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Civil Division - New Castle County
April 9, 1996
Ms. Elisa C. Diller
Contracts Administrator
The Department of Services for Children, Youth and Their Families
1825 Faulkland Road
Wilmington, DE 19805
Re: Capital Acquisitions by Non-Profit Consultants
Dear Ms. Diller:
You have asked whether capital acquisitions made by private, non-profit organizations under consulting contracts with the Department of Services for Children, Youth and Their Families ("DSCYF") are subject to the State Procurement laws, 29 Del. C. ch. 69.(1) For the reasons stated below, we conclude that capital acquisitions made by non-profit consulting contractors with DSCYF are subject to mandatory statewide procurement contracts for matériel, equipment and non-professional services under 29 Del. C. § 6903(k) where ownership of the capital property is purchased in the name of and retained by the state at the expiration of the contract term.
For purposes of this opinion, you have requested that we assume the following. The consulting contracts with DSCYF are with private, non-profit organizations. The capital equipment purchases are necessary in order that DSCYF programs are operated effectively and efficiently. Further, it is our assumption that ownership of the capital equipment purchased pursuant to the consulting contracts will be retained by the State.
The Division of Purchasing of the Department of Administrative Services is empowered to establish and implement a system of central purchasing for the procurement of matériel and non-professional services by all State departments, agencies, boards and commissions consistent with 29 Del. C. § 6903(k) and 29 Del. C. § 8806(b)(1). The Division of Purchasing procures all matériel, equipment and non-professional services through statewide contracts:
Every state department and agency within the Executive Branch and Judicial Branch of the state government shall procure all material, equipment and nonprofessional services through the statewide contracts administered by the Division of Purchasing, Department of Administrative Services. The operations and programs funded in whole or in part by the Delaware Transportation Authority, the Transportation Trust Fund or the operations funded by public school districts, the Center for Educational Technology, the Legislative Branch or the Board of Pension Trustees and their consultants, are specifically excepted from the requirements of this subsection. (Emphasis supplied.)
29 Del. C. §6903(k)
The general rules of statutory construction provide that the courts will not resort to traditional methods of statutory interpretation where the statute is plain and unambiguous. Richardson v. Wile, Del. Supr., 535 A.2d 1346 (1988). When the language of a statute is clear, the courts interpret the statute using the exact meaning attributed to the language. Chrysler Corp. v. State, Del. Supr., 457 A.2d 345 (1983). It is clear from the plain language of Section 6903(k) that every state executive agency, except those specifically exempted, must procure matériel and nonprofessional services through statewide contracts administered by the Division of Purchasing within the Department of Public Safety.
An agency is defined by the Procurement Act as "any board, department, bureau, commission, employee or officer of the State or of any county in the State, and any public school district and its board." 29 Del. C. § 6901(1). Therefore, DSCYF is an agency as defined by the Procurement Act. Moreover, DSCYF is not exempted from the mandatory statewide contract requirement for the procurement of matériel, equipment and non-professional services under 29 Del. C. § 6903(k). Where DSCYF provides funds to a non-profit consultant to purchase capital equipment in the name of the State or agency thereof and DSCYF retains ownership of the equipment at the conclusion of the contract term, it does so without a statewide contract as required by 29 Del. C. § 6903(k) and 29 Del. C. §8806(b)(1). Accordingly, DSCYF may not obtain capital acquisitions through purchases by non-profit consulting consultants when the capital acquisitions are retained by the State upon expiration of the contract.
DSCYF observes that non-profit organizations are not subject to the State Procurement laws. While the non-profit consulting organizations may procure capital equipment which is titled in the name of the organization without using the statewide procurement contract, the non-profit consulting organization may not obtain capital equipment on behalf of the state agency with public funds. Public funds are defined under the Procurement Act as "funds of the State, of any county in the State, or of any public school district, or of any agency within the State and also funds of or from the United States government or of or from any department or representative body thereof..."29 Del. C. §6901(5). By retaining ownership of capital purchased with public funds by non-profit consulting organizations, DSCYF procures capital using public funds without adhering to the State centralized purchasing process.(2)
To eliminate the problems associated with capital acquisitions outlined above, we recommend that DSCYF pre-qualify vendors to ensure that each vendor possesses the necessary capital equipment and/or motor vehicles before being declared a responsive and responsible bidder pursuant to 29 Del. C. § 6907. The procurement laws permit an agency to pre-qualify vendors to bid on State contracts. See 29 Del. C. § 6904. Under 29 Del. C. § 6905, an agency may require any bidder to complete a questionnaire and file a financial statement concerning the bidder's financial ability and experience in performing the proposed work. In the event the agency is not satisfied with the sufficiency of the information supplied by the bidder in the questionnaire or financial statement, the agency may refuse to provide specifications to that bidder and disregard the bid. 29 Del. C. § 6905(b).
In addition to pre-qualification, DSCYF may include a special contract provision which requires the bidder to have the necessary capital equipment and/or motor vehicles outlined in the bid invitation. Since the vendor would already be required to have the necessary capital equipment, including the necessary motor vehicles, there would be no need for the non-profit organization to purchase vehicles and capital equipment for the State outside of the centralized purchasing process.
Additionally, we must note that since DSCYF is an Executive Branch agency as defined in 29 Del. C. §6903(k) and is also subject to 29 Del. C. §8806(b), the State's centralized purchasing statute, it is irrelevant that the vendor is for profit or non-profit or a §501(c)(3) tax exempt organization under the Internal Revenue Code. If an executive board agency covered by §6903(k) is purchasing either non-professional services or matériel with state funds and retaining ownership, it must comply with the provisions of 29 Del. C. §8806(b). See Gannett Co. v. State, Delaware Dept. of Administrative Services, Del. Ch., C.A. No. 12815, Harnett, V.C. (January 11, 1993); Capitol Cleaners and Launderers, Inc. v. Division of Purchasing, Dept. of Administrative Services, Del. Ch., C.A. No. 1159-K, Chandler, V.C. (October 30, 1991).
For the reasons stated above, we conclude that a private, non-profit organization under a consulting contract with DSCYF may not purchase capital equipment and/or motor vehicles which are titled in the name of the State without using the mandatory statewide purchasing contract administered by the Division of Purchasing, Department of Administrative Services. We further conclude that the mandatory statewide procurement contracts administered by the Division of Purchasing pursuant to 29 Del. C. §6903(k) and 29 Del. C. §8806(b)(1) apply to every agency of the Executive Branch of the State Government except those agencies specifically exempted.
If you have any further questions, please do not hesitate to contact us.
Very truly yours,
John K. Welch
Deputy Attorney General
Lawrence W. Lewis
Deputy Attorney General
APPROVED:
Michael J. Rich
State Solicitor
Enclosure
JKW/LWL/jb
cc: Ms. Elizabeth Bacon, Opinion Administrator
1. The issue of whether private, non-profit organizations under consulting contracts with the DSCYF are subject to the State procurement laws for the purchase of equipment was initially addressed by Deputy Attorney John K. Welch in a memorandum to Elisa C. Diller, DSCYF Contract Administrator, dated January 10, 1996. Deputy Attorney General Welch concluded that the purchase of matériel and non-professional services by the non-profit consulting organizations for the DSCYF must be accomplished through the centralized purchasing process administered by the Division of Purchasing. In a memorandum dated January 31, 1996 from Ms. Diller to Deputy Attorney General Janice Tigani, DSCYF asked specific questions with regard to the purchase and disbursement of equipment purchased by a non-profit organization for DSCYF. Due to the conclusion reached by this opinion and the advice provided herein, it is unnecessary to address each of those questions individually.
2. Since we conclude that DSCYF may not purchase capital equipment through a non-profit consulting organization, DSCYF's questions related to the purchase and disbursement of such equipment are moot.