local behavioral health authority the independent authority to participate in that process. Therefore, assuming based on your request that the NTBHA has not been delegated the authority over the solicitation and procurement of service providers that has been reserved by statute to DSHS, we conclude that DSHS has no legal obligation to allow the NTBHA to participate in that process.[3]

SUMMARY

The North Texas Behavioral Health Authority ("NTBHA") can participate in the solicitation and procurement of service providers in its designated area only to the extent that it has been delegated such authority under sections 533.035 or 533.0356 or by agreement or contract. Otherwise the Department of State Health Services has no legal obligation to allow the NTBHA to participate in that process.

Very truly yours,

GREG ABBOTT
Attorney General of Texas

DANIEL T. HODGE
First Assistant Attorney General

JAMES D. BLACKLOCK
Deputy Attorney General for Legal Counsel

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

Stephen L. Tatum, Jr.
Assistant Attorney General, Opinion Committee

[1] See Letter and Attachments from Mr. Jeff May, Collin Cnty. Auditor, to Honorable Greg Abbott, Tex. Att'y Gen. at 1 (Mar. 28, 2014), http://www.texasattorneygeneral.gov/opin ("Request Letter" and "Attachments").

[2] Section 533.0356(b) provides that "[t]he department and the commission jointly may designate a local behavioral health authority." TEX. HEALTH & SAFETY CODE ANN. § 533.0356(b) (West 2010). As referenced in Title 7, the department is the Texas Department of Mental Health and Mental Retardation, and the commission is the Texas Commission on Alcohol and Drug Abuse. Id. §§ 531.002(6), 533.0356(a). The functions and duties of those entities were transferred by legislative enactment to DSHS. See Act of June 1, 2003, 78th Leg., R.S., ch. 198, § 1.26(a), 2003 Tex. Gen. Laws 611, 641.

[3] You include as an attachment to your request a copy of an "Operations Agreement" that "memorialize[s]" the NTBHA's creation and establishes its responsibilities as a local behavioral health authority. Request Letter at 1; see Attachments Exhibit A. By such an agreement, it is possible that the NTBHA is authorized to participate in or provide input and guidance for the procurement process being conducted by DSHS. This office, however, does not construe contracts. Tex. Att'y Gen. Op. No. GA-0690 (2009) at 3-4.