By Clark                                              H.B. No. 2486
         77R8564 PAM-F                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the purchasing and contracting authority of
 1-3     municipalities; providing penalties.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1. Chapter 252, Local Government Code, is reorganized
 1-6     and amended to read as follows:
 1-7            CHAPTER 252.  PURCHASING AND CONTRACTING AUTHORITY OF
 1-8                               MUNICIPALITIES
 1-9                      SUBCHAPTER A.  GENERAL PROVISIONS
1-10           Sec. 252.001.  DEFINITIONS. In this chapter:
1-11                 (1)  "Bond funds" includes money in the treasury
1-12     received from the sale of bonds and includes the proceeds of bonds
1-13     that have been voted but have not been issued and delivered.
1-14                 (2)  "Component purchases" means purchases of the
1-15     component parts of an item that in normal purchasing practices
1-16     would be purchased in one purchase.
1-17                 (3)  "Current funds" includes money in the treasury,
1-18     taxes in the process of being collected in the current fiscal [tax]
1-19     year, and all other revenue that may be anticipated with reasonable
1-20     certainty to be deposited in the treasury in the current fiscal
1-21     [tax] year, including revenue derived from bond funds, certificates
1-22     of obligation, or other debt instruments or other general municipal
1-23     funds.
1-24                 (4)  "Custom manufactured goods" means goods made to
 2-1     the specifications of the municipality that are unique to and
 2-2     generally usable only for a stated purpose connected with a
 2-3     particular specialized industrial or technological operation.
 2-4                 (5)  "Goods" means tangible personal property,
 2-5     including machinery, equipment, and supplies.
 2-6                 (6)  "High technology procurement" means the
 2-7     procurement of equipment, goods, or services of a highly technical
 2-8     nature, including:
 2-9                       (A)  data processing equipment and software and
2-10     firmware used in conjunction with data processing equipment;
2-11                       (B)  telecommunications equipment and radio and
2-12     microwave systems;
2-13                       (C)  electronic distributed control systems,
2-14     including building energy management systems; [and]
2-15                       (D)  a subscription to an Internet service
2-16     provider, a computerized database subscription service, or any
2-17     other Internet-based or computer system-based information storage,
2-18     processing, acquisition, or subscription service; and
2-19                       (E)  maintenance, training, support, and other
2-20     technical services related to the [those] items described by
2-21     Paragraphs (A)-(D).
2-22                 (7)  "Normal purchasing practice" means the accepted
2-23     custom, practice, and standard among political subdivisions or
2-24     government agencies in the United States regarding the methods of
2-25     purchasing a particular good or service.
2-26                 (8) [(5)]  "Planning services" means services primarily
2-27     intended to guide governmental policy to ensure the orderly and
 3-1     coordinated development of the state or of municipal, county,
 3-2     metropolitan, or regional land areas.
 3-3                 (9)  "Professional services" means:
 3-4                       (A)  the services defined as professional
 3-5     services by Section 2254.002, Government Code; and
 3-6                       (B)  the services provided in connection with a
 3-7     person employed or trained in a field or occupation that consists
 3-8     predominantly of mental or intellectual labor and requiring:
 3-9                             (i)  a high order of intelligence, skill,
3-10     and learning; and
3-11                             (ii)  at least two years of education and
3-12     practice in the field or occupation to attain competence.
3-13                 (10) [(6)]  "Separate purchases" means purchases, made
3-14     separately, of items that in normal purchasing practices would be
3-15     purchased in one purchase.
3-16                 (11) [(7)]  "Sequential purchases" means purchases,
3-17     made over a period, of items that in normal purchasing practices
3-18     would be purchased in one purchase.
3-19                 (12)  "Specialized industrial or technological
3-20     operation" means:
3-21                       (A)  an operation of a municipal:
3-22                             (i)  solid waste or sludge landfill;
3-23                             (ii)  water or wastewater treatment,
3-24     collection, purification, or distribution plant or process;
3-25                             (iii)  reservoir;
3-26                             (iv)  dam;
3-27                             (v)  electric power plant; or
 4-1                             (vi)  energy recovery facility; or
 4-2                       (B)  any other similar industrial or
 4-3     technological process or operation owned by a municipality.
 4-4                 (13)  "Special services contract" means a contract
 4-5     requiring an expenditure greater than $25,000 for the purchase of
 4-6     any of the following items:
 4-7                       (A)  a high technology item;
 4-8                       (B)  insurance, insurance consulting, or other
 4-9     insurance related services;
4-10                       (C)  management consulting, training, or
4-11     recruiting services;
4-12                       (D)  administrative services of a third party
4-13     relating to the administration of legal claims, workers'
4-14     compensation benefits, or employee health, life, or dental
4-15     benefits;
4-16                       (E)  management services provided for a municipal
4-17     building, facility, or utility, including management services
4-18     provided by a nonprofit organization;
4-19                       (F)  surveillance, robotic, or other highly
4-20     technical equipment for use by a municipal police department for
4-21     law enforcement purposes or by a municipal fire department to fight
4-22     fires more safely and effectively;
4-23                       (G)  solid waste collection, disposal, or
4-24     management services;
4-25                       (H)  books, including rare books, and
4-26     manuscripts, papers, magazines, and other library materials for a
4-27     public library;
 5-1                       (I)  films or electronic audio-visual media;
 5-2                       (J)  services performed in connection with a
 5-3     community development program established under Chapter 373, if the
 5-4     contract funding is derived exclusively from an appropriation,
 5-5     loan, or grant received from this state or the federal government
 5-6     to conduct the program;
 5-7                       (K)  custom-manufactured goods necessary for a
 5-8     specialized industrial or technological operation;
 5-9                       (L)  construction management services;
5-10                       (M)  municipal code publication services;
5-11                       (N)  travel services;
5-12                       (O)  an agreement for the temporary use or
5-13     occupancy of hotel, conference, or other business center facilities
5-14     for a municipal conference or seminar,  employee training or
5-15     testing, or other municipal events; or
5-16                       (P)  any purchase of goods or services for which
5-17     the preparation of detailed specifications to support the award of
5-18     a contract is determined by the governing body to be impractical or
5-19     impossible [(8) "Time warrant" includes any warrant issued by a
5-20     municipality that is not payable from current funds].
5-21           Sec. 252.002.  MUNICIPAL CHARTER SUPERSEDED [CONTROLS] IN
5-22     CASE OF CONFLICT. (a)  Except as provided by Subsection (b), any
5-23     [Any] provision in the charter of a home-rule municipality that
5-24     [relates to the notice of contracts, advertisement of the notice,
5-25     requirements for the taking of sealed bids based on specifications
5-26     for public improvements or purchases, the manner of publicly
5-27     opening bids or reading them aloud, or the manner of letting
 6-1     contracts and that] is in conflict with this chapter is superseded
 6-2     by [controls over] this chapter.
 6-3           (b)  The [unless the] governing body of a [the] municipality
 6-4     may elect [elects] to have its charter supersede the provisions of
 6-5     this chapter if the charter provisions are more restrictive than
 6-6     the provisions of this chapter [supersede the charter].
 6-7           Sec. 252.003.  APPLICATION OF OTHER LAW. (a)  The purchasing
 6-8     requirements of Section 361.426, Health and Safety Code, apply to
 6-9     municipal purchases made under this chapter.
6-10           (b)  The purchasing requirements of this chapter do not apply
6-11     if another law provides specific procedures for acquiring goods or
6-12     services.
6-13           Sec. 252.004 [252.0215].  COMPETITIVE BIDDING IN RELATION TO
6-14     HISTORICALLY UNDERUTILIZED BUSINESS. A municipality, in making an
6-15     expenditure of more than $5,000 [$3,000] but less than $25,000
6-16     [$15,000], shall contact at least two historically underutilized
6-17     businesses on a rotating basis, based on information provided by
6-18     the General Services Commission pursuant to Chapter 2161,
6-19     Government Code.  If the list fails to identify a historically
6-20     underutilized business in the county in which the municipality is
6-21     situated, the municipality is exempt from this section.
6-22           Sec. 252.005 [252.046].  CIRCUMSTANCES IN WHICH CURRENT FUNDS
6-23     TO BE SET ASIDE. An [If an] expenditure under a [the] contract
6-24     subject to this chapter shall be [is] payable from [by warrants on]
6-25     current funds.  The[, the] governing body of the municipality by
6-26     order or resolution shall set aside an amount of current funds that
6-27     will discharge the contract obligation [principal and interest of
 7-1     the warrants].  Those funds may not be used for any other purpose
 7-2     unless the contract is properly completed or terminated and the
 7-3     remaining funds are released[, and the warrants must be discharged
 7-4     from those funds and may not be refunded].
 7-5           Sec. 252.006.  CONTRACTS PERMITTED UNDER COMMON LAW.
 7-6     Regardless of Section 252.102(d), a municipality is not prohibited
 7-7     from procuring goods or services under contracts that would be
 7-8     considered severable under common law.
 7-9              (Sections 252.007-252.020 reserved for expansion
7-10                SUBCHAPTER B.  COMPETITIVE BIDDING PROCEDURES
7-11                     [OR COMPETITIVE PROPOSALS REQUIRED]
7-12           Sec. 252.021.  COMPETITIVE BIDDING REQUIREMENTS; ALTERNATE
7-13     [AND COMPETITIVE PROPOSAL] REQUIREMENTS. (a)  Before a municipality
7-14     may enter into a contract that requires an expenditure of more than
7-15     $25,000 [$15,000] from one or more municipal funds, the
7-16     municipality must comply with the procedure prescribed by this
7-17     subchapter [chapter] for competitive sealed bidding [or competitive
7-18     sealed proposals].
7-19           (b)  Before a municipality with a population of less than
7-20     75,000 may enter into a contract for insurance that requires an
7-21     expenditure of more than $5,000 from one or more municipal funds,
7-22     the municipality must comply with the procedure prescribed by this
7-23     chapter for competitive sealed bidding.
7-24           (c)  A municipality must comply with the procedures
7-25     prescribed by Subchapter A, Chapter 2254, Government Code, to
7-26     procure professional services [A municipality may use the
7-27     competitive sealed proposal procedure only for high technology
 8-1     procurements or, in a municipality with a population of 75,000 or
 8-2     more, the purchase of insurance].
 8-3           [(d)  This chapter does not apply to the expenditure of
 8-4     municipal funds that are derived from an appropriation, loan, or
 8-5     grant received by a municipality from the federal or state
 8-6     government for conducting a community development program
 8-7     established under Chapter 373 if under the program items are
 8-8     purchased under the request-for-proposal process described by
 8-9     Section 252.042.  A municipality using a request-for-proposal
8-10     process under this subsection shall also comply with the
8-11     requirements of Section 252.0215.]
8-12           Sec. 252.022.  GENERAL EXEMPTIONS. (a)  This chapter does not
8-13     apply to the following contracts:
8-14                 (1)  an interlocal or intergovernmental agreement; or
8-15                 (2)  a special services contract, unless the
8-16     competitive bidding option is chosen under Subchapter E.
8-17           (b)  This chapter does not apply to an expenditure for:
8-18                 (1)  a procurement made because of a public calamity
8-19     that requires the immediate expenditure [appropriation] of money to
8-20     relieve the necessity of the municipality's residents or to
8-21     preserve the property of the municipality;
8-22                 (2)  a procurement that the governing body finds is
8-23     necessary to preserve or protect the public health or safety of the
8-24     municipality's residents;
8-25                 (3)  a procurement necessary because of unforeseen
8-26     damage to real property, public machinery, equipment, or other
8-27     tangible personal property;
 9-1                 (4)  a procurement for personal, professional, or
 9-2     planning services;
 9-3                 (5)  a procurement for work that is performed and paid
 9-4     for by the day as the work progresses;
 9-5                 (6)  a purchase or lease of land or any other purchase
 9-6     of a temporary right to use or occupy land or a purchase of a
 9-7     right-of-way;
 9-8                 (7)  a procurement of items that are available from
 9-9     only one source, including:
9-10                       (A)  items that are available from only one
9-11     source because of patents, copyrights, secret processes, [or]
9-12     natural monopolies, or exclusive distribution rights;
9-13                       (B)  films, manuscripts, [or books;]
9-14                       [(C)  gas, water, and other utility services;]
9-15                       [(D)  captive replacement parts or components for
9-16     equipment;]
9-17                       [(E)]  books, papers, software, and other similar
9-18     audio and visual [library] materials [for a public library] that
9-19     are owned by or available only from a person [the persons] holding
9-20     exclusive distribution rights to the materials; and
9-21                       (C)  captive replacement parts or components for
9-22     equipment;
9-23                       [(F) management services provided by a nonprofit
9-24     organization to a municipal museum, park, zoo, or other facility to
9-25     which the organization has provided significant financial or other
9-26     benefits;]
9-27                 (8)  [a purchase of rare books, papers, and other
 10-1    library materials for a public library;]
 10-2                [(9)  paving drainage, street widening, and other
 10-3    public improvements, or related matters, if at least one-third of
 10-4    the cost is to be paid by or through special assessments levied on
 10-5    property that will benefit from the improvements;]
 10-6                [(10)]  a public improvement project, already in
 10-7    progress, authorized by the voters of the municipality, for which
 10-8    there is a deficiency of funds for completing the project in
 10-9    accordance with the plans and purposes authorized by the voters;
10-10                (9) [(11)]  a payment under a contract by which a
10-11    developer participates in the construction of a public improvement
10-12    as provided by Subchapter C, Chapter 212;
10-13                (10)  a purchase of [(12)] personal property sold:
10-14                      (A)  at an auction by a state licensed
10-15    auctioneer;
10-16                      (B)  at a going out of business sale held in
10-17    compliance with Subchapter F, Chapter 17, Business & Commerce Code;
10-18                      (C)  by a political subdivision of this state, a
10-19    state agency of this state, or an entity of the federal government;
10-20    or
10-21                      (D)  under an interlocal contract for cooperative
10-22    purchasing administered by a regional planning commission
10-23    established under Chapter 391;
10-24                (11)  a purchase of goods or [(13)] services produced
10-25    or furnished [performed] by blind or severely disabled persons;
10-26                (12) [(14)]  goods purchased by a municipality for
10-27    subsequent retail sale by the municipality;  [or]
 11-1                (13) a purchase of natural gas, water, wastewater, or
 11-2    other utility services;
 11-3                (14)  a purchase of food;
 11-4                (15)  a purchase of retail electrical power and service
 11-5    related to providing retail electrical power to the municipality;
 11-6    or
 11-7                (16)  a purchase [electricity.]
 11-8          [(b)  This chapter does not apply to bonds or warrants issued
 11-9    under Title 118, Revised Statutes, relating to seawalls.]
11-10          [(c)  This chapter does not apply to expenditures] by a
11-11    municipally owned electric or gas utility, including a division of
11-12    the utility, or an unbundled division [divisions] of a municipally
11-13    owned electric or gas utility if the purchase is [in connection
11-14    with any purchases by the municipally owned utility or divisions of
11-15    a municipally owned utility] made in accordance with procurement
11-16    procedures adopted by a resolution of the body vested with
11-17    authority for management and operation of the municipally owned
11-18    electric or gas utility or its divisions that sets out the public
11-19    purpose to be achieved by those procedures.
11-20          (c)  The exemption provided by Subsection (b)(16) does [This
11-21    subsection may] not [be deemed to] exempt a municipally owned
11-22    utility from any other applicable statute, charter provision, or
11-23    ordinance.
11-24          (d)  A municipality by ordinance may establish procedures to
11-25    procure goods or services under a contract that is exempt from this
11-26    chapter by Subsection (a).  An ordinance adopted under this
11-27    subsection must:
 12-1                (1)  establish a procedure that provides the
 12-2    municipality with the most reasonable price for procuring goods and
 12-3    services; and
 12-4                (2)  comply with the requirements of other applicable
 12-5    law, including the municipality's charter.
 12-6          Sec. 252.023.  [EXEMPTIONS FROM REFERENDUM PROVISIONS. The
 12-7    referendum provisions prescribed by Section 252.045 do not apply to
 12-8    expenditures that are payable:]
 12-9                [(1)  from current funds;]
12-10                [(2)  from bond funds; or]
12-11                [(3)  by time warrants unless the amount of the time
12-12    warrants issued by the municipality for all purposes during the
12-13    current calendar year exceeds:]
12-14                      [(A)  $7,500 if the municipality's population is
12-15    5,000 or less;]
12-16                      [(B)  $10,000 if the municipality's population is
12-17    5,001 to 24,999;]
12-18                      [(C)  $25,000 if the municipality's population is
12-19    25,001 to 49,999; or]
12-20                      [(D)  $100,000 if the municipality's population
12-21    is more than 50,000.]
12-22          [Sec. 252.041.]  NOTICE REQUIREMENT. (a)  Notice [If the
12-23    competitive sealed bidding requirement applies to the contract,
12-24    notice] of the time and place at which the bids are scheduled to
12-25    [will] be publicly opened and read aloud must be:
12-26                (1)  published at least once a week for two consecutive
12-27    weeks in a newspaper of general circulation published in the
 13-1    municipality, with the[. The] date of the first publication to
 13-2    [must] be before the 14th day before the date set to publicly open
 13-3    the bids and read them aloud;
 13-4                (2)  continuously [. If no newspaper is published in
 13-5    the municipality, the notice must be] posted in a conspicuous place
 13-6    at the city hall for 14 days before the date set to publicly open
 13-7    the bids and read them aloud, if a newspaper of general circulation
 13-8    is not published in the municipality; or
 13-9                (3)  continuously posted on the municipality's Internet
13-10    website, if the municipality has an Internet website, for 14 days
13-11    before the date set to publicly open the bids and read them aloud.
13-12          (b)  The [If the competitive sealed proposals requirement
13-13    applies to the contract, notice of the request for proposals must
13-14    be given in the same manner as that prescribed by Subsection (a)
13-15    for the notice for competitive sealed bids.]
13-16          [(c)  If the contract is for the purchase of machinery for
13-17    the construction or maintenance of roads or streets, the] notice
13-18    for bids [and the order for purchase] must include a general
13-19    specification of the goods or services [machinery] desired.  The
13-20    general specifications are sufficient if a reasonable bidder is
13-21    able to:
13-22                (1)  understand the requirements of the bid request;
13-23    and
13-24                (2)  bid on the same terms and conditions as other
13-25    reasonable bidders.
13-26          (c)  The municipality may not write specifications in a
13-27    manner that unreasonably prevents or restricts competition, favors
 14-1    a particular bidder, or increases the cost of work or other items
 14-2    that are part of the goods or services requested.  This subsection
 14-3    does not prevent a municipality from:
 14-4                (1)  specifying as part of the bid items for which a
 14-5    patent or copyright is held; or
 14-6                (2)  waiving minor irregularities or defects in the bid
 14-7    as provided by Section 252.024.
 14-8          [(d)  If the governing body of the municipality intends to
 14-9    issue time warrants for the payment of any part of the contract,
14-10    the notice must include a statement of:]
14-11                [(1)  the governing body's intention;]
14-12                [(2)  the maximum amount of the proposed time warrant
14-13    indebtedness;]
14-14                [(3)  the rate of interest the time warrants will bear;
14-15    and]
14-16                [(4)  the maximum maturity date of the time warrants.]
14-17          Sec. 252.024.  BID CONFORMITY. (a)  A bid that materially
14-18    varies from the requirements of the municipality's specifications
14-19    is a nonresponsive bid and may not be considered by the
14-20    municipality for any purpose.
14-21          (b)  The municipality may waive minor irregularities or
14-22    defects in a bid. [SELECTION OF INSURANCE BROKER. This chapter does
14-23    not prevent a municipality from selecting a licensed insurance
14-24    broker as the sole broker of record to obtain proposals and
14-25    coverages for excess or surplus insurance that provides necessary
14-26    coverage and adequate limits of coverage in structuring layered
14-27    excess coverages in all areas of risk requiring special
 15-1    consideration, including public official liability, police
 15-2    professional liability, and airport liability.  The broker may be
 15-3    retained only on a fee basis and may not receive any other
 15-4    remuneration from any other source.]
 15-5          Sec. 252.025 [252.043].  AWARD OF CONTRACT. (a)  After
 15-6    opening and evaluating the bids received [If the competitive sealed
 15-7    bidding requirement applies to the contract], the contract must be
 15-8    awarded to the lowest responsible bidder.  The governing body of
 15-9    the municipality may reject any and all bids.
15-10          (b)  A bid that has been opened may not be changed for the
15-11    purpose of correcting an error in the bid price.  This subsection
15-12    [chapter] does not change the common law right of a bidder to
15-13    withdraw a bid due to a material mistake in the bid.
15-14          [(b)  If the competitive sealed proposals requirement applies
15-15    to the contract, the contract must be awarded to the responsible
15-16    offeror whose proposal is determined to be the most advantageous to
15-17    the municipality considering the relative importance of price and
15-18    the other evaluation factors included in the request for
15-19    proposals.]
15-20          Sec. 252.026 [252.0435].  CONSIDERATION OF BIDDER
15-21    RESPONSIBILITY [SAFETY RECORD OF BIDDER CONSIDERED]. (a)  In
15-22    determining which bidder is the lowest responsible bidder, the
15-23    governing body of the municipality may consider the bidder's:
15-24                (1)  performance on previous or ongoing contracts with
15-25    the municipality, another political subdivision, a state agency, or
15-26    a private business entity for similar goods or services, including
15-27    issues relating to:
 16-1                      (A)  nonconformity of goods or services to
 16-2    standard specifications;
 16-3                      (B)  inability or refusal to honor warranties;
 16-4                      (C)  timeliness of contract completion;
 16-5                      (D)  poor workmanship;
 16-6                      (E)  filing of fraudulent or meritless claims; or
 16-7                      (F)  incompetence or dishonesty in the
 16-8    administration or performance of a contract;
 16-9                (2)  financial resources;
16-10                (3)  competence;
16-11                (4)  experience;
16-12                (5)  ability; or
16-13                (6)  integrity.
16-14          (b)  In determining who is a responsible bidder on a project
16-15    for the construction of public improvements, the governing body of
16-16    the municipality may take into account the safety record of the
16-17    bidder or any officer, partner, associate, permanent or temporary
16-18    employee, agent, or other representative of [the firm, corporation,
16-19    partnership, or institution represented by] the bidder[, or of
16-20    anyone acting for such a firm, corporation, partnership, or
16-21    institution] if:
16-22                (1)  the governing body has adopted a written
16-23    definition and criteria for accurately determining the safety
16-24    record of a bidder;
16-25                (2)  the governing body has given notice to prospective
16-26    bidders in the bid specifications that the safety record of a
16-27    bidder may be considered in determining the responsibility of the
 17-1    bidder; and
 17-2                (3) the determinations are not arbitrary and
 17-3    capricious.
 17-4          (c)  The municipality is not required to award a contract to
 17-5    the lowest bidder if the municipality determines that the bidder:
 17-6                (1)  does not meet the criteria for responsibility
 17-7    established by the municipality under this section; or
 17-8                (2)  has been disqualified from bidding under the
 17-9    procedures established under Section 252.027.
17-10          (d)  The municipality may require a bidder to submit any
17-11    information relevant and necessary to make a determination of
17-12    responsibility under this section.
17-13          Sec. 252.027.  DISQUALIFICATION PROCEDURES. (a) The governing
17-14    body of the municipality may establish procedures for disqualifying
17-15    a person from bidding on a contract under this subchapter if the
17-16    person in the previous five years has:
17-17                (1)  defaulted on a contract with the municipality;
17-18                (2)  demonstrated a history of poor or untimely
17-19    performance; or
17-20                (3)  persistently violated the safety record standards
17-21    established under Section 252.026(b).
17-22          (b)  The governing body of the municipality may provide that
17-23    the person disqualified may not submit a bid to the municipality
17-24    for a period of:
17-25                (1)  not more than one year for the first
17-26    disqualification; and
17-27                (2)  not more than three years for each subsequent
 18-1    disqualification.
 18-2          (c)  The procedures adopted by the governing body of the
 18-3    municipality must provide reasonable notice and an opportunity for
 18-4    a hearing for a person who is disqualified and for a person who
 18-5    seeks reinstatement from disqualification.
 18-6          Sec. 252.028.  PERSONS PROHIBITED FROM BIDDING. (a)  A person
 18-7    may not submit a bid in response to a bid request if the person
 18-8    volunteers or is hired by the municipality to:
 18-9                (1)  draft the municipality's bid specifications for
18-10    the bid request;
18-11                (2)  consult with the municipality regarding the
18-12    preparation or advertisement of the bid specifications for the bid
18-13    request;
18-14                (3)  evaluate the specifications for the bid request;
18-15    or
18-16                (4)  evaluate the bids received in response to the bid
18-17    request.
18-18          (b)  In this subsection, "bidder" includes an officer,
18-19    partner, associate, permanent or temporary employee, agent, or
18-20    other representative of the bidder.  A municipality may refuse to
18-21    award a contract to a bidder who during the previous five years has
18-22    violated a state or federal law applicable to the bidder in the
18-23    course of the bidder's performance under a contract with a
18-24    political subdivision or state agency as determined by:
18-25                (1)  the judgment of a court; or
18-26                (2)  a formal decision of a state or federal agency
18-27    after notice and hearing.
 19-1          Sec. 252.029 [252.044].  CONTRACTOR'S BOND. [(a)]  If the
 19-2    contract is for the construction of public improvements [works],
 19-3    the bidder to whom the contract is awarded must execute a payment
 19-4    bond and, if necessary, a performance [good and sufficient] bond[.
 19-5    The bond must be:]
 19-6                [(1)  in the full amount of the contract price;]
 19-7                [(2)  conditioned that the contractor will faithfully
 19-8    perform the contract; and]
 19-9                [(3)  executed,] in accordance with Chapter 2253,
19-10    Government Code, executed by a surety company authorized to do
19-11    business in the state.
19-12          [(c)  The governing body of a home-rule municipality by
19-13    ordinance may adopt the provisions of this section and Chapter
19-14    2253, Government Code, relating to contractors' surety bonds,
19-15    regardless of a conflicting provision in the municipality's
19-16    charter.]
19-17          Sec. 252.030 [252.047].  PAYMENT METHOD FOR CERTAIN
19-18    CONTRACTS. The [If the contract is for the construction of public
19-19    works or for the purchase of materials, equipment, and supplies,
19-20    the] municipality may award a [let] the contract under this
19-21    subchapter on a lump-sum basis or unit price basis as the governing
19-22    body of the municipality determines.  If the contract is awarded
19-23    [let] on a unit price basis, the information furnished in the
19-24    notice to bidders must specify the approximate quantity needed,
19-25    based on the best available information, but payment to the
19-26    contractor must be based on the actual quantity constructed or
19-27    supplied.
 20-1          Sec. 252.031 [252.048].  CHANGE ORDERS. (a)  If changes in
 20-2    plans or specifications are necessary after the performance of the
 20-3    contract is begun or if it is necessary to decrease or increase the
 20-4    quantity of work to be performed or of materials, equipment, or
 20-5    supplies to be furnished, the governing body of the municipality
 20-6    may approve change orders making the changes.
 20-7          (b)  The total contract price may not be increased because of
 20-8    the changes unless additional money for increased costs is
 20-9    appropriated for that purpose from available current funds [or is
20-10    provided for by the authorization of the issuance of time
20-11    warrants].
20-12          (c)  If a change order involves a decrease or an increase of
20-13    $25,000 or less, the governing body may grant general authority to
20-14    an administrative official of the municipality to approve the
20-15    change orders.
20-16          (d)  The original contract price may not be increased under
20-17    this section by more than 25 percent.  [The original contract price
20-18    may not be decreased under this section by more than 25 percent
20-19    without the consent of the contractor.]
20-20          Sec. 252.032 [252.049].  CONFIDENTIALITY OF INFORMATION IN
20-21    BIDS [OR PROPOSALS]. [(a)]  Trade secrets and confidential
20-22    information in competitive sealed bids are not open for public
20-23    inspection.  All other contents of a bid received, including the
20-24    bid specifications, are considered public records available for
20-25    public inspection after the bids are publically opened and read
20-26    aloud
20-27          [(b)  If provided in a request for proposals, proposals shall
 21-1    be opened in a manner that avoids disclosure of the contents to
 21-2    competing offerors and keeps the proposals secret during
 21-3    negotiations.  All proposals are open for public inspection after
 21-4    the contract is awarded, but trade secrets and confidential
 21-5    information in the proposals are not open for public inspection].
 21-6             (Sections 252.033-252.040 reserved for expansion
 21-7      SUBCHAPTER C.  ELECTRONIC ONLINE COMPETITIVE BIDDING PROCEDURES
 21-8          Sec. 252.041.  PURPOSE. The purpose of this subchapter is to:
 21-9                (1)  provide an alternative medium for conducting
21-10    competitive sealed bidding; and
21-11                (2)  optimize the efficient technology offered by
21-12    Internet-based resources.
21-13          Sec. 252.042. APPLICABILITY. (a)  This subchapter applies to
21-14    contracts and expenditures described by Subchapter B.
21-15          (b)  Unless specifically provided otherwise, this subchapter
21-16    supplements the procedures provided by Subchapter B for competitive
21-17    sealed bidding.
21-18          Sec. 252.043.  AUTHORITY TO CONDUCT OR CONTRACT FOR ONLINE
21-19    BIDDING. (a)  If the competitive sealed bidding requirements of
21-20    Subchapter B apply to the contract, a municipality may:
21-21                (1)  conduct the bidding process online on its Internet
21-22    website, if the municipality has an Internet website; or
21-23                (2)  enter into an agreement with an online bidding or
21-24    auction service to conduct the bidding process online on behalf of
21-25    the municipality.
21-26          (b)  An agreement with an online bidding or auction service:
21-27                (1)  must include a provision that requires the service
 22-1    to strictly comply with this subchapter; and
 22-2                (2)  may not include a provision that requires the
 22-3    municipality to indemnify or release the online bidding or auction
 22-4    service for or from any type of liability.
 22-5          Sec. 252.044.  NOTICE REQUIREMENTS. (a)  The notice
 22-6    requirements of this subchapter apply to a contract awarded using
 22-7    the online bidding process provided by this subchapter.
 22-8          (b)  Notice of the request for online bids must be published:
 22-9                (1)  on the municipality's Internet website, if the
22-10    municipality has an Internet website, or on the Internet website of
22-11    the online bidding or auction service contracted by the
22-12    municipality to conduct the online bidding process; and
22-13                (2)  in a newspaper of general circulation published in
22-14    the municipality.
22-15          (c)  The notice required by Subsection (b) must be published
22-16    not later than the 14th day before the date scheduled for the
22-17    online bidding to conclude.  The notice published in a newspaper
22-18    must be published once within the period prescribed by this
22-19    subsection.  The notice published on an Internet website must
22-20    remain continuously posted until the online bidding concludes.
22-21          (d)  The notice required by this section must contain the
22-22    following information:
22-23                (1)  a statement informing the bidders that the bidding
22-24    will be conducted online as provided by this subchapter;
22-25                (2)  a specific description of the goods or services to
22-26    be procured;
22-27                (3)  the date and time of any pre-bid conference
 23-1    scheduled by the municipality;
 23-2                (4)  the date and time that online bidding is scheduled
 23-3    to begin and conclude;
 23-4                (5)  the universal resource locator address of the
 23-5    municipality's Internet website, if the municipality has an
 23-6    Internet website, or the Internet website of the online bidding or
 23-7    auction service contracted by the municipality where:
 23-8                      (A)  the online bidding is scheduled to occur;
 23-9    and
23-10                      (B)  a complete copy of the bid specifications
23-11    and any details and drawings required to prepare a bid are provided
23-12    in a downloadable read-only format that is accessible on any system
23-13    software platform;
23-14                (6)  the business address of the municipality where
23-15    potential bidders may obtain a paper copy of the specifications or
23-16    requirements for the request for bids; and
23-17                (7)  a sample copy of the proposed online bid form that
23-18    will be used for online bidding and instructions for filling out
23-19    the form during the online bidding process.
23-20          (e)  The municipality is not required to comply with
23-21    Subsection (d)(5)(B) if the specifications, details, or drawings
23-22    are of a nature, size, quantity, or format that they cannot be
23-23    provided online in a downloadable read-only format.
23-24          Sec. 252.045.  CONFIDENTIALITY OF ONLINE BIDDING. (a)  The
23-25    municipality may not disclose the contents of an online bid to
23-26    other bidders during the online bidding process.
23-27          (b)  The contents of an online bid, excluding confidential
 24-1    information protected by law, becomes a public record and is
 24-2    available for public inspection at the completion of the online
 24-3    bidding process.  [REFERENDUM ON ISSUANCE OF TIME WARRANTS. (a)
 24-4    If, by the time set for letting a contract under this chapter, a
 24-5    written petition with the required signatures is filed with the
 24-6    municipal secretary or clerk requesting the governing body of the
 24-7    municipality to order a referendum on the question of whether time
 24-8    warrants should be issued for an expenditure under the contract,
 24-9    the governing body may not authorize the expenditure or finally
24-10    award the contract unless the question is approved by a majority of
24-11    the votes received in the referendum.  The petition must be signed
24-12    by at least 10 percent of the qualified voters of the municipality
24-13    whose names appear as property taxpayers on the municipality's most
24-14    recently approved tax rolls.]
24-15          [(b)  If a petition is not filed, the governing body may
24-16    finally award the contract and issue the time warrants.  In the
24-17    absence of a petition, the governing body may, at its discretion,
24-18    order the referendum.]
24-19          [(c)  The provisions of Subtitles A and C, Title 9,
24-20    Government Code, relating to elections for the issuance of
24-21    municipal bonds and to the issuance, approval, registration, and
24-22    sale of bonds govern the referendum and the time warrants to the
24-23    extent those provisions are consistent with this chapter. However,
24-24    the time warrants may mature over a term exceeding 40 years only if
24-25    the governing body finds that the financial condition of the
24-26    municipality will not permit payment of warrants issued for a term
24-27    of 40 years or less from taxes that are imposed substantially
 25-1    uniformly during the term of the warrants.]
 25-2          [(d)  This section does not supersede any additional rights
 25-3    provided by the charter of a special-law municipality and relating
 25-4    to a referendum.]
 25-5          [Sec. 252.050.  LEASE-PURCHASE OR INSTALLMENT PURCHASE OF
 25-6    REAL PROPERTY. (a)  This section applies only to a lease-purchase
 25-7    or installment purchase of real property financed by the issuance
 25-8    of certificates of participation.]
 25-9          [(b)  The governing body of a municipality may not make an
25-10    agreement under which the municipality is a lessee in a
25-11    lease-purchase of real property or is a purchaser in an installment
25-12    purchase of real property unless the governing body first obtains
25-13    an appraisal by a qualified appraiser who is not an employee of the
25-14    municipality.  The purchase price may not exceed the fair market
25-15    value of the real property, as shown by the appraisal.]
25-16             (Sections 252.046-252.060 reserved for expansion
25-17                 SUBCHAPTER D.  REVERSE AUCTION PROCEDURES
25-18          Sec. 252.061.  APPLICABILITY. (a)  This subchapter applies to
25-19    contracts and expenditures described by Subchapter B.
25-20          (b)  This subchapter provides alternative procedures to the
25-21    procedures provided by Subchapter B for competitive sealed bidding.
25-22          Sec. 252.062.  APPLICABILITY OF ONLINE BIDDING PROCEDURES.
25-23    (a)  A municipality may conduct a reverse auction or contract with
25-24    an online bidding or auction service to conduct a reverse auction
25-25    in the same manner as provided for electronic online bidding under
25-26    Section 252.043.
25-27          (b)  A municipality that intends to use a reverse auction
 26-1    process to award a contract must provide notice as prescribed by
 26-2    Section 252.044.
 26-3          Sec. 252.063.  CONFIDENTIALITY. (a)  The municipality may
 26-4    disclose to other bidders during the reverse auction process the
 26-5    contents of an online bid, excluding confidential information
 26-6    protected by law.  The municipality may not disclose to other
 26-7    bidders during the reverse auction process the name of the bidder
 26-8    who has submitted a specific bid.
 26-9          (b)  At the completion of the reverse auction process, the
26-10    contents of all online bids, excluding confidential information
26-11    protected by law, become public records and are available for
26-12    public inspection.
26-13          Sec. 252.064.  APPLICABILITY OF COMPETITIVE BIDDING
26-14    PROCEDURES. Sections 252.024-252.031 apply to the procedures for
26-15    awarding a contract under this subchapter.
26-16             (Sections 252.065-252.080 reserved for expansion
26-17            SUBCHAPTER E.  SPECIAL SERVICES CONTRACT PROCEDURES
26-18          Sec. 252.081.  APPLICABILITY. (a)  This subchapter applies
26-19    only to special services contracts.
26-20          (b)  This subchapter does not apply to a contract for
26-21    professional services.
26-22          Sec. 252.082.  PURCHASING PROCEDURE OPTIONS; BEST VALUE
26-23    STANDARD. (a)  In entering into a special services contract, a
26-24    municipality may use any of the following methods that provides the
26-25    best value for the municipality:
26-26                (1)  request for proposal under this subchapter using
26-27    the procedures for:
 27-1                      (A)  competitive sealed proposals by public
 27-2    notice under Section 252.083; or
 27-3                      (B)  proposals by direct solicitation under
 27-4    Section 252.084;
 27-5                (2)  competitive bidding under Subchapter B or C;
 27-6                (3)  reverse auction under Subchapter D;
 27-7                (4)  a cooperative purchasing agreement under
 27-8    Subchapter D, Chapter 271;
 27-9                (5)  an interlocal agreement authorized by Chapter 791,
27-10    Government Code, or any other intergovernmental agreement
27-11    authorized by law; or
27-12                (6)  a catalog purchase under Subchapter B, Chapter
27-13    2157, Government Code, if authorized by Section 2157.067,
27-14    Government Code.
27-15          (b)  In determining the best value for the municipality under
27-16    the request for proposal procedures of this subchapter, the
27-17    municipality may consider:
27-18                (1)  the purchase price;
27-19                (2)  the reputation of the vendor and of the vendor's
27-20    goods or services;
27-21                (3)  the quality of the vendor's goods or services;
27-22                (4)  the extent to which the goods or services meet the
27-23    municipality's needs;
27-24                (5)  the vendor's past history of performance on
27-25    similar contracts and the vendor's past relationship with the
27-26    municipality, including consideration of the responsibility
27-27    standards described by Section 252.026 and the disqualification
 28-1    criteria prescribed by Section 252.027;
 28-2                (6)  the impact on the ability of the municipality to
 28-3    comply with laws, rules, and policies relating to historically
 28-4    underutilized or disadvantaged businesses;
 28-5                (7)  the total long-term cost to the municipality to
 28-6    acquire the vendor's goods or services, including life cycle costs
 28-7    if applicable;
 28-8                (8)  the reasonableness of the contract terms and
 28-9    conditions proposed by the vendor; and
28-10                (9)  any other relevant factor that a private business
28-11    entity would consider in selecting a vendor.
28-12          (c)  The governing body of the municipality, or an officer or
28-13    employee designated by the governing body, may adopt rules,
28-14    procedures, and guidelines consistent with this chapter and other
28-15    law for acquiring goods or services under this subchapter that
28-16    provide a reasonable and fair opportunity for competitiveness under
28-17    the purchasing methods described by Sections 252.083 and 252.084.
28-18          (d)  A municipality may prequalify potential vendors to
28-19    determine the vendors' eligibility to submit proposals under
28-20    Section 252.083 or 252.084 based upon the criteria described by
28-21    Subsection (b).  If more than one reasonably qualified entity is
28-22    willing and available to perform a contract, the municipality may
28-23    not purposefully set prequalification criteria that cause only one
28-24    vendor to be considered eligible to participate in the process.
28-25          (e)  The municipality shall encourage maximum participation
28-26    by historically underutilized or disadvantaged businesses.
28-27          Sec. 252.083 [252.042].  PROCEDURE FOR COMPETITIVE SEALED
 29-1    PROPOSAL BY PUBLIC NOTICE [REQUESTS FOR PROPOSALS FOR CERTAIN
 29-2    PROCUREMENTS]. (a)  Before a municipality may enter into a special
 29-3    services contract to acquire goods or services through competitive
 29-4    sealed proposal by public notice, the municipality must comply with
 29-5    the procedures prescribed by this section [Requests for proposals
 29-6    made under Section 252.021 must solicit quotations and must specify
 29-7    the relative importance of price and other evaluation factors].
 29-8          (b)  The municipality shall comply with the rules,
 29-9    procedures, and guidelines adopted under Section 252.082(c).
29-10    Notice of the request for proposal must be given in the same manner
29-11    as prescribed for competitive sealed bids under Section 252.023(a).
29-12          (c)  Requests for proposals under this subchapter must
29-13    solicit quotations and must specify the relative importance of
29-14    price and the other evaluation factors described by Section
29-15    252.082(b).
29-16          (d)  A person is restricted from submitting a proposal under
29-17    this section in the same manner as a person is restricted from
29-18    submitting a bid under Section 252.028(a).
29-19          (e)  Discussions in accordance with the terms of a request
29-20    for proposals and with regulations adopted by the governing body of
29-21    the municipality may be conducted with offerors who submit
29-22    proposals and who are determined to be reasonably qualified for the
29-23    award of the contract.  Reasonably qualified offerors [Offerors]
29-24    shall be treated fairly and equally with respect to any opportunity
29-25    for discussion and revision of proposals.  To obtain the best final
29-26    offers, revisions may be permitted after submissions and before the
29-27    award of the contract.
 30-1          (f)  A municipality may not disclose the contents of
 30-2    competing offerors' proposals during negotiations.  All contents of
 30-3    a proposal, excluding information protected by law, are considered
 30-4    public records available for public inspection after the contract
 30-5    is awarded.
 30-6          Sec. 252.084.  PROCEDURE FOR REQUEST FOR PROPOSAL BY DIRECT
 30-7    SOLICITATION. (a)  Before a municipality may enter into a special
 30-8    services contract to acquire goods or services through competitive
 30-9    sealed proposal by direct solicitation, the municipality must
30-10    comply with the procedures prescribed by this section.
30-11          (b)  The municipality shall comply with the rules,
30-12    procedures, and guidelines adopted under Section 252.082(c).
30-13          (c)  Notice of the request for proposal by direct
30-14    solicitation is sufficient if the notice informs the offerors
30-15    identified by the municipality of:
30-16                (1)  the goods or services required; and
30-17                (2)  the municipality's expectations under the
30-18    contract.
30-19          (d)  The municipality may negotiate for the award of the
30-20    contract with any of the offerors who submit proposals and who are
30-21    determined by the municipality to be reasonably qualified.
30-22          (e)  A person is restricted from submitting a proposal under
30-23    this section in the same manner as a person is restricted from
30-24    submitting a bid under Section 252.028(a).
30-25          (f)  The municipality must award the contract to the most
30-26    responsible, most qualified offeror whose proposal is determined to
30-27    be the most advantageous to the municipality.
 31-1             (Sections 252.085-252.100 reserved for expansion
 31-2                      SUBCHAPTER F [D].  ENFORCEMENT
 31-3          Sec. 252.101 [252.061].  INJUNCTION. If a [the] contract is
 31-4    made without compliance with this chapter, the contract [it] is
 31-5    void and the performance of the contract, including the payment of
 31-6    any money under the contract, may be enjoined by any property tax
 31-7    paying resident of the municipality.
 31-8          Sec. 252.102 [252.062].  CRIMINAL PENALTIES. (a)  A person
 31-9    commits an offense if the person intentionally or knowingly:
31-10                (1)  damages, tampers or interferes with, transmits a
31-11    computer software virus into, prevents the effective operation of,
31-12    or otherwise harms a municipality's online bidding document or
31-13    online bidding process under Subchapter C or D; or
31-14                (2)  enters into or participates in a municipal online
31-15    bidding process under Subchapter C or D with the intent to damage,
31-16    tamper or interfere with, transmit a computer software virus into,
31-17    prevent the effective operation of, or otherwise harm any portion
31-18    of a municipality's computer hardware or software or the
31-19    municipality's computer system.
31-20          (b)  An offense under Subsection (a) is a third degree
31-21    felony.
31-22          (c)  A person commits an offense if the person intentionally
31-23    or knowingly violates Section 252.028(a).  An offense under this
31-24    subsection is a Class B misdemeanor.
31-25          (d)  A municipal officer or employee commits an offense if
31-26    the officer or employee intentionally or knowingly makes or
31-27    authorizes separate, sequential, or component purchases to avoid
 32-1    the procurement [competitive bidding] requirements of this chapter
 32-2    [Section 252.021].  An offense under this subsection is a Class B
 32-3    misdemeanor.
 32-4          (e) [(b)]  A municipal officer or employee commits an offense
 32-5    if the officer or employee intentionally or knowingly violates
 32-6    Section 252.021, other than by conduct described by Subsection (d)
 32-7    [(a)].  An offense under this subsection is a Class B misdemeanor.
 32-8          (f) [(c)]  A municipal officer or employee commits an offense
 32-9    if the officer or employee intentionally or knowingly violates this
32-10    chapter, other than by conduct described by another subsection of
32-11    this section [Subsection (a) or (b)].  An offense under this
32-12    subsection is a Class C misdemeanor.
32-13          Sec. 252.103 [252.063].  REMOVAL; INELIGIBILITY. (a)  The
32-14    final conviction of a municipal officer or employee for an offense
32-15    under Section 252.102(d) or (e) [252.062(a) or (b)] results in the
32-16    immediate removal from office or employment of that person.
32-17          (b)  For four years after the date of the final conviction,
32-18    the removed officer or employee is ineligible:
32-19                (1)  to be a candidate for or to be appointed or
32-20    elected to a public office in this state;
32-21                (2)  to be employed by the municipality with which the
32-22    person served when the offense occurred; and
32-23                (3)  to receive any compensation through a contract
32-24    with that municipality.
32-25          (c)  This section does not prohibit the payment of retirement
32-26    or workers' compensation benefits to the removed officer or
32-27    employee.
 33-1          SECTION 2. The changes in law made by Chapter 252, Local
 33-2    Government Code, as reorganized and amended by this Act, apply only
 33-3    to a contract for which the notice soliciting bids or proposals is
 33-4    first published or posted on or after September 1, 2001.  A
 33-5    contract for which the notice soliciting bids or proposals is first
 33-6    published or posted before September 1, 2001, is subject to the law
 33-7    as it existed at the time the notice was first published or posted,
 33-8    and the former law is continued in effect for that purpose.
 33-9          SECTION 3. This Act takes effect September 1, 2001.