If a Texas county's contracted supplier can't deliver, can the county buy the shortfall from another vendor without new bids?

Texas AG Opinion JM-1254: Can a County Buy From Another Supplier When Its Contractor Can't Deliver?

Plain-English summary

Wood County had a contract with one supplier to provide all the road oil the county needed. The contractor could not keep up with the county's needs, so a county commissioner made a "spot purchase" of the same product, at the same price, from a different supplier. That extra purchase cost less than $10,000. The Wood County Criminal District Attorney asked the Attorney General two things: first, whether the existing unit-price contract barred the county from buying the shortfall elsewhere, and second, whether such a spot purchase had to go through competitive bidding even though it cost under $10,000.

On the first question, the Attorney General said the contract did not bar the spot purchase. The district attorney had pointed to section 262.023(c) of the Local Government Code, which treats separate, sequential, or component purchases from the same supplier as a single purchase when they are made with the intent of avoiding competitive bidding. The opinion explained that this provision exists to stop counties from dodging competitive bidding by splitting one large purchase into several smaller lots that each fall under the dollar threshold. It was not aimed at the situation Wood County described, where a county buys from a second supplier because the contractor cannot furnish what the county needs. The opinion found no provision of chapter 262 that prevents an isolated spot purchase in those circumstances, while cautioning that spot purchases may not be used to avoid competitive bidding.

On the second question, the Attorney General explained that county purchases do not have to be competitively bid unless the amount is more than $10,000. Because the spot purchase fell below that threshold, it did not require bids. The opinion added a caution: if the contractor's inability to supply the county turns out to be a continuing situation that will lead to spending of $10,000 or more, the county would have to call for bids again, because that kind of repeated, piecemeal buying is exactly what section 262.023(c) was written to prevent. A county may also choose to seek bids for purchases below the $10,000 line if it wants to.

Currency note

This opinion was issued in 1990. 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 dollar threshold mentioned here.

Who this opinion affected (as of 1990)

Counties and commissioners courts: The opinion told counties that awarding a competitively-bid, unit-price supply contract did not lock them into that single supplier when the supplier could not deliver. An isolated spot purchase of the same materials from another vendor was permitted, so long as it was not a device to escape competitive bidding.

County purchasing officers and commissioners: The opinion drew a line between a genuine one-off purchase to cover a contractor's shortfall and a pattern of splitting purchases to stay under the dollar threshold. The first was allowed; the second was the abuse that section 262.023(c) was meant to stop. The opinion also flagged that a shortfall expected to be ongoing, and to total $10,000 or more, would trigger the duty to re-bid.

Suppliers and contractors: The opinion meant a contractor that could not meet a county's requirements could not use its contract to block the county from buying the difference elsewhere.

Common questions

Does a county's supply contract stop it from buying the same item from someone else?
Not by itself. Under this opinion, when the contractor obligated to supply the county cannot furnish what the county needs, the county may make an isolated spot purchase of the same materials from a different supplier. The County Purchasing Act does not preclude it.

Doesn't the anti-bid-splitting rule (section 262.023(c)) forbid that?
The opinion said no, not in these circumstances. That rule combines separate, sequential, or component purchases from the same supplier when they are made to avoid competitive bidding. It is aimed at counties that break one big purchase into small lots to duck the threshold, not at a county covering a contractor's shortfall from a second vendor.

Did the spot purchase have to be competitively bid?
No. County purchases do not have to be bid unless the amount is more than $10,000, and this purchase cost less than that. Local Government Code section 262.023(a) sets that threshold.

What if the contractor keeps falling short?
The opinion cautioned that if the shortfall becomes a continuing situation expected to result in spending of $10,000 or more, the county would have to call for bids again. Repeated piecemeal purchasing to stay under the threshold is precisely what the statute forbids.

Can a county ask for bids on a purchase under $10,000?
Yes. The opinion noted a county is authorized to request bids for purchases that fall below the $10,000 threshold if it chooses to.

Background and statutory framework

Chapter 262 of the Local Government Code, the County Purchasing Act, governs how counties buy supplies, materials, and services. Section 262.023(a) requires competitive bidding for a county purchase that costs more than $10,000. Section 262.028 authorizes unit-price contracts, under which a county contracts to buy items at a set price per unit; the opinion assumed Wood County's road-oil contract had been let by competitive bid under chapter 262 and that the county had not adopted the Optional County Road System authorized by section 3.201 of article 6702-1, V.T.C.S.

The requestor's concern was section 262.023(c). That subsection provides that, in applying the competitive bidding and competitive proposal requirements of subsection (a), all separate, sequential, or component purchases of items ordered or purchased with the intent of avoiding those requirements, from the same supplier by the same county officer, department, or institution, are treated as if they are part of a single purchase and a single contract. For office supplies, separate purchases by an individual department are not treated as a single purchase unless a specific intent to avoid competitive bidding is present. The opinion read the provision as a targeted anti-evasion rule: it prevents a county from splitting one large purchase into lots that individually cost less than $10,000 but together exceed it. The opinion observed that the public policy behind competitive bidding is strong enough that criminal penalties were enacted to stop this kind of evasion, citing Local Government Code sections 262.034(a) and 252.062(a).

Applying that framework, the opinion concluded that section 262.023(c) was not intended to reach an isolated spot purchase made because the contractor could not meet the county's needs, and that no other provision of chapter 262 barred it. On the second question, the opinion returned to the $10,000 threshold in section 262.023(a): a purchase below it need not be bid, subject to the warning that an ongoing shortfall totaling $10,000 or more would require re-bidding, and citing Attorney General Opinion JM-725 (1987). The opinion also noted, citing Patten v. Concho County, 196 S.W.2d 833 (Tex. Civ. App. - Austin 1946, no writ), that a county may request bids for purchases that fall below the threshold.

Citations

Statutory authorities:

• Local Government Code § 262.023(a) ($10,000 competitive bidding threshold for county purchases)
• Local Government Code § 262.023(c) (separate, sequential, or component purchases made to avoid bidding treated as a single purchase)
• Local Government Code § 262.028 (unit-price contracts)
• Local Government Code §§ 262.034(a), 252.062(a) (criminal penalties for evading competitive bidding)
• Article 6702-1, § 3.201, V.T.C.S. (Optional County Road System)

Case:

• Patten v. Concho County, 196 S.W.2d 833 (Tex. Civ. App. - Austin 1946, no writ) (a county may request bids for purchases below the threshold)

Prior Attorney General opinion referenced:

• Attorney General Opinion JM-725 (1987) (continuing, sequential purchasing that reaches the threshold requires re-bidding)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-1254
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1990/jm1254.pdf

Original opinion text

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

December 10, 1990

Honorable Marcus D. Taylor
Criminal District Attorney
Wood County
P. O. Box 689
Quitman, Texas 75783

Opinion No. JM-1254

Re: Whether the awarding of a contract precludes a county from making spot purchases from another supplier (RQ-2015)

Dear Mr. Taylor:

You ask:

Does the awarding of a contract to buy supplies on a unit price basis in accordance with Sec. 262.028, Local Government Code, preclude counties from making spot purchases of the same supplies at [the same or][Footnote 1] a lower unit price from another supplier during the term of the contract?

Your question arises from a situation where the county executed a contract to purchase all road oil needed by the county from one contractor. The contractor was unable to meet all of the county's needs, and one of the county commissioners made a "spot purchase" of the product at the same price from a different supplier. The cost of the additional purchase was less than the $10,000 competitive bidding threshold found in section 262.023(a) of the Local Government Code.

Inasmuch as your question states that the unit price contract was made "in accordance with section 262.028, Local Government Code," we assume that the contract was let as the result of competitive bids in accordance with chapter 262 of the code. We also assume that the county has not adopted the Optional County Road System as authorized by section 3.201 of article 6702-1, V.T.C.S.

You have suggested that section 262.023(c) of the Local Government Code prohibits the spot purchase in question as follows:

In applying the competitive bidding and competitive proposal requirements established by Subsection (a), all separate, sequential, or component purchases of items ordered or purchased, with the intent of avoiding the competitive bidding and competitive proposal requirements of this subchapter, from the same supplier by the same county officer, department, or institution are treated as if they are part of a single purchase and of a single contract. In applying this provision to the purchase of office supplies, separate purchases of supplies by an individual department are not considered to be part of a single purchase and single contract by the county if a specific intent to avoid the competitive bidding requirements of this subchapter is not present. (Our emphasis.)

Local Gov't Code § 262.023(c).

The purpose of this provision is readily apparent. It is designed to prevent counties from avoiding the competitive bidding requirements by purchasing quantities of materials or supplies in lots, which individually cost less than $10,000 but total more than that amount. The public policy behind the competitive bidding requirement is strong enough that criminal penalties have been enacted to effectively stop this particular means of evading the statutory requirement. See Local Gov't Code §§ 262.034(a), 252.062(a).

We do not think that the provision was intended to preclude "spot purchases" in the specific circumstances you describe. Nor do we find any other provision of the chapter that precludes such spot purchases. Of course spot purchases may not be used to avoid the competitive bidding process.

In your second question, you ask:

Assuming that the answer to the first question is 'no,' would such a spot purchase be subject to county bidding requirements, even if it were for an amount less than $10,000?

As indicated by your question and the preceding discussion, county purchases are not required to be made by competitive bids unless the amount is more than $10,000. Local Gov't Code § 262.023(a). Again, we caution that if the contractor's inability to meet the county's needs is seen as a continuing situation that will result in the expenditure of $10,000 or more, the county would be required to call for bids again. Such separate, sequential purchasing is precisely the activity that the language emphasized above in section 262.023(c) was intended to prevent. See Attorney General Opinion JM-725 (1987). Of course, a county is authorized to request bids for purchases that fall below the $10,000 threshold. Patten v. Concho County, 196 S.W.2d 833 (Tex. Civ. App. - Austin 1946, no writ).

                   SUMMARY

      The County Purchasing Act, chapter 262 of the Local Government Code, does not preclude a county from making an isolated spot purchase of supplies or materials when the contractor obligated to meet the county's requirements is unable to furnish the supplies or materials. Spot purchases may not be used to avoid the competitive bidding process.

                               JIM MATTOX
                               Attorney General of Texas

MARY KELLER
First Assistant Attorney General

LOU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RENEA HICKS
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Karen C. Gladney
Assistant Attorney General

Footnote 1: The original question was amended by adding the bracketed language to reflect the facts.