Rider FireWall for Agency & Higher Ed Contracting

State contracting is under the microscope. This is no junior high science microscope where everything looks grainy, this is an electron microscope fitting of a PhD in neuroscience. 

HB 1, Rider 7.12, sets up new contracting requirements. The big picture:

  • Contracts  over $10M or $1M in contracting/purchase will require notifications
  • Notification to the LBB, SAO, Governor, and Finance/Appropriations Chairs
  • Establish the basis for their contracting methods
  • Establish that the contracting methods comply with state contract management and procurement standards

Text of the full rider:

Sec. 7.12. Notification of Certain Purchases or Contract Awards, Amendments, and Extensions.

(a) Until providing notice that satisfies the requirements of this Sec. 7.12, an agency or institution of higher education appropriated funds in this Act may not expend any funds to award a contract or make a purchase if the expected amount of the contract or purchase exceeds or may reasonably be expected to exceed either of the following thresholds: 

(1) $10 million; or
(2) $1 million in the case of a contract or purchase:

(A) awarded or made as a result of an emergency or following an emergency procedure allowed by statute; or

(B) awarded or made without issuing a request for proposal, request for bid, or other similar process common to participation in the competitive bidding processes required by statute, rule, or ordinary and commonly recognized state policies and procedures.

(b) An agency or institution of higher education may exceed the thresholds provided under Subsection (a) of this Sec. 7.12 after:

(1) providing written notice, a minimum of 30 business days prior to the date of the expenditure, meeting all of the requirements of Subsection (c) of this Sec. 7.12 to:

(A) the Legislative Budget Board;

(B) the Governor;

(C) the State Auditor;

(D) the Chair of the House Appropriations Committee;

(E) the Chair of the Senate Finance Committee; and

(F) the Chairs of any House or Senate Committees with jurisdiction over state contracting authority; or

(2) providing written notice and a clear statement of the emergency and necessity for making the expenditure, a minimum of 24 hours prior to the emergency expenditure and then as soon as possible thereafter providing written notice meeting the requirements of Subsection (c) of this Sec. 7.12 to:

(A) the Legislative Budget Board;

(B) the Governor;

(C) the State Auditor;

(D) the Chair of the House Appropriations Committee;

(E) the Chair of the Senate Finance Committee; and

(F) the Chairs of any House or Senate Committees with jurisdiction over state contracting authority.

(c) A notice required by this Sec. 7.12 must include:
(1) information regarding the nature and term of the contract, contract extension, or purchase and

the vendor(s) awarded the contract or purchase;
(2) (A) certification signed by the executive director of the agency or other similar agency or

institution administrator or designee of the agency or institution of higher education stating that the process used to award the contract, contract extension, or purchase complies with or is consistent with the following:

(i) State of Texas Contract Management Guide; (ii) State of Texas Procurement Manual; and

(iii) all applicable statutes, rules, policies and procedures related to the procurement and contracting of goods and services, including compliance with conflict of interest disclosure requirements;

or

(B) if the process to award the contract, contract extension, or procurement did not comply with the requirements of Subsection (c)(2) (A)(i), (ii) and (iii), the agency or institution of higher education shall provide an explanation for the alternative process utilized, legal justification for the alternative process, and identify the individual(s) directing the use of an alternative process;

(3) certification by the executive director of the agency or other similar agency or institution administrator or designee of the agency or institution of higher education that the agency or institution has a process for: 

(A) verification of vendor performance and deliverables;

(B) payment for goods and services only within the scope of the contract or procurement order; and

(C) calculation and collection of any liquidated damages associated with vendor performance;

and

(4) any other information requested by the Legislative Budget Board before or after the Legislative Budget Board receives the notice as required by this Sec. 7.12.

(d) This section shall apply without regard to the source of funds associated with the expenditures and without regard to the method of finance associated with the expenditures.

(e) The Comptroller of Public Accounts shall not allow the expenditure of funds if the Legislative Budget Board provides notification to the Comptroller of Public Accounts that the requirements of this provision have not been satisfied.

(f) In this section the term: (1) “contract” includes:

(A) an original contract or grant;
(B) a contract or grant amendment;
(C) a contract or grant extension;
(D) a purchase order;
(E) an interagency grant or agreement; or (F) an interlocal grant agreement.

(2) “purchase” includes any acquisition methods covered by Title 10, Government Code, including Chapters 2155, 2156, or 2157, Government Code.

(g) It is the intent of the legislature that a written notice certified as required by this Sec. 7.12 should be considered a “governmental record” as defined under Chapter 37, Penal Code. 

 

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