Request By:
Terry R. Shockley, President
Kentucky Association of Rehabilitation Facilities
201 Willowcrest Drive
Frankfort, Kentucky 40601
Opinion
Opinion By: David L. Armstrong, Attorney General; By: Martin Glazer, Assistant Attorney General
You inquire as to clarification of Senate Bill 219 of the 1982 Kentucky General Assembly.
You state that the intent is to help handicapped citizens become self sufficient by work oriented facilities. It requires state purchasing to give preference to such entities in purchasing products from such industries.
You specifically ask:
"Does Section 2 of KRS 45A exempt respective agencies and their appropriate list of commodities and services from the competitive bid process?"
This bill was codified as KRS 45A.465 and 45A.470. KRS 45A.465 is a definition section. KRS 45A.470 provides:
(1) All governmental bodies and political subdivisions of this state shall, when purchasing commodities or services, give first preference to the products made by the department of corrections, division of prison industries, as required by KRS 197.210. Second preference shall be given to the Kentucky industries for the blind as described in KRS 163.450 to 163.470 and agencies of the severely handicapped as described in KRS 45A.465.
(2) The department of finance shall make a list of commodities and services provided by these agencies and organizations available to all governmental bodies and political subdivisions. The list shall identify in detail the commodity or service the agency or organization may supply and the price.
(3) The department of finance shall annually determine the current price range for the commodities and services offered from its experience in purchasing these commodities or services on the open market. In no case shall the prices quoted by these agencies or organizations exceed the current price range.
(4) The bureau for the blind within the education and the humanities cabinet and qualified agencies for the severely handicapped shall annually cause to be made available to the department of finance, lists of the products of services available.
(5) In the event two (2) or more of the agencies or qualified nonprofit organizations wish to supply identical commodities or services, the department of finance shall conduct negotiations with the parties to determine which shall be awarded the contract. The decision of the department of finance shall be based upon quality of the commodity or service and the ability of the respective agencies to supply the commodity or service within the requested delivery time.
The sections aforesaid do not clearly state that the organizations involved do not have to bid in being considered.
KRS 45A.470(1) provides that first preference (whatever that means) shall be given to the division of prison industries as required by KRS 197.210. KRS 197.210 requires state departments and agencies to purchase the articles manufactured by prison industries, except where the prison industry article or product does not meet the specification requirement of the article needed, or where the prison industry cannot supply a sufficient amount of the article needed.
A second preference shall be given to articles manufactured by the Kentucky industries for the blind under KRS 163.450 to 163.470.
As we read those statutes in para materia, we can see that articles manufactured by one state agency (such as prison industries and bureau for the blind) can be utilized by another state agency without using the bidding process. They are merely transferred to the receiving agency and the cost or price is interaccounted to the selling agency.
The problem arises when the article is produced by a private, non-governmental agency designated, "qualified nonprofit agency for the severely handicapped. " KRS 45A.465(3) defines such an agency, but the purchasing division would still need to identify the entities who meet the criteria of KRS 45A.465(3).
Such an agency would need to register with purchasing, be approved by it, identify the products it produces and quote current prices for such product, so that purchasing can ascertain whether such prices are within the current price range for similar products produced on the open market by other producers (as required by KRS 45A.470(3)). That can be done by bidding on specific offered bids.
It is obvious that the 1982 Senate Bill 219, now codified as KRS 45A.465 and 45A.470 was not artfully or clearly drawn, but the General Assembly did intend to give the entities therein encompassed some measure of preference and protection. The statutes cannot be ignored because of some ambiguity in their provisions.
CONCLUSION
Products of the prison industries and bureau for the blind can be purchased by state agencies without bidding where their prices fall within the current price range of other producers.
Entities who are nonprofit agencies for the severely handicapped would need to be approved by purchasing as meeting the definition of KRS 45A.465(3)(a), (b), (c), and (d). They can then bid on contracts seeking products or services such entities produce.
If their bids fall anywhere in the current price range and meet the necessary specifications and such entities can produce sufficient amounts of products needed, the purchasing division should choose such products, even if they are not the lowest bid price. In that way, they shall be given preference as required by the statutes involved.