No. 90-01 AG Alpha No. AD PU AGARE - January 12, 1990

This opinion responds to the authority of University Hospital after divestiture to enter into cooperative purchasing agreements.

Summary
The Corporation that operates University Hospital is not a "public procurement unit." The Corporation may, however, enter into contracts with the Board of Regents for the provision of goods, services, and facilities in support of the University, Section 23-21-401(6), C.R.S. (1989 Supp.), Section 23-21-403(1)(d), C.R.S. (1989 Supp.); and, as a public procurement unit, the Board could enter into cooperative purchasing agreements to obtain materials and other resources which the Corporation might need for running the Hospital


FORMAL
OPINION

of

DUANE WOODARD
Attorney General

No. 90-1

AG Alpha No. AD PU AGARE

January 12, 1990

Michael K. Ghourdjian
State Purchasing Director
Division of Purchasing
Department of Administration
303 West Colfax Avenue, Suite 600
Denver, Colorado 80204

 

RE: Procurement status of University Hospital after divestiture

Dear Mr. Ghourdjian,

This opinion letter is written in response to your inquiry about the authority of University Hospital after divestiture to enter into cooperative purchasing agreements.

 

QUESTION PRESENTED AND CONCLUSION

Does the Corporation which operates University Hospital after divestiture qualify as a "public procurement unit" for purposes of participating in cooperative purchasing agreements authorized by the Colorado Procurement Code?

 

No.

 

ANALYSIS

Among other things, the State Procurement Code, Sections 24-101-101 to 24-112-101, C.R.S. (1988 & 1989 Supp.), authorizes "public procurement units" to enter into cooperative purchasing agreements. Section 24-110-201, C.R.S. (1988). "Public procurement units" include "local" public procurement units, Section 24-110-103(4), C.R.S. (1988), which, by definition, include "any educational, health, or other institution, and, to the extent provided by law, any other entity which expends public funds for the procurement of supplies, services and construction." Section 24-110-101(3), C.R.S. (1988).

University Hospital was established by the University of Colorado Board of Regents (hereafter, "the Board") to meet the needs and demands for medical, dental, nursing, and pharmacy schools and other health-related programs. Colo. Const. art. VIII Section 5; Section 23-21-101, C.R.S. (1988). Prior to 1989, the Board managed, controlled, and governed the operation of the Hospital. Section 23-21-101, C.R.S. (1988). In 1989, however, the General Assembly determined that the public interest would "be best served if the hospital is reorganized to operate as a private nonprofit corporation charged with the mission of operating a teaching hospital for the benefit of the health sciences schools and providing care for the medically indigent." Section 23-21-401(1)(e), C.R.S. (1989 Supp.). Upon transfer of Hospital assets, the Corporation, not the Board, became responsible for operating and managing the Hospital. Sections 23-21-114, C.R.S. (1989 Supp.) (repealing, Sections 23-21-101 to 113, C.R.S. (1988)), 23-21-402(3) and (9), C.R.S. (1989 Supp.), 23-21-403(1)(d), C.R.S. (1989 Supp.), 23-21-404(1)(c), C.R.S. (1989 Supp.).

I am cognizant of the fact that the Hospital's reorganization is the subject of pending litigation in the appellate courts of this state. Assuming the reorganization is upheld, it is my view that the Corporation does not qualify as a "public procurement unit." Admittedly, the Hospital remains an educational institution for which public funds are indirectly expended. See Section 23-21-401(1)(f), C.R.S. (1989 Supp.) (partial state reimbursement of costs for medical care of the indigent). Nonetheless, the definition of "public procurement unit" must be considered in the context of other relevant provisions of the State Procurement Code. See Allen v. Charnes, 674 P.2d 378, 381 n.8 (Colo. 1984); see also Robidoux v. City of Lakewood, 700 P.2d 917, 918 (Colo. App. 1985) ("the several parts of a statute reflect light upon each other."). Significantly, the Code applies to "governmental bodies of the executive branch of this state," Section 24-101-105(1), C.R.S. (1988) and "{a}ll political subdivisions and local public agencies" which opt to "adopt all or any part of the code and its accompanying rules," Section 24-101-105(2), C.R.S. (1988). And, the article which authorizes cooperative purchasing agreements i.e., article 110 of title 24, is titled "Intergovernmental Relations." In light of these provisions, it is my opinion that the legislature intended that only state or local governmental entities could qualify as "public procurement units."

The Corporation that manages and operates University Hospital is clearly not a governmental entity. The Legislature's purpose in reorganizing the Hospital was to remove it from "various kinds of government policy and regulation." Section 23-21-401(1)(c), C.R.S. (1989 Supp.). And, the Legislature specifically provided that:

 

{t}he corporation shall not be an agency of state government, nor a department or political subdivision thereof. It shall not be subject to any provisions of law affecting only governmental or public entities and, unless otherwise provided ..., shall have all the rights and powers of a private nonprofit corporation organized under the laws of this state.

Section 23-21-403(1)(a), C.R.S. (1989 Supp.). University Hospital is in many ways, then, much like other private colleges and institutions which, while receiving some governmental assistance, would not qualify as governmental entities entitled to reap the benefits of the State Procurement Code.

 

SUMMARY

The Corporation that operates University Hospital is not a "public procurement unit." The Corporation may, however, enter into contracts with the Board of Regents for the provision of goods, services, and facilities in support of the University, Section 23-21-401(6), C.R.S. (1989 Supp.), Section 23-21-403(1)(d), C.R.S. (1989 Supp.); and, as a public procurement unit, the Board could enter into cooperative purchasing agreements to obtain materials and other resources which the Corporation might need for running the Hospital.

Sincerely,

DUANE WOODARD
Attorney General

DW:4397:wp
AG Alpha No. AD PU AGARE
AG File No. OLS8906934/ARE

LOCAL PUBLIC PROCUREMENT UNIT
UNIVERSITY HOSPITAL
PROCUREMENT CODE

Section 24-110-101(3), C.R.S. (1988)

ADMINISTRATION, DEPT. OF
Purchasing Division

University Hospital after divestiture no longer meets the definitional requirement of a "public procurement unit."

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