Texas County Progress

The Official Publication of the County Judges and Commissioners Association of Texas

Disclosure of Interested Parties by Persons Contracting with Governmental Entities

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By Narita Holmes
Government Procurement and Compliance Consultant
Former Ector County Purchasing Agent

Government Code 2252, 84th and 85th Legislative Sessions

During the 84th Legislative Session in 2015, House Bill 1295 was passed and signed into law, despite concerns expressed by local government officials and procurement professionals. The bill added Section 2252.908 to the Government Code.

A governmental entity may not enter into a contract that requires a vote by the governing body of the entity before the contract may be signed or that has a value of at least $1 million with a business entity unless the business entity submits a disclosure of interested parties to the governmental entity at the time the entity submits the signed contract to the governmental entity.
The disclosure must be submitted on a form prescribed by the Texas Ethics Commission. The form must include a list of each interested party for the contract of which the contracting entity is aware and the signature of the authorized agent of the contracting business entity, acknowledging that the disclosure is made under oath and under penalty of perjury.
Not later than the 30th day after the governmental entity receives a disclosure of interested parties, the entity shall submit a copy of the disclosure to the Texas Ethics Commission.
The Texas Ethics Commission was required to adopt rules to implement the law, determine the form, and post a copy of the form on the commission’s website.
Because most contracts that counties sign require Commissioners Court approval prior to execution, this law applies to most contracts entered into by the county. The Texas Ethics Commission implemented rules and designed an online form to be used for compliance with this statute.

“Interested parties” is defined as a person who has a controlling interest in a business entity with whom the county contracts, or who actively participates in facilitating the contract or negotiating the terms of the contract. This includes a broker, intermediary, adviser or attorney for the business entity who receives compensation from the business entity, communicates directly with the governmental entity on behalf of the business regarding the contract, and is not an employee of the business.

In order to comply with this law, counties started including instructions for their vendors in bid and RFP specifications that require the vendors to go to the Texas Ethics Commission website to complete Form 1295 electronically and print, sign, notarize, and submit the form with their submittals, even if no interested parties exist. The governmental entity must acknowledge receipt of the filed Form 1295 by notifying the Texas Ethics Commission of the receipt. The Texas Ethics Commission posts the completed Form 1295 on its website within seven business days after receiving notification from the county.

During the 85th Legislative Session in 2017, Senate Bill 255 made changes in Vendor Disclosure Form 1295 as follows:

Contracts with a publicly traded business entity and electric and gas utilities are exempted.
Form 1295 must include a written, unsworn declaration by the authorized agent of the contracting business entity. (Removes the requirement for the document to be notarized.)
In order to ensure compliance with this disclosure requirement, elected officials should check to be sure that bid and RFP specifications have been updated for these requirements and that the proper disclosures are being made and submitted to the State of Texas. These changes apply to a contract entered into or amended on or after Jan. 1, 2018. *

Purchasing Statutes of Special Interest to Counties

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By Narita Holmes
Government Procurement and Compliance Consultant
Former Ector County Purchasing Agent

With the next legislative session only a few months away, we can expect to see further changes in laws impacting procurement which will require careful attention to detail.

During the 85th Legislative Session in 2017, several laws passed that require special wording be included in specifications to keep the county in compliance with purchasing statutes.

  • B. 9 – established the Texas Cybercrime Act and created a third degree felony for a person who intentionally interrupts or suspends access to a computer system or network without consent of the entity or intentionally alters data, introduces ransomware, or decrypts encrypted private data.
  • B. 89 – prohibits contracts with a company for goods or services unless the contract contains written verification from the company that it (1) does not boycott Israel, and (2) will not boycott Israel during the term of the contract. The Office of the Texas Comptroller (comptroller) has published a list of companies that boycott Israel, and this list should be checked before the awarding of a contract to a vendor.
  • B. 1571 – requires governments to include the estimated amount of avoided expected future operating and maintenance costs when evaluating energy savings, along with all other pertinent costs when entering into an energy savings contract.
  • B. 3223 – makes a political entity liable for damages caused by use of a vehicle used during a crime and requires a $1,000 penalty payment to the state if the entity violates the requirement to remove any equipment and insignia from the vehicle before selling or transferring the marked law enforcement vehicle.
  • B. 252 – Provides that governmental entities may not enter into a contract with a company that does business with Iran, Sudan, or a foreign terrorist organization, as indicated on a list prepared by the comptroller. See the statute, Chapter 2252, Government Code, for exceptions.
  • B. 255 – changes the Vendor Disclosure Form 1295. See related story for specifics.
  • SB 622 – provides that the proposed budget of a political subdivision for a fiscal year beginning on or after Jan. 1, 2018, must include a line item indicating expenditures for required newspaper notices that allows comparison between budgeted and actual expenditures.
  • B. 1289 – Requires that construction projects in which iron or steel must be used must include a requirement that any iron or steel product used in the project must be produced in the United States, unless the total cost of the project will increase by more than 20 percent or complying with the requirement is not in the public interest. A number of other requirements are included in the law. Purchasing professionals are reporting rising bid costs as a result of this law. Any variance from the law should be made only after consulting with legal counsel and careful documentation. *

Do’s and Don’ts of County Purchasing

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By Narita Holmes
Government Procurement and Compliance Consultant
Former Ector County Purchasing Agent

When it comes to county government purchasing, the statutes contain many requirements that must be met. These requirements are scattered throughout the statutes – not just in the section known as the County Purchasing Act – and change each time the Texas Legislature meets. It is the duty of every county official to follow these laws. Many counties rely on procurement professionals in their county to stay current on these laws and ensure that purchases are properly administered.

Do’s in County Purchasing

  • Ensure that all vendors may participate in competitive offers to your county on a “level playing field” that does not favor one vendor.
  • Prepare specifications that will allow multiple vendors to compete for the county’s business using descriptions that state “minimum” requirements.
  • Make awards of bids or proposals based ONLY on criteria included in the specifications.
  • Make certain that your specifications follow the laws that are currently in place. A current area of high risk involves construction procurement, where there have been many changes. Using old specifications is very risky. You cannot rely on architects or other contracted individuals to be aware of the changes in the law.
  • Follow the Professional & Consulting Services Act when acquiring services that fall under this act (Government Code, Chapter 2254).
  • Utilize cooperative purchasing when possible to reduce costs of solicitations and time required and to gain the benefit of group purchase prices. Local Government Purchasing Groups also provide great options.
  • Have procurement policies and procedures in place to guide your county offices. State law has a number of requirements that must be included.
  • Make certain that vendors are required to provide proper bonding and insurance, including workers’ compensation insurance, to protect the county and comply with state law.
  • When awarding using “best value,” be certain that the factors that constitute best value and their weights are included in your specifications.
  • When using a sealed proposal process, always ask for “best and final offer” from the proposers. If this final step is not completed, you will almost certainly pay more for the product or service than necessary.
  • Get your attorney to approve your terms and conditions to be included in solicitations, as well as the contract that may result from an award, in order to protect the county.
  • Make certain that individuals who administer bids and proposals for your county have current knowledge of all the laws and attorney general opinions currently in place that govern those purchases. Membership in organizations such as the Texas Public Purchasing Association (TxPPA) provides opportunities for educational programs, networking, and a listserv where assistance is available.

Don’ts in County Purchasing

  • Don’t make a purchase of services or products during the fiscal year where the total for that category will exceed $50,000 without taking sealed bids or proposals, or using an awarded cooperative bid.
  • Don’t make separate, sequential, or component purchases in order to avoid competitive bidding.
  • Don’t grant an exemption from bidding when it doesn’t comply with the law.
  • Don’t divulge information to one vendor that is not available to all vendors.
  • Don’t have a relationship with a vendor that could create a conflict of interest in fact or in appearance. (NOTE:  State law requires disclosure of certain relationships that you and/or your family may have with vendors. There is required vendor disclosure, as well).
  • Don’t write specifications that are so “tight” that only one vendor will be able to bid.
  • Don’t change what you are asking for without giving notice to all vendors who may participate in the solicitation.
  • Don’t allow vendors to bid who have helped write specifications. Their role should be one or the other, but not both.
  • Don’t collude with vendors to give them an advantage. This could result in an investigation by the attorney general’s office and possible prosecution.
  • Don’t consider a vendor a “sole source” unless you can document that there is truly no other vendor offering a product or service that meets the county’s minimum requirements. The favorite vendor of a department is not always a sole source.
  • Don’t violate the laws and attorney general opinions that govern whether and how you may consider the location of a vendor’s business in award of a bid.
  • Don’t appoint more than two members of the Commissioners Court to proposal evaluation committees.

Knowing that the laws are scattered and complicated, it is important for county officials to make certain that they are following the current statutes. Finding your name in the headlines of the newspaper for violations of purchasing laws would not be the way that you want to start any day! *

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