ALERT: State and Local Government Purchasing Legislation

July 25, 2001

According to the Comptroller's e-Texas report, the State of Texas annually spends about $14.2 billion on the purchase of goods and services. The 77th Session of the Texas Legislature convened earlier this year, and we monitored numerous bills affecting businesses that sell products or services to government purchasing agencies throughout the State. Following are summaries of several of the significant highlights in state and local government procurement legislation passed during this session. The text and other information about each bill can be viewed through the Legislature's on-line site, www.capitol.state.tx.us/tlo/billnbr.htm.

  • Texas Building and Procurement Commission - Under Senate Bill 311, the General Services Commission is abolished and its functions are transferred to a newly-created Texas Building and Procurement Commission. In addition, the powers and duties of the General Services Commission related to providing telecommunication services to state government are transferred to the Department of Information Resources.
  • Multiple-Award Contract Schedule - Senate Bill 311 also calls for development of a schedule (to be posted in a searchable database on the Internet) of multiple-award contracts previously awarded (on a competitive basis) by the federal government (e.g., the GSA) or any other governmental entity in any state. A state agency or local government can purchase goods or services directly from a vendor listed on the schedule and satisfy any state law requirement for competitive bids or proposals. Vendors will be encouraged to use historically underutilized and small businesses under their schedule contracts.
  • Contract Management - Senate Bill 311 requires the Attorney General to develop a contract management guide for use by state agencies in developing and negotiating contracts, selecting contractors, and monitoring contract performance. The guide will include model contract provisions (essential and recommended) and various procedures regarding competitive solicitations. A Contract Advisory Team will assist state agencies in improving contract management practices.
  • Competitive Sourcing of Commercially-Available Services - Senate Bill 311 requires the identification, review, and cost comparison of services being performed by the commission to determine whether they may be provided with a comparable or better level of quality, and at a savings to the State, by other state agencies or by competitive, private commercial sources.
  • State Construction Contracting Methods - Senate Bill 311 requires the adoption of rules and criteria to determine how various procedures and methods will be used in contracting for the construction of state buildings and structures. The methods to be used to provide the best value to the State include the "lowest and best bid" method, the "design-build" method, the "construction manager-at-risk" method, and the "competitive sealed proposal" method.
  • Municipal and County Construction Contracting Methods - Senate Bill 510 authorizes municipalities and counties to use any of several "alternative project delivery methods" that provide the best value for construction, rehabilitation, alteration, or repair services for a building, including the "construction manager-agent" method, the "construction manager-at-risk" method, and the "design-build" method, as well as the competitive bidding and competitive sealed proposal methods for construction services, and job order contracts for minor, recurring work.
  • Best-Value Leasing - Senate Bill 311 requires the commission to establish guidelines to obtain the best value for the State in leasing of property for use as office space and lists a variety of factors the commission may consider for determining the best value in leases. Private brokerage and real estate firms may assist the commission in leasing office space.
  • "Reverse Auction" Procedures - Senate Bill 221 permits the commission, counties, local governments, and school districts to use "reverse auction" bidding procedures in which prices start high and go lower as multiple suppliers, rather than buyers, bid for contracts to provide designated goods and services. The reverse auction procedures involve a bidding process, either in real time (less than an hour) or over the course of about two weeks or less, in which multiple suppliers (anonymous to each other) submit bids at a pre-designated Internet location to provide the designated goods or services.
  • Best-Value Contracting - Where a municipality is required to conduct competitive, sealed bidding for a contract for goods and services (other than professional services), the contract must be awarded to the lowest responsible bidder or, when Senate Bill 510 becomes effective, to the bidder who provides goods and services (except for the certain construction projects) at the best value to the municipality. The bill lists several factors that may be considered in determining the best value including the price and total long-term cost of the purchase, the bidder's reputation and past relationship with the municipality, the reputation and quality of the bidder's goods or services, among other criteria.
  • Pre-Bid Conferences - Senate Bill 874 authorizes counties with a population of at least 2.8 million (e.g. Harris) to require prospective bidders to attend a pre-bid conference as a precondition for acceptance of a bid for goods and services. The conferences will be conducted for the purpose of discussing contract requirements and answering questions from prospective bidders.
  • Local Business Bid Preference - House Bill 969 broadens coverage of the preference extended to a local business bid that is within three percent of the low bid by an out-of-town business to municipalities with a population of 200,000 or less and counties with a population of 400,000 or less.
  • Additional Competitive Procedures - House Bill 1981 amends the Local Government Code to require that (a) procedures for competitive bidding provide the opportunity to bid on the same items on equal terms and have bids judged according to the same standards as set forth in the specifications; (b) bids or proposals be received in a fair and confidential manner; and (c) bids and proposals may be received in hard-copy format or through electronic transmission (but bids or proposals submitted in hard- copy format must be accepted).

For information or assistance regarding Federal and Texas government procurement and construction matters, please contact the Government Contracts Group in our Dallas office (Paul W. Searles, 214.651.5197).

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