Can a Texas county bid on a state highway maintenance contract?

Plain-English summary

Charles Heald, the executive director of the Texas Department of Transportation, asked whether counties may bid on state highway maintenance contracts. The Attorney General's answer was no: a county has neither express nor implied statutory authority to submit such a bid.

The reasoning started with the limits on county power. A commissioners court may exercise only the authority the constitution and statutes give it, and its power to contract on the county's behalf is confined to what is conferred expressly or by necessary implication. Nothing in Texas law authorizes a county to compete, through the bidding process, against private contractors for state highway work. The opinion reinforced that conclusion by reading the Transportation Code's own competitive-bidding language, which treats "contracts awarded by competitive bids" as private-sector contracts, and by pointing to a settled line of the office's open-records decisions recognizing that governmental entities generally are not in competition with private business. An earlier opinion had already said a county could not bid against private contractors to pave or maintain a city street, calling that "engaging in the road construction business," an activity not authorized by law.

Two qualifications rounded out the answer. First, a county is not shut out of highway maintenance entirely. Section 251.014 of the Transportation Code expressly lets a county enter an agreement with the Texas Transportation Commission to carry out a highway-improvement project, and that direct agreement is an exception to the usual requirement that highway contracts be competitively bid. So a county can do the work, just not by bidding for it. Second, even apart from state law, any highway project that receives federal aid is subject to a federal regulation, 23 C.F.R. section 635.112(e), that bars public agencies from bidding in competition with private contractors. Because the county lacked authority either way, the opinion did not reach the separate questions Heald had raised about how the commission's construction-experience, insurance, bonding, and indemnification requirements would apply to a county.

Currency note

This opinion was issued in 2000. 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.

Background and statutory framework

The Texas Transportation Commission must put out for competitive bid any contract to improve a state-system highway (Transportation Code section 223.001(1)), and "improvement" includes maintenance and the related planning and survey work (section 221.001(2)). Improvements may be made with or without federal aid (section 221.003), but federally aided projects carry the extra constraint of 23 C.F.R. section 635.112(e), which bars public agencies from bidding against private contractors. That federal rule alone disposed of any federally funded contract.

For non-federally funded contracts, the opinion turned to county contracting power. Under article V, section 18(b) of the Texas Constitution, a commissioners court exercises only the powers conferred on it, and unless the Legislature vests contracting authority elsewhere, the commissioners court is the county's contracting agent (Anderson v. Wood). Its contracting authority reaches only what the constitution and laws confer expressly or by necessary implication, a limit drawn from Jack v. State, Childress County v. State, and Wilson v. Calhoun County, 489 S.W.2d at 397. Section 251.014(a) supplies one express grant: a county may agree with the commission to carry out a highway-improvement project, an arrangement the opinion treated as a special provision prevailing over the general competitive-bidding requirement under Government Code section 311.026. But the opinion found no provision letting a county compete by bid. It read section 223.042, which requires the department to spend at least half its maintenance money through competitive bids and ties that to "private sector contracts," as equating competitive bidding with private contracting. It also drew on open-records decisions construing Government Code section 552.104 (the competition exception in the Public Information Act), which had concluded governmental bodies without express authority to compete cannot claim a "competitive advantage" because they are not regarded as competing with private enterprise. Synthesizing these, the opinion held a county's general contracting authority does not, by necessary implication, include authority to bid on a state highway maintenance contract.

Common questions

Can a Texas county bid on a state highway maintenance contract?
No. The opinion concluded counties have neither express nor implied statutory authority to submit such a bid.

Can a county do highway maintenance at all?
Yes, but not by bidding. Under section 251.014 of the Transportation Code, a county may enter a direct, non-competitive agreement with the Texas Transportation Commission to carry out a highway-improvement project.

Why can't a county just compete like a private contractor?
A commissioners court has only the powers the constitution and statutes give it. The opinion found no authority for a county to compete against private contractors, and read the Code's bidding provisions as aimed at private-sector contractors.

Does federal funding change anything?
Yes, independently. The opinion noted that a federally aided highway project is subject to 23 C.F.R. section 635.112(e), which separately bars public agencies from bidding against private contractors.

Citations

Statutes and regulations: Tex. Transp. Code Ann. §§ 223.001(1), 221.001(2), 221.003, 251.014(a), and 223.042 (Vernon 1999); Tex. Const. art. V, § 18(b); Tex. Gov't Code Ann. § 311.026 (Vernon 1998); Tex. Gov't Code Ann. ch. 552 and § 552.104 (Vernon 1994 & Supp. 2000); 23 C.F.R. § 635.112(e) (1999).

Cases: Anderson v. Wood, 152 S.W.2d 1084 (Tex. 1941); Jack v. State, 694 S.W.2d 391 (Tex. App.-San Antonio 1985, writ ref'd n.r.e.); Childress County v. State, 92 S.W.2d 1011 (Tex. 1936); Wilson v. Calhoun County, 489 S.W.2d 393 (Tex. Civ. App.-Corpus Christi 1972, writ ref'd n.r.e.).

Prior Attorney General materials discussed: JC-0037 (1999), JM-444 (1986), WW-1401 (1962), DM-467 (1998), Letter Opinion LO-90-022, and Open Records Decisions ORD-463 (1987), ORD-231 (1979), ORD-153 (1977), and ORD-593 (1991).

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/john-cornyn/jc-0171
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2000/jc0171.pdf

Original opinion text

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

January 24, 2000

Mr. Charles W. Heald, P.E.
Executive Director
Texas Department of Transportation
125 East 11th Street
Austin, Texas 78701-2483

Opinion No. JC-0171

Re: Whether counties may bid on state highway maintenance contracts (RQ-0100-JC)

Dear Mr. Heald:

You ask whether counties may bid on state highway maintenance contracts. Counties have neither express nor implied statutory authority to bid on state highway maintenance contracts; accordingly, they may not do so.

The Texas Transportation Commission (the "Commission") is required to submit for competitive bids any contract to improve a highway that is part of the state highway system. See TEX. TRANSP. CODE ANN. § 223.001(1) (Vernon 1999). The "improvement" of a state highway includes construction, reconstruction, maintenance, and making a necessary plan or survey before beginning construction, reconstruction, or maintenance. Id. § 221.001(2). Improvements of the state highway system may be made with or without federal aid, id. § 221.003, but a highway project that receives federal aid is subject to a federal regulation that bars public agencies from bidding in competition with private contractors. See 23 C.F.R. § 635.112(e) (1999). Accordingly, a county may not submit a bid for a state highway maintenance contract funded by federal aid.

We next consider the authority of a commissioners court to bid on a state highway maintenance contract that receives no federal funding. The commissioners court's authority is limited to exercising "such powers and jurisdiction over all county business" as is conferred by the constitution and statutes. TEX. CONST. art. V, § 18(b). Unless the legislature expressly vests contractual authority in another county agent, the commissioners court is the contracting agent of the county. Anderson v. Wood, 152 S.W.2d 1084 (Tex. 1941). It is well settled that the authority of the commissioners court to contract in behalf of the county is limited to that conferred either expressly or by necessary implication by the constitution and laws of this state. Jack v. State, 694 S.W.2d 391, 397 (Tex. App.-San Antonio 1985, writ ref'd n.r.e.) (citing Childress County v. State, 92 S.W.2d 1011, 1016 (Tex. 1936); Wilson v. Calhoun County, 489 S.W.2d 393, 397 (Tex. Civ. App.-Corpus Christi 1972, writ ref'd n.r.e.)). Section 251.014 of the Transportation Code authorizes a commissioners court to "enter into an agreement with the commission for the county to carry out a project or activity for the improvement of a segment of the state highway system." TEX. TRANSP. CODE ANN. § 251.014(a) (Vernon 1999). This section provides an exception to the general requirement in section 223.001(1) of the Transportation Code that all contracts for improvement of state highways be submitted for competitive bids. See TEX. GOV'T CODE ANN. § 311.026 (Vernon 1998) (where general and special provisions cannot be harmonized, special provision prevails as an exception to general provision); Tex. Att'y Gen. Op. No. JC-0037 (1999) at 6 (interlocal contract entered into by school district need not be competitively bid); Tex. Att'y Gen. Op. No. JM-444 (1986) at 2 (general statutes requiring political subdivisions to purchase goods and services through competitive bidding do not apply to purchases from disabled persons made under statutorily-authorized program). Thus, a county has express authority to enter into an agreement with the Texas Transportation Commission to perform highway maintenance on a non-competitive basis.

A county has no express authority to enter into a contract on the basis of competitive bidding, nor do we find any such authority implied from the constitution or laws. This office has held that a county has no authority to submit a bid to a municipality, in competition with private contractors, for the job of paving or maintaining a city street. Tex. Att'y Gen. Op. No. WW-1401 (1962) at 3. The proposal suggested that the county would be "engaging in the road construction business," an activity not authorized by law. Id.; see also Tex. Att'y Gen. LO-90-022, at 2 (questioning whether a county's purchase of culverts solely to resell them to private persons to generate a profit would constitute county business). The Transportation Code itself reflects the assumption that "competitive bidding" is used to enter into contracts with private entities. Section 223.042 of the Transportation Code provides in part:

(a) Of the amount spent in a fiscal year by the department for maintenance projects, the department shall spend not less than 50 percent through contracts awarded by competitive bids.

. . .

(d) Subsection (a) does not apply unless the department determines that a function of comparable quality and quantity can be purchased or performed at a savings by using private sector contracts.

TEX. TRANSP. CODE ANN. § 223.042 (Vernon 1999). This provision equates "contracts awarded by competitive bids" with "private sector contracts."

This office moreover has recognized in decisions of this office construing the "competitive bidding" provision of the Texas Public Information Act, TEX. GOV'T CODE ANN. ch. 552 (Vernon 1994 & Supp. 2000), that governmental entities as a general rule do not engage in competition with private entities. Section 552.104 of the Government Code, which excepts from public disclosure "information that, if released, would give advantage to a competitor or bidder," id. § 552.104 (Vernon 1994), helps assure that the competitive bidding process will be truly competitive. Tex. Att'y Gen. ORD-463 (1987) at 2. In Open Records Decision No. 463, this office stated that section 552.104 of the Government Code "may not be claimed to protect a governmental body's 'competitive advantage' because they cannot be regarded as being in competition with private enterprise." Id.; see also id. ORD-231 (1979); ORD-153 (1977). While this statement is inapplicable to a governmental body with express statutory or constitutional authority to engage in competition, Tex. Att'y Gen. ORD-593 (1991) at 4, it does apply to governmental entities, such as counties, that lack express authority to compete with private entities.

We conclude on the basis of prior decisions of this office that a county's general contracting authority does not include, by necessary implication from the constitution or laws, the authority to submit a bid on a contract for state highway maintenance. In view of our conclusion, we need not address your question concerning the application to a county of the commission's requirements regarding construction experience, liability insurance, bonding, and indemnification. But see Tex. Att'y Gen. Op. No. DM-467 (1998) (addressing questions raised by a county agreement to indemnify a third party).

SUMMARY

A county may not submit a bid on a state highway maintenance contract that the Texas Transportation Commission has put out for competitive bidding, because counties have neither express or implied statutory authority to bid on a state highway maintenance contract. Moreover, a highway project that receives federal aid is subject to a federal regulation codified at 23 C.F.R. § 635.112(e) (1999), which bars public agencies from bidding in competition with private contractors.

JOHN CORNYN
Attorney General of Texas

ANDY TAYLOR
First Assistant Attorney General

CLARK KENT ERVIN
Deputy Attorney General - General Counsel

ELIZABETH ROBINSON
Chair, Opinion Committee

Susan L. Garrison
Assistant Attorney General - Opinion Committee