Chair, Georgia State Use Council Commissioner, Georgia Department of
Miscellaneous questions concerning the procurement of goods and services under the set aside provisions of
State law provides for state agencies to procure when needed certain goods and services “produced by community based rehabilitation programs and training centers” (hereinafter “training centers”). O.C.G.A. §§ 50‑5‑135 through ‑138. (hereinafter the “State Use Law”). In separate requests for official opinions, you have asked several questions regarding the proper functioning of this “set aside” program. Before addressing your specific questions, a general overview of the basic mechanisms of state purchasing law and State Use Law will be helpful.
The Commissioner of Administrative Services (hereinafter the “Commissioner”) is the department head of the Department of Administrative Services (hereinafter the “Department”) and in that role oversees state purchasing generally. O.C.G.A. §§ 50‑4‑1, 50‑5‑1, 50‑5‑51. As a rule, state purchases are based upon competitive bids and awarded to the lowest responsible bidder. See O.C.G.A. § 50‑5‑67(b). One partial exception to competitive pricing is found in the State Use Law, and one of its key aspects is dual administration. The Commissioner has certain specific roles under the State Use Law. See, e.g., O.C.G.A. §§ 50‑5‑136(b)(2), ‑138. The State Use Council (hereinafter the “Council”) also has certain “powers and authority” regarding the state use program. O.C.G.A. § 50‑5‑136.
The key step in the set aside process is the creation of “a list of goods … and services which shall be set aside for purchase from … training centers.” O.C.G.A. § 50‑5‑136(b)(2). The Council, “in conjunction with” the Commissioner, has the power and authority “[t]o develop” this list.
To be eligible to sell the goods and services contained on the “set aside” list, a training center must be “operated by or under contract with the Department of Human Resources” (hereinafter “DHR”). O.C.G.A. § 50‑5‑136(a). The Council must also “certif[y] in writing” the “availability of such services [and] goods” from the training center.
More than one training center may be eligible to sell particular goods and services found on the set aside list. O.C.G.A. § 50‑5‑136(b)(1) and (4) (certification process enables training centers “to compete in procurement activities”). A “central nonprofit agency” designated by the Council is “responsible for selecting the … training center to perform a specific contract for work ordered by the state.” O.C.G.A. § 50‑5‑136(b)(1). Under the State Use Law, the Department is the state entity which must purchase the services and goods produced by the training centers. See O.C.G.A. § 50‑5‑136(a). Generally, for statewide contracts the Department enters into a contract to purchase goods and services and then state entities must obtain these goods and services under the Department’s contract. O.C.G.A. § 50‑5‑57. The State Use Law creates a system similar to statewide contracts. However, instead of the Department having to enter into a contract with each training center, the statute contemplates the Department contracting with the central nonprofit agency to purchase the items on the set aside list. See O.C.G.A. § 50‑5‑136(b)(1).
The central nonprofit agency obtains and provides a good or service by its “subcontract” with a training center. O.C.G.A. § 50‑5‑136(b)(1). Once the subcontract is established, the central nonprofit agency also must provide “management and quality control assistance in the administration of the project,” with examples set out in the Code.
The central nonprofit agency is to be paid for its services according to a percentage of each purchase order:
The Department … shall contract with the central nonprofit agency to pay a fee to such agency [of] not less than 5 percent nor more than 8 percent of the total contract fee awarded for a particular project. The fees will be added to the fair market price paid by the state agencies … or will be paid from assessments received from the state agencies … by the Department…. The timeliness and methodology of collection … will be decided upon between the Department … and the central nonprofit agency [in] such contract.
O.C.G.A. § 50‑5‑138(a). In establishing “fair market prices,” the Council must consider “recommendations from the procuring agencies, the central nonprofit agency, and other relevant sources.” O.C.G.A. § 50‑5‑136(b)(3). In addition, the central nonprofit agency “shall analyze the data and submit a recommended fair market price … along with detailed justification….”
With this statutory background in mind, the questions posed in your separate requests for official opinions are addressed below. As an initial matter, however, I note that the Council and Commissioner have complementary responsibilities. Legislation creating such complementary responsibilities imposes a shared duty to make the allocation of responsibility work to fulfill the varied public purposes involved. 
Turning now to your specific questions, the Council, through its chair, first asked whether a product or service contained on the set aside list created under O.C.G.A. § 50‑5‑136(b)(2) is “a mandatory source” of purchase for state agencies. The Code provides that “[a]ll services … or goods … produced … by … training centers operated by or under contract with [DHR]and needed by … the state … shall be obtained from … [such] centers where availability of … services [and] goods … has been certified in writing by the council.” O.C.G.A. § 50‑5‑136(a) (emphasis added). The Code further provides that the Council is authorized and empowered “[t]o develop, in conjunction with the Department …, a list of goods … and services which shall be set aside for purchase from training centers.” O.C.G.A. § 50‑5‑136(b)(2) (emphasis added). Normally, the word “shall” is a mandatory command. Hardwick v. State, 264
The Council has also asked how “prices normally paid by state agencies” should be determined and whether competitive bidding requirements of the Department should be a factor in arriving at this determination. In establishing the price of goods and services on the set aside list, the preliminary inquiry is a determination of fair market prices by the Council. O.C.G.A. § 50‑5‑136(b)(3). The Code dictates certain procedures the Council must follow in order to establish fair market prices.
This also answers the Commissioner’s first question: “[I]s the price normally paid by state agencies not just the lowest retail price but the lowest price state agencies may be able to realize via competitive bidding?” While the question has the sense of the idea, it is more accurate to say under State Use Law that the Council determines a “fair market price” according to a statutory process, which is subject to a “cap” determined and reported by the Commissioner, and he should determine the price normally paid on the basis of departmental experience or its considered expectation of the competitive pricing that would result from its normal processes. In determining the price normally paid, the Commissioner may not take into account any fee to be paid to the central nonprofit agency, since the Commissioner in this determination is ascertaining the cap on the fair market price, and, under the State Use Law, the fee is “added to the fair market price” for each purchase order. See O.C.G.A. § 50‑5‑138(a).
The above answers and discussion also indicate the answer to the Commissioner’s second question, namely, whether he or the Council has the “final authority to determine whether the disputed certified goods or services must be purchased from the [central nonprofit agency] or whether a state agency may seek competitive bids.” The answer is that the set aside list is a mandatory source which the Commissioner must require agencies to utilize, as he does now in the agency instructions. See O.C.G.A. § 50‑5‑136(a) and (b)(2); Department of Administrative Services,
In his third question the Commissioner has asked what happens when the service and pricing specifications of a certain product or service contained on the set aside list do not meet the service and pricing requirements of a particular state agency. The Commissioner gives the example of a janitorial service priced per square foot when a procuring agency’s requirements change from location to location, such that the services that are needed and the appropriate price vary. The answer is that various specifications and parameters for particular goods and services recommended by agencies should be considered by the Council in certifying availability under O.C.G.A. § 50‑5‑136(a) and by the Commissioner and Council in creating the set aside list under O.C.G.A. § 50‑5‑136(b)(2). The Council should determine fair market prices responsive to those specifications under O.C.G.A. § 50‑5‑136(b)(3), and when pricing and specifications are not responsive to an agency’s needs for a service that is on the set aside list the Commissioner and the central nonprofit agency should in good faith attempt to amend their agreement to provide the set aside service in a responsive way, subject to the concurrent powers of the Council and the Commissioner regarding the set aside list and pricing. Ultimately, the Commissioner may cancel or modify a contract, but only for noncompetitive pricing or nonperformance under O.C.G.A. § 50‑5‑138(b). The various parties should make good faith efforts to establish specifications which satisfy State Use Law and particular agency needs.
The fourth question posed by the Commissioner is whether there is a time limit to contracts made under the state use program. There is no direct statutory answer. However, the Commissioner and the Council “annually” review the goods and services to be placed on the set aside list, see O.C.G.A. § 50‑5‑136(b)(2), and the Council “establish[es] fair market prices for commodities or services on the selected procurement list,” subject to the ceiling of “prices normally paid by state agencies for such commodities or services.” O.C.G.A. § 50‑5‑136(b)(3) (emphasis added). The resulting contracts are subject to cancellation or modification at any time by the Commissioner for reasons of nonperformance or noncompetitive price. See O.C.G.A. § 50‑5‑138(b). Taking the matter further, I understand that these contracts are a form of supply contract, which obligate the State to purchase under them in event of need but which promise no specific purchases until purchase orders are placed. Department of Administrative Services,
The Commissioner in his fifth question asks whether he has authority to cancel a contract for reasons other than price. The question arises because the express provisions of O.C.G.A. § 50‑5‑138(b) provide that “[t]he commissioner … retains the right to cancel or modify contracts which have been selected for procurement under this part for nonperformance and noncompetitive pricing.” (Emphasis added.) Depending on legislative intent, the conjunctive “and” can be interpreted as the disjunctive “or.” Ball v. State, 167
Where the letter of the statute results in absurdity or injustice …, the meaning of general language may be restrained by the spirit or reason of the statute…. It is the duty of the court to consider the results and consequences of any proposed construction and not so construe a statute as will result in unreasonable or absurd consequences not contemplated by the legislature.
General Elec. Credit Corp. of Ga v. Brooks, 242
The Commissioner is authorized to modify or cancel contracts in order to insure that the set aside mechanism operates to provide goods and services needed by state agencies for their public functions. Interpreting “and” in O.C.G.A. § 50‑5‑138(b) as conjunctive would defeat this purpose. For example, under that reading if a training center agrees to provide an item at a competitive price but fails to perform the contract, the Commissioner could not exercise his power to cancel or modify purchasing contracts to protect state agencies from nonconforming goods or services in the performance of their public functions. This would be an absurd result. Therefore, under O.C.G.A. § 50‑5‑138(b), the Commissioner is empowered to cancel or modify contracts when either nonperformance or noncompetitive pricing is present.
In his fifth question, the Commissioner gives as an example the repackaging by a training center of a commercial product found on the set aside list after the commercial vendor has just lost a bid to provide the same product in a competitive procurement conducted by the Department. The illustration raises concerns that the set aside process may be used to circumvent the competitive processes of the Department and an uncertainty about when “services” are “provided” and “goods” are “produced” by training centers. O.C.G.A. § 50‑5‑136(a). As a threshold matter, whether a product that has simply been repackaged has been “produced” by a training center as required by O.C.G.A. § 50‑5‑136(a) is a decision for the Council and Commissioner in establishing the set aside program. In addition, as discussed above, the Commissioner may consider the results from a competitive procurement in determining whether the product placed on the set aside list has been priced at a level beyond what a state agency would normally pay.
Finally, the Commissioner asks whether the central nonprofit agency may contract with the Council rather than the Commissioner for the payment of the fee contemplated in O.C.G.A. § 50‑5‑138(a). The Code explicitly provides for the Commissioner and the central nonprofit agency to contract with one another for the payment of the fee between five percent and eight percent of the total contract award. O.C.G.A. § 50‑5‑138(a). There must be such a contract; the Code imposes on the Department and the central nonprofit agency a duty to act together to create one in accord with the further provisions of O.C.G.A. § 50‑5‑138(a). Apart from setting the central nonprofit agency’s fee, this is the statewide agreement for mandatory purchases under the set aside program. O.C.G.A. § 50-5-136(b)(1); Department of Administrative Services,
In summary, therefore, it is my official opinion that:
(1) Goods and services placed jointly on the set aside list are mandatory sources of supply for the State, subject to further provisions of the State Use Law.
(2) In setting price, the Council determines a “fair market” price in accord with procedures of State Use Law, but the fair market price may not exceed the price normally paid by the State for goods and services on the set aside list, a determination within the purview of the Commissioner.
(3) The Commissioner should determine the price normally paid for a set aside service or good on the basis of departmental experience in competitive pricing of comparable goods and services, if any, or if not its considered expectation of the competitive pricing that would result from its normal processes (without taking into account the fee to be paid the central nonprofit agency).
(4) The Commissioner lacks “final authority” to add to or remove a good or service from the set aside list, such actions requiring the joint authority of the Commissioner and Council exercised in good faith. While the Commissioner may “cancel or modify” a contract for reasons of nonperformance or noncompetitive pricing, in doing so he must have a principled basis, grounded in his expertise and knowledge of contract administration, purchasing, and competitive procurement. He should give preference in the necessary case to the power to “modify” over the power to “cancel” in order to protect the set aside program as a mandatory source.
(5) When the service and pricing specifications of a certain product or service on the set aside list do not meet the service and pricing requirements of a particular state agency, the Commissioner and the central nonprofit agency should in good faith attempt to amend their agreement to provide the set aside service in a responsive way, subject to the concurrent powers of the Council and the Commissioner regarding the set aside list and pricing. Ultimately, the Commissioner may cancel or modify a contract, but only for noncompetitive pricing or nonperformance under O.C.G.A. § 50‑5‑138(b). The specifications and parameters of a service required by state agencies should be considered by the Commissioner and the Council in establishing the set aside list, and the Council should determine the fair market price for the service based on various agency specifications.
(6) There is no statutory time limit to the duration of the set aside contracts, but a permanent duration is not possible; the discretion of the parties in setting a reasonable term must take into account the annual review of the set aside list, the rule against binding successors in office, and the Commissioner’s power to amend or cancel for nonperformance or noncompetitive pricing.
(7) The Commissioner’s statutory power “to cancel or modify contracts … for nonperformance and noncompetitive pricing” is disjunctive; that is, he may cancel or modify a contract for either noncompetitive pricing or nonperformance.
(8) The Commissioner and the central nonprofit agency must contract with one another in order to establish the mandatory source and to establish the amount, timing, and method of the statutory fee to be paid to the central nonprofit agency by state agencies, within statutory parameters.
It is further my official opinion that the Commissioner of Administrative Services, the State Use Council, the central nonprofit agency, and the community based programs and training centers acting under O.C.G.A. §§ 50‑5‑135 through ‑138 have complementary duties to see that conforming goods and services are set aside as a mandatory source for state agencies, purchased when needed, and properly delivered, at competitive prices and under appropriate specifications, in order to fulfill the purpose of the set aside program and the public purposes of the state agencies which procure under it.
Oscar B. Fears, III
Senior Assistant Attorney General
 The Council consists of the commissioners of administrative services, human resources, community affairs, and corrections, or their designees, and five appointees of the Governor from the business community, three from a “broad spectrum of persons with disabilities,” and three from “organizations representative of persons with disabilities.” O.C.G.A. § 50‑5‑135(a).
 As of July 1, 2001, the responsibility for “establishing and operating rehabilitation centers and workshops” was transferred from the Department of Human Resources to the Commissioner of Labor. O.C.G.A. § 34‑15‑5. Existing contracts and accumulated rights and duties were also transferred. O.C.G.A. § 34‑15‑2(g).
 Neither the preceding summary nor the answers to specific questions which follow contain the entire text of State Use Law. All of the statutory provisions should be followed in implementing the program. If any further questions arise, I will be happy to provide further advice.
See generally Lemelledo v. Beneficial Mgmt. Corp. of America, 696 A.2d 546, 554 (N.J. 1997) (When a legislature has enacted “multiple remedial statutes” it may not be inferred that the legislature intended to give effect only to one of them); Hinfey v. Matawan Reg’l Bd. of Educ., 391 A.2d 899, 907 (N.J. 1978) (“[P]rinciples of comity and deference to sibling agencies are part of the fundamental responsibility of administrative tribunals charged with overseeing complex and manifold activities that are also the appropriate statutory concern of other governmental bodies.”); 1983 Ops. Att’y Gen. 83‑51, 83‑35; 1980 Op. Att’y Gen. 80‑74, 1978 Op. Att’y Gen. 78‑59 (a series of opinions on allocations of concurrent and distinct responsibility among agencies in the area of employment discrimination).
State Use Law concerns goods and services “needed by the … agencies of the state and its political subdivisions supported wholly or in part by public funds….” O.C.G.A. § 50‑5‑136(a) (emphasis added). This opinion is limited to a discussion of the set aside list as it is implemented in state government.
 See note 2 supra regarding the transfer of the vocational rehabilitation program from DHR to the Commissioner of Labor.
In considering whether “shall” is mandatory or directory, courts consider the underlying purposes for the legislation and tend to a directory reading only when doing so “‘will result in no injury or prejudice to the substantial rights of interested persons.’” Barton v. Atkinson, 228
O.C.G.A. § 50‑5‑136(a) taken alone and literally is more expansive than O.C.G.A. § 50‑5‑136(b)(2) in that the former requires that “all” goods and services certified as available “shall be obtained” from training centers. However, the subsection must be read in deference to the more explicit legislative instructions of the paragraph directing the Council and the Commissioner to “develop” a set aside list from the available goods and services; that list then becomes the mandatory source. See Undercofler v. Capital Auto. Co., 111
 “Fair market value is the price a seller who desires, but is not required, to sell and a buyer who desires, but is not required, to buy, would agree is a fair price, after due consideration of all the elements reasonably affecting value.” Wright v. Metropolitan
The provision for the Commissioner’s power to cancel or modify contracts was a legislative revision of earlier law. 1993
 In practice the Commissioner might not always be able to determine definitively the price the State will “normally” pay, for example, when there has been no comparable competitive procurement. It is my understanding that in such situations the Commissioner has determined that the price the State will “normally” pay is the lowest retail price of an item which meets specifications and is available to the general public.
“A joint authority given to any number of persons or officers may be executed by a majority of them, unless it is otherwise declared.” O.C.G.A. § 1‑3‑1(5). This rule is applied to governmental powers. Cf. Aliotta v. Gilreath, 226
Specifically, one General Assembly may not bind its successors and the State in providing that the terms of an exercise of the welfare power are fixed permanently by contract. Cf. State Ports Authority v. Arnall, 201
When the State Use Law was enacted it provided in part that “[a]ll contracts which presently exist between the State of Georgia and … [the] training centers in Georgia … shall be grandfathered in perpetuity” except for nonperformance reasons. O.C.G.A. § 50‑5‑138(c). The predecessor statute to the State Use Law, 1979 Ga. Laws 1318, codified in the present Code in 1982, provided in pertinent part that “[a]ll services provided or goods … produced … by the … training centers operated by or under contract with [DHR] … shall be obtained from the … training centers.” O.C.G.A. § 50‑5‑74(a), repealed by 1993 Ga. Laws 1736. The contract with the DHR for the operation of the training center is the only “contract” mentioned in the predecessor statute. Therefore, O.C.G.A. § 50‑5‑138(c) appears simply to provide that any contract with DHR for the operation of the training center shall continue notwithstanding the passage of the State Use Law but subject to the constitutional constraints just discussed and only until otherwise changed or ended in accord with related law. Note that the same 1993 legislation expressly limits the grandfathering of training center certifications to a period of two years, after which they are required to undergo the certification evaluation and approval process of the amended State Use Law. See O.C.G.A. § 50‑5‑136(b)(4).
I recognize that an alternative interpretation is possible, one in which pricing and other terms are fixed permanently pursuant to O.C.G.A. § 50‑5‑138(c) unless a provider fails to perform. However, “[w]hen a statute can be read in both a constitutional and unconstitutional manner, the courts apply the construction that upholds the law's constitutionality.” Board of Pub. Educ. v. Hair, 276
For further discussion of “binding successors” see Memorandum accompanying 1995 Op. Att’y Gen. 95‑9.
Compare these situations: In one a provider purchases a product at wholesale and merely adds its own label before selling to the State. In another the provider buys a product in bulk and packages the bulk product in units convenient for shipment, storage, and use by individual agencies. “Produce” ordinarily connotes creating something by effort, as in to make or manufacture something. The American Heritage Dictionary 988 (2d College Ed. 1982). In the hypothetical, it might be reasonable for the Council and Commissioner to determine that the provider of the first good did not produce it, without more, and that the provider of the second product did. However, the illustration is not meant to be conclusive, in that the Council and Commissioner should make such determinations in creating the set aside list, keeping in mind the rehabilitative purposes of the set aside program and the agency procurement function. Cf. Humphrey v. Copeland, 54 Ga. 543, 545 (1875) (“The true genius of the law, whatever may be thought to the contrary, is to quibble as little as possible on words, and go directly to the substance.), applied to administrative interpretations in Chatham County Hosp. Auth. v. St. Joseph's Hosp., 178 Ga. App. 628 (1986). In determining administrative interpretations as applied to various scenarios, the Commissioner and Council should also take into account the statutory language “produced wholly or in part by … training centers….” O.C.G.A. § 50‑5‑136(a) (emphasis added).
 As a subpart to this question, the Commissioner inquires whether there is a limit to the number of times a central nonprofit agency can succeed itself. The Council has the power and authority to select the central nonprofit agency for a period of two years but the “agency may succeed itself as the central nonprofit agency.” O.C.G.A. § 50-5-136(b)(1).