By: West S.B. No. 1488

(In the Senate - Filed March 10, 2011; March 22, 2011, read first time and referred to Committee on Higher Education; April 26, 2011, reported adversely, with favorable Committee Substitute by the following vote: Yeas 6, Nays 0; April 26, 2011, sent to printer.)

COMMITTEE SUBSTITUTE FOR S.B. No. 1488 By: Watson

A BILL TO BE ENTITLED

AN ACT

relating to the purchasing and contracting practices of junior college districts; providing criminal penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subsection (a), Section 44.0311, Education Code, is amended to read as follows:

(a) Except as provided by Subchapter K, Chapter 130 [Subsection (c)], this subchapter applies to junior college districts.

SECTION 2. Subchapter A, Chapter 130, Education Code, is amended by adding Section 130.0104 to read as follows:

Sec. 130.0104. POLICY AND REPORT REGARDING HISTORICALLY UNDERUTILIZED BUSINESSES. (a) In this section, "historically underutilized business" has the meaning assigned by Section 2161.001, Government Code.

(b) This section applies only to a junior college district that:

(1) is located wholly or partly in a county with a population of one million or more; and

(2) had an annual enrollment of 30,000 or more full-time equivalent students in one or more of the most recent five academic years.

(c) Each junior college district shall adopt a policy stating its commitment to developing, maintaining, and enhancing participation by historically underutilized businesses in all phases of the district's procurement processes in order to support, to the greatest extent feasible, the efforts of historically underutilized businesses to compete for purchases of equipment, supplies, services, including professional services, and construction contracts.

(d) Annually, each junior college district shall publish a report of the total number and total value of contracts awarded by the district in the preceding fiscal year and the number and total value of those contracts awarded to historically underutilized businesses. The report must be published in a newspaper of general circulation in the county in which the majority of the territory or population of the district is located not later than the 60th day following the last day of the district's fiscal year.

SECTION 3. Chapter 130, Education Code, is amended by adding Subchapters K, L, and M to read as follows:

SUBCHAPTER K. PURCHASING CONTRACTS FOR GOODS AND SERVICES OTHER

THAN CONSTRUCTION OR PROFESSIONAL SERVICES

Sec. 130.251. DEFINITIONS. In this subchapter:

(1) "Board of trustees" means the governing board of a district.

(2) "District" means a junior college district.

(3) "Purchase of goods or services":

(A) includes:

(i) contracting for the rights to use rather than own goods;

(ii) the purchase of the materials and labor incidental to the delivery and installation of personal property; and

(iii) the purchase of services to repair or replace equipment; and

(B) does not include the purchase or lease of real property.

(4) "Services" does not include:

(A) construction services; or

(B) professional services, including services of a consultant, to which Subchapter M applies.

Sec. 130.2511. USE OF TERMS "BIDDER," "VENDOR," AND "BID." (a) In this subchapter, the terms "bidder" and "vendor" are used interchangeably to identify an entity that responds to a request for competitive bids, proposals, or qualifications.

(b) In this subchapter, the term "bid" is used to refer to a competitive bid, proposal, or statement of qualifications.

Sec. 130.252. CONFLICT WITH OTHER LAW. To the extent of any conflict, this subchapter prevails over any other law relating to the purchase of goods or services by a district other than a law relating to:

(1) contracting with historically underutilized businesses; or

(2) the procurement of goods and services from persons with disabilities.

Sec. 130.253. PURCHASE METHODS. (a) Except as otherwise provided by this subchapter and subject to Section 130.264, each contract for the purchase of goods or services by a district with a value of $50,000 or more that covers one or more fiscal years shall be made by the method, of the following methods, that provides the best value for the district:

(1) competitive sealed bids;

(2) competitive sealed proposals;

(3) the reverse auction procedure defined by Section 2155.062(d), Government Code; or

(4) the formation of a political subdivision corporation under Section 304.001, Local Government Code.

(b) Only one of the methods listed in Subsection (a) may be used for any individual contract. The district must determine which method provides the best value for the district before publishing the notice required by Section 130.258.

(c) If the district uses the competitive sealed proposal method, the district shall:

(1) reveal when the proposals are opened the names of the companies submitting proposals; and

(2) keep the contents of the proposals confidential until the district concludes negotiations and awards a contract.

(d) Without complying with Subsection (a), a district may purchase a good or service that is available from only one source, including:

(1) an item for which competition is precluded because of the existence of a patent, copyright, secret process, or monopoly;

(2) a film, recording, periodical, manuscript, book, or computer software;

(3) a utility service, including gas or water;

(4) a captive replacement part or component for equipment;

(5) a product needed to match or work with like products;

(6) technical or specialized services, including advertising, audio/video production, and the repair and maintenance of specialized equipment; and

(7) perishable goods, vehicle fuel, advertising services, meeting and catering services, and travel services, including airfare, ground transportation, and lodging.

(e) Without complying with Subsection (a), a district may purchase a good or service under:

(1) an interlocal contract under Chapter 791, Government Code;

(2) a contract established by the comptroller or Department of Information Resources, including a contract for the purchase of travel services, telephone service, computers, and computer-related equipment and service, cabling, and software; or

(3) a purchase made under Subchapter D, F, or G, Chapter 271, Local Government Code.

(f) A contract for services that results in no cost to the district or that provides income greater than $50,000 to the district must be based on bids, proposals, or qualifications that are solicited and awarded in the same manner as a contract for the purchase of goods or services. Such contracts include contracts for bookstore services, food services, and vending services.

(g) If district property is destroyed, stolen, severely damaged, or unusable, or a contractor is unable to fulfill its obligations in providing goods and services, and the board of trustees, or its designee, determines that the delay posed by using the methods required by Subsection (a) would pose a material threat to personal safety or of potential damage to other property or would prevent or substantially impair the conduct of classes or other essential district activities, then contracts for the replacement or repair of the property may be made by methods other than those required by Subsection (a).

(h) Without complying with Subsection (a), a district may purchase, license, or otherwise acquire library goods and services, including in any manner authorized by law for the purchase, license, or acquisition of library goods and services by a public senior college or university, as defined by Section 61.003. In this subsection, "library goods and services" means:

(1) serial and journal subscriptions, including electronic databases, digital content, and information products;

(2) other library materials and resources, including books, e-books, and media not available under a statewide contract and papers;

(3) library services, including periodical jobber and binding services not available under a statewide contract;

(4) equipment and supplies specific to the storage and access of library content; and

(5) library or resource-sharing programs operated by the Texas State Library and Archives Commission.

Sec. 130.254. PURCHASE OF INSURANCE. (a) A district may acquire insurance using a two-step process to obtain competitive sealed proposals. In the first step, the district shall determine which insurance providers are represented by agents interested in providing insurance for the district. If more than one agent indicates a desire to represent the same provider, the agent with the longest and most substantial relationship with the insurance provider shall be authorized to submit a proposal for the designated insurance provider. In the second step, the district shall notify the interested agents in writing as to which insurance providers the agents represent and request the agents to submit proposals for providing insurance.

(b) In notifying the interested agents to begin the second step, the district is not required to comply with Section 130.258. However, the district in the request for proposals shall give the interested agents notice of the date, time, and place where proposals are to be submitted. Proposals received after the date and time stated in the request for proposals may not be considered.

Sec. 130.255. MULTIYEAR CONTRACT. A contract for the purchase of goods or services that extends past the end of a district's fiscal year must include a provision that permits termination at the end of each fiscal year. Contracts solely for the purchase of goods may not exceed five years in duration.

Sec. 130.256. EVALUATION AND AWARD OF CONTRACT. (a) Except as otherwise provided by this subchapter, a district shall award a contract for the purchase of goods or services to the lowest responsible bidder offering the best value to the district according to the selection criteria established by the district. The district shall publish in the request for bids, proposals, or qualifications the criteria the district will use to evaluate the offers.

(b) In determining the lowest responsible bidder, the district shall consider:

(1) the purchase price, including delivery and installation charges;

(2) the reputation of the bidder and of the bidder's goods or services;

(3) the quality of the bidder's goods or services;

(4) the extent to which the offered goods or services meet the district's needs;

(5) the bidder's past relationship with the district;

(6) the total long-term cost to the district to acquire the bidder's goods or services;

(7) the extent to which the offers comply with the requirements of the request for bids, proposals, or qualifications;

(8) any other relevant factor specifically listed in the request for bids or proposals; and

(9) the impact on the ability of the district to comply with laws and rules relating to historically underutilized businesses.

(c) A district may reject any or all bids, proposals, or qualifications, or parts of bids, proposals, or qualifications, if the rejection serves the district's interest.

(d) The district shall provide all bidders with the opportunity to bid to provide the same goods or services on equal terms and to have bids judged according to the same standards as those set forth in the request for bids.

(e) Bids may be opened only by the district in a district-owned or district-controlled facility. The meeting or other occasion at which bids are opened shall be open to the public. At the time the district opens a bid, if one or more members of the public are present, the appropriate employee or officer of the district shall read aloud the name of the bidder and the total bid amount, if the bid is of a type that should contain a single bid amount. When opening proposals or qualifications, the appropriate employee or officer shall read aloud only the name of the respondents and may not disclose the contents of a proposal or qualification on opening or during negotiations with competing bidders. At least two district employees or members of the district's board of trustees must be present at the bid, proposal, or qualification opening.

(f) A bid that has been opened may not be changed for the purpose of correcting an error in the bid price. If there is a discrepancy between the total price and the unit price of a bid, the unit price prevails. If there is a discrepancy between the written price and the numerical price of a bid, the written price prevails.

(g) This subchapter does not change the common law right of a bidder to withdraw a bid due to a material mistake in the bid.

(h) The district shall document the basis of its selection and shall make its evaluations public not later than the seventh day after the date the contract is awarded. The district shall state in writing the reasons for making an award.

(i) A contract awarded in violation of this subchapter is void.

(j) In awarding a contract by competitive sealed bid under this section, a district that has its central administrative office located in a municipality with a population of less than 250,000 may consider a bidder's principal place of business in the manner provided by Section 271.9051, Local Government Code. This subsection does not apply to the purchase of telecommunications services or information services, as those terms are defined by 47 U.S.C. Section 153.

Sec. 130.257. RULES AND PROCEDURES; AUDITS BY STATE AUDITOR. (a) The board of trustees may adopt rules and procedures for the acquisition of goods or services by the district.

(b) District purchases of goods or services are subject to audit by the state auditor in accordance with Chapter 321, Government Code.

Sec. 130.258. NOTICE. (a) Except as otherwise provided by this subchapter, for any method of contracting selected under Section 130.253(a), the district shall, within a seven-day period, publish the notice required by this section in at least two issues of any newspaper of general circulation in the county in which the district's central administrative office is located. The deadline for receiving bids or proposals may not be less than 10 business days after the date of the publication of the first newspaper notice. The deadline for receiving responses to a request for qualifications may not be less than five business days after the date of the publication of the last newspaper notice. If there is not a newspaper of general circulation in the county in which the district's central administrative office is located, the notice shall be published in a newspaper of general circulation in a location nearest the district's central administrative office. In a two-step procurement process, the time and place where the second-step bids, proposals, or responses will be received are not required to be included in the notice.

(b) The district may, as an alternative to publishing notice in a newspaper exclusively under Subsection (a), publish on a publicly accessible Internet website the notice required by this section. Before or at the same time the district first publishes the Internet notice, the district shall publish a notice in a newspaper of general circulation, as described by Subsection (a), that includes the name of the goods or services to be purchased, the date, time, and place for receiving and opening bids, proposals, or statements of qualifications, and the Internet address of the Internet website where detailed requirements may be found. The notice posted on the Internet under this subsection must be posted every day for at least five business days before the deadline for receiving the bids or proposals or statements of qualifications.

(c) Except as otherwise provided by Subsection (b) for the newspaper notice required by that subsection, the notice required by this section must include:

(1) the location where the request for bid, proposal, or qualification documents may be obtained or examined;

(2) the date, time, and place for receiving and opening bids, proposals, or statements of qualifications;

(3) a general description of the goods or services;

(4) the location and time of any mandatory site inspections or pre-bid meetings; and

(5) the amount of any required bid bond, payment bond, or performance bond.

Sec. 130.259. DISCUSSION AND REVISION OF PROPOSALS. (a) As provided in a request for proposals and under rules adopted by the district, the district may discuss acceptable or potentially acceptable proposals with bidders to assess a bidder's ability to meet the solicitation requirements.

(b) After receiving a proposal but before making an award, the district may permit the three highest-ranking bidders to revise their proposals, within the scope of the published specifications, to obtain the best final offer.

Sec. 130.260. PRE-BID CONFERENCE OR SITE VISIT. (a) The district may require a principal, officer, or employee of each prospective bidder to attend a mandatory pre-bid conference or site visit, or both, as a condition of a request for bid or proposal. Notice of a requirement under this subsection must be included in the notice published under Section 130.258.

(b) After the district conducts a mandatory pre-bid conference or site visit, the district may send any additional required notice for the proposed contract only to prospective bidders who attended or were represented at the conference or who are documented as having visited the site.

Sec. 130.261. IDENTICAL BIDS. If, after considering the factors described by Section 130.256, the district determines that the district has received identical bids, the district shall cast lots to determine which bidder will be awarded the contract. The district shall invite the bidders to witness the selection process under this section. The selection process must be conducted by at least two district employees or members of the district's board of trustees.

Sec. 130.262. BID DEPOSIT. (a) The district may, as the district determines necessary, require a bid deposit in an amount determined by the district. The amount of the deposit, if any, must be stated in the notice required by Section 130.258 of the invitation to bid.

(b) On the award of a contract or the rejection of all bids, the district shall return the bid deposit of an unsuccessful bidder. The bid deposit of the successful bidder may be retained until the contract is signed by the district. A bid deposit may not be held longer than 90 days.

(c) The bid deposit required by the district, if any, must be in the form of a cashier's check, certified check, or bid bond written by a surety authorized to conduct business in this state. A district may elect to require a bid deposit to be in the form of a bid bond.

Sec. 130.263. PERFORMANCE BOND. A district may require a contractor to provide a performance bond in the amount of the contract before executing a contract for the use or purchase of goods or services with a value of $100,000 or more. The bond must be written by a surety authorized to conduct business in this state and generally comply with the performance bond requirements of Chapter 2253, Government Code.

Sec. 130.264. ENFORCEMENT OF PURCHASING PROCEDURES: CRIMINAL PENALTIES; REMOVAL; INELIGIBILITY; INJUNCTION. (a) In this section:

(1) "Component purchases" means purchases of the component parts of an item that in normal purchasing practices would be purchased in one purchase.

(2) "Separate purchases" means purchases, made separately, of goods or services that in normal purchasing practices would be purchased in one purchase.

(3) "Sequential purchases" means purchases, made over a period, of goods or services that in normal purchasing practices would be purchased in one purchase.

(b) An officer, employee, or agent of a district commits an offense if the person with criminal negligence makes or authorizes separate, sequential, or component purchases for the purpose of avoiding the requirements of Section 130.253, 130.256, or 130.266. An offense under this subsection is a Class B misdemeanor and is an offense involving moral turpitude that results in a forfeiture of an officer's public office.

(c) An officer, employee, or agent of a district commits an offense if the person with criminal negligence violates Section 130.253, 130.256, or 130.266 other than by conduct described by Subsection (b). An offense under this subsection is a Class B misdemeanor and is an offense involving moral turpitude that results in a forfeiture of an officer's public office.

(d) An officer or employee of a district commits an offense if the officer or employee knowingly violates Section 130.253, 130.256, or 130.266 other than by conduct described by Subsection (b) or (c). An offense under this subsection is a Class C misdemeanor.

(e) The final conviction of a person other than a member of the board of trustees for an offense under Subsection (b) or (c) results in the immediate removal from office or employment of that person. A trustee who is convicted of an offense under this section is subject to removal as provided by Chapter 66, Civil Practice and Remedies Code. For four years after the date of the final conviction, the removed person is ineligible to be a candidate for or to be appointed or elected to a public office in this state, is ineligible to be employed by or act as an agent for this state or a political subdivision of this state, and is ineligible to receive any compensation through a contract with this state or a political subdivision of this state. This subsection does not prohibit the payment of retirement benefits to the removed person or the payment of workers' compensation benefits to the removed person for an injury that occurred before the commission of the offense for which the person was removed. This subsection does not make a person ineligible for an office for which the federal or state constitution prescribes exclusive eligibility requirements.

(f) A court may enjoin performance of a contract made in violation of this subchapter. A county attorney, district attorney, criminal district attorney, citizen of the county in which the district is located, or an interested party may bring an action for an injunction. A party who prevails in an action brought under this subsection is entitled to reasonable attorney's fees as approved by the court.

Sec. 130.265. NOTIFICATION OF CRIMINAL HISTORY OF CONTRACTOR. (a) A person or business entity that enters into a contract with a district must give advance notice to the district if the person or an owner or operator of the business entity has been convicted of a felony. The notice must include a general description of the conduct resulting in the conviction of a felony.

(b) A district may refuse to enter into a contract or other transaction with a person who has been convicted of a felony or with a business entity if an owner or operator of the entity has been convicted of a felony.

(c) A district may terminate a contract with a person or business entity if the district determines that the person or business entity failed to give notice as required by Subsection (a) or misrepresented the conduct resulting in the conviction. The district must compensate the person or business entity for goods delivered or services performed before the termination of the contract.

(d) This section does not apply to a publicly held corporation.

Sec. 130.266. EFFICIENCY AND SAVINGS. In order to increase efficiency of operations and to achieve savings through volume purchases, on an annual basis a district shall identify common types of goods and services to be purchased from the district's budget and, to the extent the district determines practicable, consolidate the purchase of those goods or services under contracts entered into under this subchapter.

Sec. 130.267. DELEGATION. (a) Except as provided by Subsection (b), the board of trustees may, as appropriate, delegate its authority under this subchapter to a designated person, representative, or committee. In procuring goods or services, the district shall provide notice of the delegation and the limits of the delegation in the request for bids, proposals, or qualifications or in an addendum to the request. If the district fails to provide that notice, a ranking, selection, or evaluation of bids, proposals, or qualifications other than by the board of trustees in an open public meeting is advisory only.

(b) The board of trustees may not delegate the authority to act regarding an action specifically authorized or required by this subchapter to be taken by the board of trustees.

SUBCHAPTER L. DISPOSAL OF SURPLUS PERSONAL PROPERTY

Sec. 130.301. SALE OF PERSONAL PROPERTY. A junior college district shall dispose of surplus personal property in an accountable manner that best serves the interest of the district. A sale or transfer of personal property that is not covered by Chapter 791, Government Code, must be solicited and awarded in the same manner as a contract for the purchase of goods or services under Subchapter K.

Sec. 130.302. METHODS OF DISPOSAL. (a) A junior college district may use any of the following methods to dispose of surplus personal property:

(1) the use of a licensed auctioneer to conduct live or Internet-based auctions;

(2) a direct sale by the district to a person submitting the highest and best bid through a competitive process, including an Internet-based bidding system;

(3) the trade-in of items when purchasing new items;

(4) a sale or transfer to another governmental entity at a mutually agreed price; or

(5) a donation to a governmental entity in this state.

(b) If the junior college district is unable to find a buyer or governmental entity who wants the surplus property, the property may be:

(1) discarded in accordance with applicable federal, state, and local laws, ordinances, and rules; or

(2) removed by an interested party at no charge or for a nominal charge.

(c) Except as provided by this section, a junior college district may not give, donate, loan, or transfer surplus property to any person or entity.

SUBCHAPTER M. PROFESSIONAL SERVICES AND CONSULTANT SERVICES

Sec. 130.351. PROFESSIONAL SERVICES. (a) For purposes of this section, "professional service provider" means a person who provides services of a predominantly mental or intellectual matter and who is a member of a discipline requiring special knowledge or the attainment of a high order of learning, skill, or intelligence. The term includes a person who provides professional services, as defined by Section 2254.002, Government Code.

(b) A junior college district shall select and enter into contracts for professional services in accordance with Subchapter A, Chapter 2254, Government Code. If the estimated value of a contract for professional services is $50,000 or more during a fiscal year, or during the contract's term if the contract is a multiple-year contract, the district shall publish notice of the request for qualifications as provided by Section 130.258.

(c) A professional service provider selected by the junior college district may be selected for a specific project or for various projects that arise during the term of the provider's contract. The term of a contract with a professional service provider may not exceed five years, except that the professional service provider shall complete services for projects started before the end of the contract term.

Sec. 130.352. CONSULTANTS. (a) For purposes of this section, "consultant" includes a financial advisor, fiscal agent, auctioneer, personnel services provider, travel agent, technology or educational services provider or advisor, and business engaged to teach approved courses.

(b) A junior college district shall select and enter into contracts with consultants in accordance with Section 130.253 or Subchapter B, Chapter 2254, Government Code. If the estimated value of a contract for consulting services is $50,000 or more during a fiscal year, or during the contract's term if the contract is a multiple-year contract, the district shall publish notice of the request for qualifications, bids, or proposals as provided by Section 130.258.

(c) A consultant selected by the junior college district may be selected for a specific project or for various projects that arise during the term of the consultant's contract. The term of a contract with a consultant may not exceed five years, except that the consultant shall complete services for projects started before the end of the contract term.

Sec. 130.353. RULES AND PROCEDURES; AUDITS BY STATE AUDITOR. (a) The board of trustees of a junior college district may adopt rules and procedures in accordance with Chapter 2254, Government Code, for the acquisition of professional services and consultants by the district.

(b) Junior college district contracts for professional services or consultants are subject to audit by the state auditor in accordance with Chapter 321, Government Code.

SECTION 4. Section 271.023, Local Government Code, is amended to read as follows:

Sec. 271.023. CONFLICT OF LAWS. To the extent of any conflict, the provisions of Subchapter B, Chapter 44, Education Code, relating to the purchase of goods and services under contract by a school district and the provisions of Subchapter K, Chapter 130, Education Code, relating to the purchase of goods or services under contract by a junior college prevail over this subchapter.

SECTION 5. Subsection (c), Section 44.0311, and Sections 130.010 and 130.0101, Education Code, are repealed.

SECTION 6. The change in law made by this Act applies only to a contract for which requests for bids, requests for proposals, or requests for qualifications are published or distributed on or after the effective date of this Act. A contract for which requests for bids, requests for proposals, or requests for qualifications are published or distributed before the effective date of this Act is covered by the law in effect when the requests were published or distributed, and the former law is continued in effect for that purpose.

SECTION 7. This Act does not make an appropriation. A provision in this Act that creates a new governmental program, creates a new entitlement, or imposes a new duty on a governmental entity is not mandatory during a fiscal period for which the legislature has not made a specific appropriation to implement the provision.

SECTION 8. This Act takes effect September 1, 2011.

* * * * *