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Attorney General Opinion

Food Service Contracts and Associated Vendor Build-Outs in University System of Georgia Facilities

March 15, 2005

Institutions of the University System of Georgia may structure a transaction with a food service vendor in which it barters for construction of cafeteria or other facility improvements and private food service operations in return for allowing a vendor access to the facility over a term of five years.

This form of agreement is not considered a "forbidden pledge of credit" because the Board of Regents is bartering, and not promising to make payments to a vendor from appropriations in future fiscal years.

Under such an arrangement, the Board of Regents may be viewed as procuring, by barter, construction and food services. Procurement of construction services is a power that Regents has independently of DOAS under OCGA §50-5-72. Privatizing food service operations, on the other hand, would normally be a procurement of services under the purchasing laws administered by DOAS under OCGA §§ 50-50-57 & 67.

Special consideration must be given if the subject property has been acquired or improved with tax-exempt bond funds since the "private activity" of a vendor may threaten the tax-exempt status. Institutions of the University System of Georgia must exercise thorough due diligence in its records and in coordination with staff of GSFIC. Legal assistance should be sought in putting together such a complicated transaction.
Regulation of Construction Activities of the Board of Regents and State Departments, Agencies and Authorities, by Local Governments

February 28, 2003
  1. General Rule: Local Govt. may not regulate the state, its departments, agencies and authorities, nor the USA.
     
  2. State Fire Marshal Regulation: State Fire Marshal has exclusive jurisdiction over state buildings and over any property occupied by state employees, such as leased property.
     
  3. Exception to General Rule: Local Government is authorized to regulate the state, its departments, agencies and authorities concerning certain NPDES (soil erosion and sedimentation) permits.
     
  4. Exception to General Rule: Local Government may regulate private parties who hold "estates for years" (long-term leases). This applies to occasions where the BOR leases its property to a private party for long term use (such as fraternities). The private party cannot claim the state exemption from local governmental regulation or taxation.
     
  5. Special Circumstances: Certain provisions affecting contractors who are working on state projects. Contractors and sub-contractors working on state projects or state property are exempted from any local government tax, assessment, levy or license fee (e.g. business license), except for local sales and use taxes.
Delegation of Contracting Authority to Private Entities on Projects Utilizing General Obligation Bond Proceeds

December 11, 2003
  1. USG projects using any amount of state bond funds are generally viewed as "public works projects". It is recommended that the architectural, program management and construction contracts for these projects be held by a proper public entity of the state.
     
  2. If the BOR elects to permit a private entity to contract for the design and construction of a project involving state general obligation bond funds, it is recommended that the BOR request adherence to Regents’ competitive selection procedures (21-day public advertisement, qualifications-based selection process, adherence to GSFIC memorandum of policy, and a detailed project budget).
Significant Differences in Administration of Design, Program Management and Construction Contracts When Delegating Contracting Authority to Private Entities

December 16, 2003		 BOR and USG Institutions exempted from certain state procurement laws for projects (but are statutorily obligated to use the Georgia Procurement Registry). However, this exemption is supplanted by detailed policies and procedures of the BOR in order to insure the integrity of the public selection process and to follow the spirit and intent of the public works construction statutes, as well as GSFIC policies

Caution recommended prior to BOR delegation of contracting for public works construction projects to a Private Entity (e.g. Foundations, etc.) due to types of contract documents used and provisions contained therein. AG Review of documents needed to protect BOR interests.
State Contacts Are Not to be Negotiated, Alternates are to be Deductive, and Alternates to be Implemented in Order

October 8, 1996
  1. State contracts are not to be negotiated.
  2. Contract documents bid with alternates should be deductive, not "add alternates".
  3. When awarding a contract with alternates, the alternates must be awarded in order.
A Stamp or Seal of a Registered Architect or Professional Engineer must be Present on Plans and Drawings in order for a Building Permit to be Granted

December 1987		 Attorney General Michael Bowers stated that "...it is my official opinion that public officials charged with the responsibility of issuing building permits and enforcing building codes must require that all plans and specifications bear the seal of a registered professional engineer or architect prior to the issuance of a building permit for construction of any structure, including alterations, of which the completed cost is more than $100,000.00, unless the structure is used exclusively for private or non-commercial purposes, is a private residence, is a non-commercial farm building for use by the farmer, is a residential building not exceeding two stories in height (excluding basements), or is a domestic out-building appurtenant to a one or two-family residence. Schools, auditoriums, or other buildings intended for the mass assemblage of people or group housing projects are not exempt from these requirements, regardless of the completed cost of construction."