HBA-NRS H.B. 2486 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2486 By: Clark Urban Affairs 3/25/2001 Introduced BACKGROUND AND PURPOSE Currently, purchasing law governing municipalities is modeled on the proposal of straight sealed bids. The actual bidding process can be cumbersome and inefficient in light of current technology and the broad expansion of markets. Governing bodies of municipalities are often presented with situations in which few companies choose to bid on a contract or in which few companies agree to bid to the municipality's standard terms and conditions of a contract. This may result in governing bodies of municipalities having limited options if they wish to obtain the best value for municipal purchases. Other state agencies, counties, and school districts have different options for purchasing goods or services that reflect recent technological advances. Municipalities may benefit from similar options. Furthermore, although the fundamental principles of bidding are clear, the statutes giving guidance to the bidding process may be less so. Clarification of existing statutes is desirable, especially for smaller cities that do not always have the benefit of input from legal counsel. House Bill 2486 reorganizes and amends current law governing the purchasing and contracting authority of municipalities and adapts the purchasing and contracting procedures for municipalities to allow for online bidding and reverse auction bidding. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 2486 amends the Local Government Code to modify the provisions governing the purchasing and contracting authority of municipalities. The bill authorizes the governing body of a municipality to elect to have its charter supersede provisions regarding the purchasing and contracting authority of municipalities only if the charter provisions are more restrictive than provisions regarding the purchasing and contracting authority of municipalities (Sec. 252.002). The bill increases from $15,000 to $25,000 the maximum amount a municipality may expend without being subject to the requirement that a municipality contact at least two historically underutilized businesses on a rotating basis for competitive bidding on goods and services (Sec. 252.004). The bill increases from $15,000 to $25,000 the maximum amount a municipality may expend without being subject to competitive sealed bidding procedures. The bill provides that a municipality must comply with the Professional Services Procurement Act to procure professional services (Sec. 252.021). The bill provides certain exemptions to the provisions governing the purchasing and contracting authority of municipalities. The bill authorizes a municipality by ordinance to establish procedures to procure exempted goods and services under a contract (Sec. 252.022). The bill sets forth notice requirements for the opening of competitive sealed bids, and prohibits a municipality from writing specifications on a notice for bids in a manner that prevents or restricts competition, favors a particular bidder, or increases the cost of work or other items that are part of the goods or services requested (Sec. 252.023). The bill provides that a bid that does not conform to the municipality's specifications is prohibited from being considered by the municipality for any purpose (Sec. 252.024). In determining which bidder is the lowest responsible bidder, the bill authorizes the governing body of a municipality to consider the bidder's previous or ongoing performance on contracts with the municipality or other entities and other associated factors. In determining who is a reasonable bidder on a project for the construction of public improvements, the bill authorizes the governing body of a municipality to consider the bidder's safety record (Sec. 252.026). The bill authorizes the governing body of a municipality to establish procedures for disqualifying a person or prohibiting a disqualified person from submitting a bid, but establishes that the procedures must provide reasonable notice and an opportunity for a hearing for a person who seeks reinstatement from disqualification (Sec. 252.027). The bill prohibits a person from submitting a bid in response to a bid request if the person volunteers or is hired by the municipality to participate in part of the bid process. The bill authorizes a municipality to refuse to award a contract to a bidder who during the previous five years has violated a state or federal law applicable to the bidder in the course of the bidder's performance under a contract with a political subdivision or state agency (252.028). The bill provides that all contents of a bid, other than trade secrets and confidential information, are considered public records after the bid is publically opened and read aloud (Sec. 252.032). The bill establishes electronic online competitive bidding procedures, authorizes a municipality to conduct the bidding process online on its Internet website, and authorizes the municipality to enter into an agreement with an online bidding or auction service to conduct the bidding process (Sec. 252.043). The bill sets forth notice of request procedures and prohibits a municipality from disclosing the contents of an online bid to other bidders during the online bidding process. The contents of an online bid, other than confidential information, become a public record at the completion of the online bidding process. The bill removes provisions relating to a referendum on the issuance of time warrants in relation to certain contracts with a municipality (Secs. 252.044 and 252.045). H.B. 2486 authorizes a municipality to conduct a reverse auction or contract with an online bidding or auction service to conduct a reverse auction in the same manner as provided for electronic online bidding (Sec. 252.062). The bill authorizes a municipality to disclose to other bidders during the reverse auction process the contents of an online bid, excluding confidential information protected by law. The bill prohibits a municipality from disclosing to other bidders during the reverse auction process the name of the bidder who has submitted a specific bid (Sec. 252.063). The bill sets forth provisions allowing a municipality to enter into a special services contract under specified methods including online bidding, competitive bidding, and reverse auction bidding, and authorizes the municipality to consider certain factors in determining if a bid proposal offers the best value for the municipality (Sec. 252.082). The bill authorizes a municipality to enter into a special services contract to acquire goods or services through competitive sealed proposal by public notice only when the municipality fully complies with all rules, procedures, and guidelines, adopted by the municipality or the municipality's designee. The bill prohibits a municipality from disclosing the contents of competing offerors' proposals during negotiations (Sec. 252.083). The bill authorizes a municipality to enter in a special services contract to acquire goods or services through competitive sealed proposal by direct solicitation only when the municipality complies with specified procedures (Sec. 252.084). The bill sets forth criminal penalties for interfering with a municipality's online bidding process and provides that such an offense is a third degree felony. The bill provides that a person commits a Class B misdemeanor if the person intentionally or knowingly violates the prohibition against a person submitting a bid in response to a bid request if the person volunteers or is hired by the municipality to participate in part of the bid process (Sec. 252.102). EFFECTIVE DATE September 1, 2001.