HBA-NIK S.B. 555 76(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 555 By: Ogden Transportation 4/23/1999 Engrossed BACKGROUND AND PURPOSE Under current law, the Texas Transportation Commission (commission) is required to award a highway improvement contract involving less than $300,000 to the lowest bidder. However, there is no statutory provision allowing the commission to award the contract to the second lowest bidder if the lowest bid is withdrawn or the lowest bidder breaches the contract. Currently, if a lowest bidder withdraws a bid, the Texas Department of Transportation (TxDOT) must award the contract to that bidder anyway, and if the lowest bidder breaches an awarded contract, TxDOT must rebid the contract. The purpose of this bill is to allow the commission to award certain highway improvement contracts to the second lowest bidder if the lowest bidder withdraws its bid or breaches the contract. S.B. 555 requires TxDOT to tabulate and forward all bids for state highway improvements to the commission for acceptance or rejection. This bill requires the commission to award a contract to the lowest bidder, and allows the commission to recommend awarding the contract to the second lowest bidder in certain instances. S.B. 555 grants the commission the authority to adopt rules relating to bid withdrawals and the awarding of contracts to the second lowest bidder. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Texas Transportation Commission in SECTION 1 (Section 223.0041, Transportation Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter A, Chapter 223, Transportation Code, by adding Section 223.0041, as follows: Sec. 223.0041. AWARD OF CONTRACTS. (a) Requires that all bids received for state highway improvements and not rejected by the Texas Department of Transportation (TxDOT) be tabulated and forwarded to the Texas Transportation Commission (commission), except as provided by Section 223.005 (Bids on Contracts Involving Less Than $300,000). (b) Authorizes the commission to accept or reject the bids. Requires the commission to award the contract to the lowest bidder if the bids are accepted, subject to Section 223.045 (Steel Preference Provisions in Improvement Contracts), and except as provided in Subsection (c). (c) Authorizes the executive director of TxDOT, for a contract involving an amount less than $100,000, to recommend that the commission award the contract to the second lowest bidder if the lowest bidder withdraws its bid before the contract is awarded or fails to execute the contract. Authorizes the commission to award the contract to the second lowest bidder if that bidder agrees to accept the unit bid prices of the lowest bidder. Requires the commission to adopt rules governing the conditions under which TxDOT will allow a bid withdrawal and consider awarding a contract to the second lowest bidder. SECTION 2. Amends Section 223.005, Transportation Code, to redesignate existing Subsection (d) to Subsection (b). Deletes the existing text of the subsections (b) and (c), regarding the current process for tabulating, accepting, and rejecting bids. SECTION 3. Emergency clause. Effective date: upon passage.