98-20

Contracts in which a supplier provides cash bonuses, incentives or commissions in return for a long-term exclusive right to sell its product do not normally implicate the fiscal year limitation in Article X, §23 of the Oklahoma Constitution (that precludes committing state funds beyond the current fiscal year) because the contracts typically do not involve the expenditure of state funds. To the extent such a contract has a multi-year term and does involve the commitment of state funds, the contract must contain a non-appropriation clause that makes the effectiveness of the contract contingent upon future legislative appropriations.

The purpose of competitive bidding is to secure economy and protect the public from collusive contracts, favoritism or fraud and to promote actual, honest and effective competition. A RFP provision is impermissible if it would not result in the best bid being received or if it were intended to improperly eliminate a sufficient number of legitimate potential bidders so as to destroy the character of free and competitive bidding. In this instance, a provision had been included in the RFP that asked the bidder if there would be a dollar value for being a sole or major supplier to the state entity and if the bidder would contribute to a fund for scholarships or other improvements. Pursuant to 74 §3402.1, the Anti-Kickback Act of 1974 generally prohibits the giving of money or other thing of value by any person holding, or bidding to obtain, a contract with the state, to any state employee or person holding a higher tier contract with the state when the purpose for giving is to acquire or hold such contract with the state. Although the provision was not an illegal kickback, a provision soliciting a contribution or donation unrelated to the contract price is problematic because the public could reasonably question whether the contract is influenced by a donation rather than the merits of the proposal. Conversely, seeking a discount, or payment in lieu of a discount, in consideration for being an exclusive or major supplier is acceptable. See 74 O.S. §§85.4, 85.7 and 85.13.

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Attorney General Opinion No. 98-20

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