STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 5982

September 9, 1981

LEGISLATURE:

Enactment of appropriation

LOTTERIES:

Request for quotations for data processing equipment prior to enactment of appropriation therefor

Authority to purchase and operate data processing equipment

STATE ADMINISTRATIVE BOARD:

Review of request for quotations for data processing equipment

Requests for quotiations by the Commissioner of the State Lottery may be circulated and received in sealed form prior to enactment of an appropriation for the contemplated contract, but the bids may not be opened until the required appropriation has been enacted into law.

The Commissioner of the State Lottery is empowered to acquire and operate data processing equipment.

The Legislature may enact appropriation bills only by legislative act.

The State Administrative Board is not required to review requests for quotations before the requests are released.

Honorable Michael J. O'Brien

State Senator

The Capitol

Lansing, Michigan

You have requested my opinion on four questions relative to the appropriation process and actions of the Bureau of State Lottery to acquire a new on-line wagering system to replace the current 'daily' lottery game by July, 1982. In connection therewith, you have furnished certain pertinent background information.

On March 2, 1981, I issued a letter opinion advising the Commissioner of the State Lottery that an appripriation would be required to fund a contract for acquisition of an on-line wagering system.

On June 9, 1981, the Director of the Department of Management and Budget submitted a letter to the Chairman of the Senate Appropriations Committee and the Chairman of the House Appropriations Committee requesting that $19,639,075.00 be appropriated from the State Lottery Fund for an on-line wagering system, operation thereof, and maintenance of terminals, which appropriation would be for the fiscal year ending September 30, 1982. Thus, it was contemplated that it would be supplemental to the executive budget appropriations for fiscal year 1981-1982, which have already been enacted into law.

On June 30, 1981, a letter was issued to the Commissioner of the State Lottery over the signatures of the Chairman of the House Appropriations Committee, the Acting Chairman of the Senate Appropriations Committee, the Chairman of the House Subcommittee on Data Processing and the Chairman of the Senate Subcommittee on Data Processing. That letter noted that the actual cost of this system would be determined by competitive bidding processes and stated that once that cost was determined, the respective subcommittees would recommend to the full appropriations committees that an amount of money be appropriated to fund acquisition of equipment and maintenance and operation of the new system. Thus, the letter constitutes a deferral of the request proposed by the Director of the Department of Management and Budget.

The first question you pose is:

Requests for quotations are, as the wording thereof suggests, merely requests to vendors to quote prices and other key contract terms. Neither the request nor the response of a vendor constitutes a contract. As a general rule, it would not be necessary that appropriations to fund a contract have been enacted into law prior to issuing a request for 'quotations.'

However, the acquisiton in issue falls within the restrictions imposed by 1972 PA 239, Sec. 9; MCLA 432.9; MSA 18.969(9), which provides, in pertinent part:

The Legislature, in establishing the state lottery pursuant to Const 1963, Art 4, Sec. 41, as amended, effective July 1, 1972, indicated particular concern with acquisition of data processing equipment and services, imposing three protections: (1) mandatory competitive bidding; (2) contract term limitation of two years; and (3) approval of the State Administrative Board.

To receive an open quotations ('bids') at a point in time when the Commissioner of the State Lottery is not authorized to execute a contract because of the lack of appropriations therefor could have the affect of subverting protection of competitive bidding.

1962 PA 239, Sec. 43, MCLA, 432.43, MSA 18.969(43) made appropriation only for the ensuing year. Board of Education of Oakland Schools v Superintendent of Public Instruction, 392 Mich 613, 620; 221 NW2d 345 (1974); Advisory Opinion Re: 1975 PA 227 (Questions 2-10); 396 Mich 465, 499-502; 242 NW2d 3 (1976).

It is my opinion, therefore, that although the requests for quotations may be circulated and quotations received in sealed form prior to enactment of an appropriation for the contemplated contract, the bids may not be opened until the required appropriation has been enacted into law.

Your second question is:

Although certain types of appropriations require approval of at least two-thirds of the members elected to and serving in each house of the Legislature, Const 1963, art 4, Sec. 30, the instant appropriations would require approval of a majority of the members elected to and serving in each house of the Legislature. Const 1963, art 4, Sec. 17, art 4, Secs. 24 and 26.

Because an appropriation may be accomplished only by a legislative act, it is my opinion that the letter signed by the Appropriations Committee Chairman (House) and Acting Chairman (Senate), as well as by the respective data processing subcommittee chairmen, has no binding legal effect.

Your third question is:

In answering this question, it is presumed that you are inquiring whether a request for quotation must, as a matter of law, be reviewed by the State Administrative Board before release, rather than inquiring whether it would be prudent to submit the request for approval even though not legally mandated to do so. The law imposes no such requirement.

In a letter opinion addressed to Mr. William M. Nugent, Commissioner of the State Lottery, it is stated:

The State Administrative Board has not required its prior approval for requests for quotations.

As noted above, before a proposed contract for acquisition of data processing equipment may be entered into, it must be approved by the State Administrative Board. At the time the State Administrative Board reviews the proposed contract, it may review the bid specifications and quotations received.

In answer to your third question, it is my opinion that there is no legal requirement that the State Administrative Board review requests for quotations before the requests are released.

Your fourth question is:

1972 PA 239 Sec. 9, supra, when read together with 1972 PA 239 Sec. 11(2)(k); MCLA 432.11; MSA 18.969(11), confer authority upon the Commissioner of the State Lottery to acquire data processing equipment, which I interpret as including 'computer hardware' within the terminology of your question. Having established such authority in the act, it is not necessary to consider whether authority would exist under other state laws.

It is my opinion, in answer to your fourth question, that the Commissioner of the State Lottery has authority to acquire and operate computer hardware.

Frank J. Kelley