Procurement-Related Attorney General Opinions
Pursuant to 74 O.S. §2221.B, the Oklahoma Tourism and Recreation Department (“Tourism”) is authorized to enter into partnerships for promotional programs and projects with private entities for the purposes of carrying out its duties and responsibilities and promoting tourism and tourism economic development. Tourism may enter into contacts for these promotional programs and projects. Such contracts shall not be subject to the Oklahoma Central Purchasing Act. Agreements between Tourism and a private entity for the administration of the annual Governor’s Conference on Tourism fall under the types of agreements contemplated by 74 O.S. §2221.B and are not subject to the requirements of the Central Purchasing Act.
A limitation of liability clause where the state agrees not to seek damages against a private supplier or agrees to limit the damages it may seek (1) does not violate Oklahoma Constitution prohibitions related to debt of the state because there is no affirmative promise on the part of the state to pay another party to the contract and (2) is not inherently violative of public policy.
The limitation of liability clause considered in this Opinion does not constitute an obligation that binds future legislatures beyond the fiscal year; however, the terms of each clause must be analyzed to determine if the clause contains language that exempts the supplier from its own fraud, willful injury or violation of law. If so, the clause is null and void because such a limitation of liability is prohibited by 15 O.S. §212 and against the public policy of the state. Additionally, a clause may be labelled as a limitation of liability but its terms may require the state to indemnify a supplier for the supplier’s own damage; indemnification clauses requiring the state to pay a third party constitute a debt and are prohibited by the Oklahoma Constitution, Article X, §23. See 74 O.S. 85.5.
NOTE: This Opinion overrules Opinion Nos. 06-11, 01-02, and 78-256 to the extent those Opinions determined a limitation of liability clause in a contract constitutes a debt, liability or obligation of the state in violation of the Oklahoma Constitution or is inherently violative of public policy. Opinion 01-02 which addressed only limitation of liability clauses has been withdrawn.
Facility management and operation services contemplated by 10A O.S. §2-2-806, in connection with the Oklahoma Office of Juvenile Affairs, are not listed among the exclusions from the Central Purchasing Act. Citing Okla. Alcoholic Beverage Control Bd. v. Moss, 509 P.2d 666 (Okla. 1973), the Opinion stated state agencies have only those powers that are granted to them by statute, and an agency may not, by rule, expand its powers beyond those granted by statute. Thus, by promulgating a rule, the Office of Juvenile Affairs may not grant unto itself the power to be exempted from the Central Purchasing Act. See 74 O.S. §85.12.
Among the statutory exceptions to the general requirement that state agencies use competitive solicitations when making acquisitions are the statutes and administrative rules relating to the State Use Committee which exists within the OMES Purchasing Division. State Use Committee contracts are mandatory contracts and whenever a state agency intends to procure a product or service included in the State Use Committee’s procurement schedule, the agency shall secure the product or service from a State Use contractor regardless of the acquisition purchase price. The only exception to the mandate is if the product or service is not available within the period required by the entity. Pursuant to 74 O.S. §3007.B. a state agency is prohibited from evading the purchase of individual products or services listed on the State Use Committee's procurement schedule, by issuing a solicitation for products or services that is a slight variation from the standards adopted by OMES.
The proper test to apply in determining whether a solicitation by a state agency violates State Use statutes is found within the language of 74 O.S. §3007 and turns on whether a particular solicitation is for "any product or service included in the procurement schedule." This test must be applied to each solicitation on a case-by-case basis. For example, a solicitation for prepared soup is not a violation of the intent of the State Use statutes even though it includes individual items on the schedule such as pasta, peas and beans, because the product of prepared soup is not an item on the procurement schedule. Likewise, a solicitation for a comprehensive package of computer parts and services would not violate the intent of the State Use statutes even though the State Use procurement schedule includes an individual item such as toner, because the product/service of comprehensive computer services is not on the procurement schedule.
Pursuant to 74 O.S. §3007, the fair market price of products and services on the procurement schedule established by the State Use Committee must be determined before procurements can be made.
Regarding products and services on the procurement schedule for which the price does not vary by agency, location or specifications, the fair market price is determined before procurement by vote of the State Use Committee upon the recommendation of the contracting officer after the market analysis required pursuant to OAC 260:120-1-4.
Regarding products and services on the procurement schedule for which the price does vary and a fair market price has not been established, the contracting officer is authorized, with the approval of the State Purchasing Director, to award a contract to a State Use supplier and establish a fair market price in accordance with the State Use Fair Market Price Policy. The Policy is an internal policy which more specifically describes the methodology to be used by the contracting officer in conducting the market analysis required by OAC 260:120-1-4. The fair market price is subject to ratification by the State Use Committee.
Similarly, regarding emergency purchases, with approval of the State Purchasing Director, the contracting officer may award a contract for a maximum of three months to a State Use supplier after determining a fair market price in accordance with applicable administrative rules and the State Use Fair Market Price Policy, which is subject to ratification by the State Use Committee.
Citing the application that specific language will control over general language in statutes when there is a conflict between the two, the Opinion determined the State Use Committee has sole authority to prescribe rules which carry out the purposes of the State Use statutes and the OMES Director has the more general authority to promulgate rules governing the Purchasing Division and state agency acquisitions under the Central Purchasing Act.
Pursuant to 74 O.S. §3008, procurements made pursuant to the State Use statutes are not subject to the competitive bid requirements of the Central Purchasing Act. No other provisions of the State Use statutes or rules require a competitive bidding process and, citing the conclusion in Attorney General Opinion 06-23, the State Use Committee does not have the authority to issue requests for proposals and contracts with State Use suppliers are not awarded through a RFP process. Therefore, the State Use procurement process is an open market bid process and is not subject to a competitive bid process prior to procurement or the determination of a fair market price by the State Use Committee. See 74 O.S. §§3007, 3008 and 3009 and OAC 260:120-1-4.
The sales tax exemption in 68 O.S. §1356.10 on the sale of tangible personal property or services to any person who enters into a public contract with the Oklahoma Department of Veterans Affairs, or to any subcontractor to such a public contract, does not apply when the sale is to a person who has entered into a contract with OMES executed on behalf of the Oklahoma Department of Veterans Affairs. See 74 O.S. §85.5
Note: Opinion No. 07-31 withdrew the conclusion in Opinion Nos. 84-66, 84-76, 85-157, 87-7, 88-61 and 89-36 that OMES or the State Purchasing Director is a purchasing agent for a state agency.
The State Purchasing Director may only cancel contracts with State Use Committee suppliers for reasons specified by OAC 260:115-9-9 or as authorized by terms of the contract. The statutory authority and responsibility of the State Purchasing Director for all acquisitions used or consumed by state agencies would necessarily include the power to specify procedures agencies must follow in ordering acquisitions. The Opinion concluded the State Purchasing Director may implement an internet-based system of purchasing goods as long as orders for products on the State Use procurement schedule are routed to State Use suppliers. However, neither the statutes nor the rules governing the State Use program expressly, or by implication, authorize or impose a requirement that State Use suppliers may be required to subcontract with the entity providing the internet-based ordering system in order to sell to state agencies.
Unless otherwise provided by law, the State Purchasing Director has sole authority over state purchasing contracts, including the issuance of Requests for Proposals for acquisitions by state agencies. The State Use Committee does not have authority to enter into contracts or to issue or authorize Requests for Proposals. The Committee qualifies the suppliers, prepares the procurement schedule and establishes the fair market price of goods and services on the schedule but does not enter into contracts with suppliers. Contracts with suppliers on the Committee procurement schedule are between the supplier and the Purchasing Division of OMES. Contracts with State Use suppliers are not awarded through a RFP process, but rather, are awarded by the Purchasing Division after approval of the supplier by the State Use Committee and the inclusion of the supplier’s products and services on the procurement schedule. Because state agencies may purchase items on the procurement schedule from other suppliers where the items are not available from State Use suppliers within the time frame required by the agency and when the agency has a waiver from the contracting officer assigned to the State Use Committee, the State Purchasing Director may issue a RFP for items listed on the procurement schedule.
It would not be a fair competition if a bidder had advance notice of the terms of an RFP, such as would be the case if the bidder assisted in preparing the RFP. Citing Medco Behavioral Care Corp. v. State of Iowa Dep't of Human Serv., 553 N.W.2d 556 (Iowa 1996), the Opinion states "In such cases the concern is that the firm could either skew competition in favor of itself when developing the terms of the procurement, or, through its inside knowledge of the agency's requirements, gain an unfair advantage in the competitive bidding process". Therefore, an entity may not be awarded a contract for the sale of software to a state agency if the entity has, through a professional services contract, provided assistance to the agency in developing a RFP for the purchase of such software.
Depending upon the particular facts and circumstances of the business relationship, it may be a conflict of interest for an entity to sell services to a state agency if a partner of the entity has, through a professional services contract, provided assistance to the agency in developing a RFP for the purchase of such services. If a partner of an entity that assisted in the preparation of a RFP is in a position to obtain advance information about the terms of the RFP from such entity, then the prohibition against bidding on the RFP would extend to the partner of the entity as well; however, the determination of an actual conflict of interest is a question of fact outside the scope of this Opinion. See 74 O.S. §§85.5; 3004, 3005 and 3007; OAC §§260:115-7-3, 115-7-23 and 115-9-9.
The Attorney General is the only person who can agree to grant a supplier sole control over the state's defense of any claim arising from a contract with the supplier. No purchasing officer has the authority to agree to such a clause and OMES is not the proper state agency to make such a decision and cannot do so under the guise of negotiating and performing a contract with a private entity. Therefore, a contract clause granting, in advance, a supplier control over the state's defense in a lawsuit or waiving the state’s defenses is prohibited.
Although contract language which states a supplier's liability is limited to the extent allowed by law is not prohibited, such language is superfluous, has no legal effect and the clause is void if the state cannot under the Constitution agree to a particular limitation of liability clause. See 74 O.S. §85.5.
NOTE: portions of this Opinion concluding that a limitation of liability clause in a contract constitutes a debt, liability or obligation of the state in violation of the Oklahoma Constitution or is inherently violative of public policy are not included in this Guide because those portions are overruled by Opinion No. 12-18.
The Central Purchasing Act does not prohibit negotiated contracts when using "RFP" bid procedures. Likewise, specific legislative enactments favor negotiated contracts using RFP procedures. The Opinion cites other instances in which an agency utilizes the bidding procedures and contracting process of the OMES Purchasing Division but retains its statutory duty to negotiate the contract. Thus, the Office of Juvenile Affairs may use the competitive bidding procedures of the OMES Purchasing Division or internal agency procedures when negotiating contracts with designated Youth Services Agencies so long as final contracts are negotiated by the Department of Juvenile Justice. See 74 O.S. §85.7.
The Legislature has authorized state agencies to enter into a multi-year lease-purchase contract so long as the contract contains a valid non-appropriation clause. However, the Legislature has not authorized school districts to enter into multi-year contracts containing non-appropriation clauses. A school district contract extending beyond the fiscal year cannot be automatically renewed pursuant to the operation of a non-appropriation clause. A school district contract must contain a provision for mutual ratification of renewal, allowing the school and supplier to consider if they want to continue the contract for another year or terminate the contract at the end of a fiscal year. See 74 O.S. §85.4.
This Opinion was issued prior to enactment of statutes that established a Chief Information Officer for the state and provided for consolidation of appropriated state agency information technology and telecommunication (“IT”) assets and personnel. The statutes enacted after this Opinion provide that the Chief Information Officer acts as the Information Technology and Telecommunication Purchasing Director for all state agencies; thus, to the extent this Opinion references authority for IT acquisitions and negotiation of IT contracts, the authority rests with the CIO and this Reference Guide will refer to the CIO in those instances.
Once an agency is approved to make a purchase, the procedure is under the control of the State Purchasing Director. The same is true for IT purchases pursuant to a Delegation of Authority from the CIO to the State Purchasing Director in which the State Purchasing Director has authority over the procurement process while the CIO retains approval authority over the purchase. OMES is the sole entity with the authority to negotiate and accept contract offers and the State Purchasing Director has ultimate authority to determine to whom a particular contract will be awarded; however, OMES is required to consult with a requisitioning agency and any mandated contract must meet the specifications of the requisitioning agency as far as needs and general class or nature of the acquisitions.
The CIO has the power, pursuant to statute, to bypass the routine requisition procedures and negotiate enterprise agreements, consolidation contracts and high technology system contracts without going through the competitive bidding procedures.
Multi-year contracts in and of themselves are not invalid so long as they do purport to bind the State to an agreement to appropriate funds for any subsequent fiscal year. The Opinion points out two contract structure that do not violate the constitutional prohibition against binding the state to an agreement to expend future fiscal year funds: (1) an agreement between a supplier and OMES with a primary term of one year which permits an option in favor of renewal from year to year and (2) a contract conditioned upon continued funding on a fiscal year basis by the Legislature continuing to appropriate funds to satisfy the obligation. See 74 O.S. §§85.4, 85.5 and 85.9D and 62 O.S. §34.11.1.
If statutory procedures regarding fixed rate contracts are followed, the Office of Juvenile Affairs may restrict its providers of rehabilitative services to existing community at-risk service providers through fixed rate contracts without violating competitive bidding requirements of the Central Purchasing Act. The Act provides an exception from competitive bidding for fixed rate contracts. See 74 O.S. § 85.7.
State agencies may contract with each other under either 74 O.S. §581 or 74 O.S. §1008, both of which are outside the Central Purchasing Act. Acquisitions made by a State agency from another State agency pursuant to either of these statutes are not subject to the competitive bidding requirements of the Central Purchasing Act. Additionally, “contracting” as defined in the Central Purchasing Act, refers to obtaining acquisitions from private sources; therefore, the concept of contracting between two state agencies is not included in the Act. In fact, contracts between two state agencies in essence involve only one party, the state of Oklahoma. See 74 O.S. §§85.2 and 85.7.
Although the state court system is not among entities exempted from the Central Purchasing Act, purchases from the Court Fund to defray expenses of county court operations are specifically governed by 20 O.S. §§ 1301-1312, and the Supreme Court Rules at 20 O.S. ch. 18, app. 1. Neither the statutes nor the Rules governing the Court Fund require that expenditures be subject to the Central Purchasing Act. See 74 O.S. §85.12.
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.
Once an agency is approved to make a purchase, the process is under the control of the State Purchasing Director who determines the brand, model or other specific classification of each item or group and drafts specifications establishing the acquisition requirements after consultation with the requesting agency. Decisions about the contract subsequent to completion of the bidding process rests with OMES rather than the requisitioning agency although OMES is to consult with the agency in good faith.
Whether re-bidding is justified for any particular item is a question of fact. An agency’s needs and circumstances may change between the time a requisition is submitted and the time of contracting for the item and it would not serve the purpose of the Central Purchasing Act for an agency to be required to take something it no longer needed or could not use. On the other hand, the integrity of the competitive bidding system must be preserved and allowing an item to be re-bid after going through the competitive bid process could permit an agency to supplier shop, which thwarts the purpose of the Act. Thus, once an Invitation to Bid has been issued and bids submitted and evaluated, the Purchasing Division has the authority to issue a purchase order, thereby forming a contract, even if the requisitioning agency asks that the requisition be cancelled and the item re-bid, if the Purchasing Division decides, after careful consideration of all the facts, that the requested re-bidding is not justified. See 74 O.S. §§85.4 and 85.5.
A public entity may be a state agency for some purposes but not for other purposes and officers that are neither judicial or legislative necessarily belong to the executive department of government and are “executive” or “administrative” officers; those terms being equivalent. In this instance, statutes gave powers to the agency’s governing board and Commissioner as fully and completely as a governing body of a private entity in the same business. The Commissioner had broad authority to purchase materials and services necessary for agency operations but the agency was subject to the Central Purchasing Act as to the manner by which the items were acquired. That the Legislature exempted certain agencies by name from the Act, but did not include this particular agency, demonstrated that the Legislature intended the agency to remain subject to the Central Purchasing Act. See 74 O.S. §85.12.
18 O.S. §803 defines certain personal services as professional services that are exempt, pursuant to 74 O.S. §85.7, from competitive bidding requirements of the Central Purchasing Act. However, “professional services” defined in the Central Purchasing Act are different than the §803 services and are subject to the Act’s competitive bidding requirements. See 74 O.S. §§85.2 and 85.7.
NOTE: Opinion No. 07-31 withdrew this Opinion to the extent it concluded that the Department of Central Services (now OMES) is a purchasing agent for a state agency.
Professional services, including legal counsel services, set forth in 18 O.S. §803 are not subject to the competitive bid requirements of the Central Purchasing Act and the Oklahoma Capitol Improvement Authority was authorized to select an attorney and determine the fee; however, the Authority was required to submit a requisition for the legal services to Central Purchasing.
With respect to personal services of a professional that falls within the definition of “professional services” in the Central Purchasing Act but that are not within the definition of “professional services” under 18 O.S. §803, acquisition of the services is subject to competitive bidding requirements of the Central Purchasing Act.
The Central Purchasing Act only applies to state agencies when acquiring materials, supplies, equipment or services. Where an underwriter only purchases the bonds of a state agency and does not provide any “attendant services” to the state agency, the Central Purchasing Act does not apply. See 74 O.S. §§85.2; 85.4 and 85.7.
A professional services contract between a former state employee or official and any state agency is prohibited for a period of one year from the date the employee or official leaves state service. The statute applies regardless of whether the former employee or official worked for the particular agency before leaving state service. Likewise, while the statute references “any person”, the person’s financial interest or control over a corporation that is a party to a professional services contract may be so great that, for purposes of determining if the contract is prohibited, the contract may be deemed to be with that person rather than the corporate entity. One factor, among others, to consider is whether the former employee’s financial interest is the contract is direct and substantial. The statute is designed to prevent a less than arms-length transactions in which a state employee or official sets up professional contracts before leaving state employment and immediately enters into such contracts after leaving state employment.
A state agency is not prohibited from entering into a contract with a corporation that simply employed a former state employee within one year of the date of his or her termination from state service unless the contract is for the purpose of securing the services of the particular former employee. The mere fact of employment of a former state employee, standing alone, does not prohibit the corporation from entering into a professional services contract with a state agency. See 74 O.S. §85.42
In connection with contracts to acquire services of contractors for restoration of historic sites and museums, the Board of the Oklahoma Historical Society may select such contractors without the necessity of subjecting the contract to public competitive bids. See 74 O.S. §85.7.
NOTE: Attorney General Opinion 07-31 has withdrawn this Opinion to the extent it concluded that the Department of Central Services (now OMES) or the State Purchasing Director is a purchasing agent for a state agency.
The Turnpike Authority is exempt from the provisions of the Central Purchasing Act when acquiring liability insurance. The enabling statute for the Turnpike Authority provides that the Authority is required to carry liability insurance ... "in the same manner" as the Transportation Commission. The term "in the same manner" means the procedure or mode to be used in effectuating the statutorily prescribed acts. Using this analogy, "in the same manner" means that the procedure or mode in obtaining liability insurance for the Turnpike Authority will be the procedure or mode used in obtaining liability insurance for the Transportation Commission.
The Central Purchasing Act provides a specific exclusion of the Transportation Commission and the Department of Transportation’s contractual services from the Act; thus, the procedure for obtaining "contractual services" by the Transportation Commission does not require compliance with the Central Purchasing Act. The acquisition of liability insurance referenced in the enabling statute for the Turnpike Authority is an acquisition of a "contractual service" as defined in the Central Purchasing Act.
A state agency that is not subject to the provisions of the Central Purchasing Act, may, unless acting pursuant to a contract with the state that specifies otherwise, make use of statewide contracts and the services of the Purchasing Division and the State Purchasing Director. The decision to use these services is in the discretion of the particular agency. See 74 O.S. §§85.2 and 85.12.
Agricultural commissions are state agencies subject to the Central Purchasing Act when expending state funds. See 74 O.S. §85.2.
Although public trusts are not expressly included in the definition of “state agency” in the Act, public officers fall within the definition and trustees of a state beneficiary public trust are officers of the executive branch of state government; thus, the Opinion concluded that state beneficiary public trusts created pursuant to 60 O.S. § 176 must comply with the Central Purchasing Act. The scope of this Opinion does not extend to public trusts having beneficiaries other than the State.
Citing the definition of “acquisition” in the Central Purchasing Act, the Opinion also concluded that to the extent no materials, supplies, services or equipment are acquired by a state beneficiary public trust from an underwriter, trustee bank or bond insurer, the Central Purchasing Act, including the competitive bid requirements, does not apply. In other words, to the extent there is no “acquisition” as defined in the Central Purchasing Act, the Act does not apply, e.g., when an underwriter is solely purchasing the bonds and is providing no attendant services. See 74 O.S. §§ 85.2 and 85.5; 62 O.S. §§695.3 and 695.11; and Opinion No. 84-137.
Oklahoma Water Resources Board must comply with the Central Purchasing Act but whether underwriters, trustee banks, and bond insurers of bond issues of the Board are subject to the provisions of the Central Purchasing Act, including the competitive bid requirements therein, depends upon whether the Board is purchasing (acquiring) materials, supplies, equipment, or services from the underwriter, trustee bank or bond issuer. If such an acquisition is occurring, then the Central Purchasing Act applies. Where, however, an underwriter is solely purchasing the bonds and is providing no attendant services, the Central Purchasing Act does not apply. See 74 O.S. §§ 85.2 and 85.5; 62 O.S. §§695.3 and 695.11; and Opinion No. 84-135.
While this Opinion concluded that contracts for services of investment counselors were not exempt from competitive bidding requirements of the Central Purchasing Act because “professional services” included only those services defined in 18 O.S. §803, the Act has since been amended to provide an exemption from both the competitive bidding and requisition requirements of the Act for certain investment consultant contracts, other specific services contracts as well as professional services as defined in 18 O.S. §803. See 74 O.S. 85.7.
While this Opinion concluded that a contract for services of a bank as custodian of investments was subject to the Central Purchasing Act, the Act has since been amended to provide an exemption from both the competitive bidding and requisition requirements of the Act for certain contracts for master custodian banks or trust companies, investment managers, other specific services contracts and professional services as defined in 18 O.S. §803. See 74 O.S. 85.7.
While this Opinion concluded there was not statutory authority for the Director of State Finance (now OMES) to issue authorization orders for procurement of goods or services and there was no legal basis for authority orders, 62 O.S. §34.62 has since been amended to provide the OMES Director with power to authorize state agencies to make purchases without the submission of competitive bids as otherwise required by 74 O.S. §§85.7 and 85.12 when the Director determines it is in the best interests of the state and further directs the OMES Director to require support for payment of claims which, pursuant to subsection 4.d., may be authorizations for purchases granted by the Director. See 74 O.S. §85.7.
Purchase of an additional surety bond to supplement the blanket bond contemplated under 74 O.S. § 85.29 is not authorized under related statutes in the Central Purchasing Act and the amounts set forth in §85.29 are controlling with respect to the authority provided in §85.28. Section 85.31 expressly transfers and confers upon the Purchasing Division the authority to purchase any official, surety and blanket bonds or surety contract authorized by state law.
Note: this Opinion was issued prior to enactment of 74 O.S. §85.58A et seq., which tasks OMES Risk Management with obtaining these blanket bonds.
See 74.O.S. §§85.26 through 85.31.
State colleges and universities are exempt from the Central Purchasing Act. However, if any such institution chooses to utilize the central purchasing procedure, any purchase made on its behalf by the Purchasing Division would be subject to applicable Central Purchasing Act provisions in the same manner as any other purchase made on its behalf by the Division. See 74 O.S. §85.3A.
The State Purchasing Director is statutorily empowered to accept, evaluate and determine the lowest and best bid on state purchases falling within the Central Purchasing Act and to determine the lowest and best bid in the event of disagreements with requesting agencies regarding specifications. See 74 O.S. §85.5.
Citing the Oklahoma Constitution, Article X, §§ 5 and 6 as well as Board of Equalization of Tulsa County v. Tulsa Pythian Benevolent Association of Tulsa, 195 Okl. 458, 158 P.2d 904 (1945), the Opinion concluded that clauses whereby the state agrees to pay taxes assessed a private entity, or to reimburse that entity for taxes lawfully paid in connection with a contract between the state and that entity, are void as being contrary to the laws of this state.
Citing Schrom v. Oklahoma Industrial Development, 536 P.2d 908 (1975), the Opinion states purchase of liability insurance, pursuant to legislative authority, by a state agency is a waiver of governmental immunity to the extent of the insurance coverage. Thus, any contract clause requiring the state to purchase liability insurance is requiring the state to waive its immunity and, unless given specific authority to do so by the legislature, is invalid and void.
Citing State ex rel. Nesbitt v. Dist. Ct. of Mayes County, Okla., 440 p.2d 700 (Okla. 1967), in the absence of explicit legislative or constitutional expression to the contrary, the Attorney General possesses complete dominion over every litigation in which he properly appears in the interest of the state. Clauses whereby the state, acting through any agency other than the Attorney General, agrees to waive legal rights or defenses in advance are inconsistent with state law and are void.
Clauses in which a private entity attempts to require the state to authorize the private entity to generally act as an agent for the state are illegal except to the extent authorized by statute.
NOTE: portions of this Opinion relating to multi-year contracts and limitation of liability clauses are not included in this Guide because those portions are overruled by Opinion Nos. 04-18 and 12-18, respectively.
The most fundamental element of the Central Purchasing Act is the competitive bidding requirement. The Purchasing Division is charged with administering the provisions of the purchasing laws and policing the procedure. Multiple award contracts for procurement of certain commodities is not, as a matter of law, inconsistent with state statutes. Multiple award contracts have been used since the Central Purchasing Act became effective. Citing Peterson v. Oklahoma Tax Commission, 395 P.2d 388 (Okla. 1964), for the holding that where the legislature has convened many times during the period of administrative construction of a statute without expressing its disapproval, such silence may be regarded as acquiescence in or approval of the administrative construction, the Opinion stated that by virtue of the fact that the multiple award contract procedure had been in effect for sixteen years without legislative action to alter or amend it, the legislature has acquiesced to the procedure as consistent with its intent in enacting the Central Purchasing Act. See 74 O.S. §85.7.
An agency’s authority when submitting a requisition to the Purchasing Division is limited to quantitative needs and the general class or nature of the acquisition and is subject to the State Purchasing Director’s exclusive and specific authority to determine the particular brand, model or specific classification of an item. The State Purchasing Director is not restricted to exact specifications in an agency’s requisition other than a sole source acquisition. See also 74 O.S. §§85.4, 85.5 and 85.45j.
Purchasing Reference Guide
- Oklahoma Central Purchasing Act
- Other Procurement-Related Statutes in Title 74
- Information Technology Procurement
- IT Procurement-Related Statutes in Title 62
- Pay for Success Act
- Oklahoma Correctional Industries Procurement-Related Statute
- OMES Procurement-Related Administrative Rules
- Procurement-Related Caselaw
- Procurement-Related Attorney General Opinions
- Procurement Information Memorandums