The VitaPro Case: Ethical Pitfalls
in Procurement
Katherine “Missy” Cary
General Counsel
Wes Ogilvie
Assistant Attorney General
General Counsel Division
VitaPro Background
 Background
• First purchase – made early in 1994 through General
Services Commission (GSC)
• Subsequent purchases – “direct purchase”
 Accompanied by memo describing plan to resell
VitaPro (Public/Private Partnership?)
 First purchase order (November 7, 1994) from Texas
Department of Criminal Justice (TDCJ) obligated TDCJ
to purchase 17 metric tons/month until August 31,
1995, with options for four one-year renewals
 Second purchase order (July 1995) – five-year term, 39
metric tons/month
 First and second purchase orders claimed exemption
from GSC as “direct purchase”
 Shipments delivered to Texas Correctional Industries
(TCI) for repackaging
VitaPro Background Continued
 Limited success with reselling to other entities. Most TCI
shipments sold to TDCJ.
 TDCJ inmates and staff both complained about VitaPro.
 TDCJ stopped acceptance and the Office of the Attorney
General filed for a declaratory judgment claiming no contract
existed. VitaPro counterclaims for declaration that contract is
valid and for damages for breach.
 Trial court held for TDCJ.
 Appeals court reversed and held there was an issue of material
fact as to whether VitaPro is an agricultural commodity under
direct purchasing statute.
The Texas Supreme Court Review
Subsequent appeal by TDCJ to the Texas Supreme Court
State of Texas, ex rel. Department of Criminal Justice, Petitioner
v. VitaPro Foods, Inc., 8 S.W.3d 316 (Tex. 1999).
Primary Ethical Trap in VitaPro
 Primary Ethical Trap – Going Beyond Statutory Authority
Going Beyond Statutory Authority
 Examples from VitaPro case
•
Claimed VitaPro was an agricultural commodity under
Direct Purchasing Statute
•
Claimed VitaPro was a raw material or supply under
Direct Purchasing Statute
•
Claimed exemption from GSC as a good for resale or
auxiliary enterprise
•
Texas Supreme Court also held that neither TCI nor
TDCJ had independent statutory contracting authority
Other Ethical Lessons That Can Be
Inferred From VitaPro
 Ethical dilemmas with sole source/proprietary procurements
Other Ethical Lessons That Can Be
Inferred From VitaPro
 Formal policy for signature delegation
• Many state agencies have a signature delegation matrix
• Formal board/commission action
• Minute Order
Other Ethical Lessons That Can Be
Inferred From VitaPro
 Internal and external pressures to complete a deal
Other Ethical Lessons That Can Be
Inferred From VitaPro
 Step back – What are you trying to accomplish? In this
case, confusion between buying VitaPro for TDCJ use and
partnering to repackage and merchandise VitaPro.
Other Ethical Lessons That Can Be
Inferred From VitaPro
 Consult legal counsel and consider consulting with your
agency’s AAG
Questions and Assistance
Katherine Cary
General Counsel
Office of the Attorney General
katherine.cary@texasattorneygeneral.gov
(512) 936-1395
Wes Ogilvie
Assistant Attorney General, General Counsel Division
Office of the Attorney General
wesley.ogilvie@texasattorneygeneral.gov
(512) 936-1408