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Chapter 252. Purchasing and Contracting Authorities of Municipalities.
Subchapter A. General Provisions.

Sec. 252.001. Definitions.
Sec. 252.002. Municipal Charter Controls in Case of Conflict.
Sec. 252.003. Application of Other Law.

Subchapter B. Competitive Bidding or Competitive Proposals Required.
Sec. 252.021. Competitive Requirements for Certain Purchases.
Sec. 252.0215. Competitive Bidding in Relation to Historically Underutilized Business.
Sec. 252.022. General Exemptions.
Sec. 252.023. Exemptions from Referendum Provisions.
Sec. 252.024. Selection of Insurance Broker.

Subchapter C. Procedures.
Sec. 252.041. Notice Requirement.
Sec. 252.0415. Procedures for Electronic Bids or Proposals.
Sec. 252.042. Requests for Proposals for Certain Procurements.
Sec. 252.043. Award of Contract.
Sec. 252.0435. Safety Record of Bidder Considered.
Sec. 252.0436. Contract with Person Indebted to Municipality.
Sec. 252.044. Contractor's Bond.
Sec. 252.045. Referendum on Issuance of Time Warrants.
Sec. 252.046. Circumstances in Which Current Funds to be Set Aside.
Sec. 252.047. Payment Method for Certain Contracts.
Sec. 252.048. Change Orders.
Sec. 252.049. Confidentiality of Information in Bids or Proposals.
Sec. 252.050. Lease-Purchase or Installment Purchase of Real Property.

Subchapter D. Enforcement.
Sec. 252.061. Injunction.
Sec. 252.062. Criminal Penalties.
Sec. 252.063. Removal; Ineligibility.

Chapter 252. Purchasing and Contracting Authorities of Municipalities.
Subchapter A. General Provisions.

Sec. 252.001. Definitions.

In this chapter:

(1) "Bond funds" includes money in the treasury received from the sale of bonds and includes the proceeds of bonds that have been voted but have not been issued and delivered.

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

(3) "Current funds" includes money in the treasury, taxes in the process of being collected in the current tax year, and all other revenue that may be anticipated with reasonable certainty in the current tax year.

(4) "High technology procurement" means the procurement of equipment, goods, or services of a highly technical nature, including:

(A) data processing equipment and software and firmware used in conjunction with data processing equipment;

(B) telecommunications equipment and radio and microwave systems;

(C) electronic distributed control systems, including building energy management systems; and

(D) technical services related to those items.

(5) "Planning services" means services primarily intended to guide governmental policy to ensure the orderly and coordinated development of the state or of municipal, county, metropolitan, or regional land areas.

(6) "Separate purchases" means purchases, made separately, of items that in normal purchasing practices would be purchased in one purchase.

(7) "Sequential purchases" means purchases, made over a period, of items that in normal purchasing practices would be purchased in one purchase.

(8) "Time warrant" includes any warrant issued by a municipality that is not payable from current funds.

Added by 1987 Tex. Laws, ch. 149, Sec. 1; amended by 1989 Tex. Laws, ch. 1250, Sec. 2; amended by 1995 Tex. Laws, ch. 207, Sec. 1.

Cross References:
Appraisal district purchasing and contracting authority, see Tax Code Sec. 6.11.

Sec. 252.002. Municipal Charter Controls in Case of Conflict.

Any provision in the charter of a home-rule municipality that relates to the notice of contracts, advertisement of the notice, requirements for the taking of sealed bids based on specifications for public improvements or purchases, the manner of publicly opening bids or reading them aloud, or the manner of letting contracts and that is in conflict with this chapter controls over this chapter unless the governing body of the municipality elects to have this chapter supersede the charter.

Added by 1987 Tex. Laws, ch. 149, Sec. 1; amended by 1993 Tex. Laws, ch. 1749, Sec. 5 and by ch. 757, Sec. 7.

Sec. 252.003. Application of Other Law.

The purchasing requirements of Section 361.426, Health and Safety Code, apply to municipal purchases made under this chapter.

Added by 1991 Tex. Laws, p. , ch. 303, Sec. 17.

Subchapter B. Competitive Bidding or Competitive Proposals Required.

Sec. 252.021. Competitive Requirements for Certain Purchases.

(a) Before a municipality may enter into a contract that requires an expenditure of more than $25,000 from one or more municipal funds, the municipality must:

(1) comply with the procedure prescribed by this subchapter and Subchapter C for competitive sealed bidding or competitive sealed proposals;

(2) use the reverse auction procedure, as defined by Section 2155.062(d), Government Code, for purchasing; or

(3) comply with a method described by Subchapter H, Chapter 271.

(b) Before a municipality with a population of less than 25,000 may enter into a contract for insurance that requires an expenditure of more than $5,000 from one or more municipal funds, the municipality must comply with the procedure prescribed by this chapter for competitive sealed bidding.

(c) A municipality may use the competitive sealed proposal procedure for high technology procurements and, in a municipality with a population of 25,000 or more, for the purchase of insurance.

(d) This chapter does not apply to the expenditure of municipal funds that are derived from an appropriation, loan, or grant received by a municipality from the federal or state government for conducting a community development program established under Chapter 373 if under the program items are purchased under the request-for-proposal process described by Section 252.042. A municipality using a request-for-proposal process under this subsection shall also comply with the requirements of Section 252.0215.

Added by 1987 Tex. Laws, ch. 149, Sec. 1; amended by 1989 Tex. Laws, ch. 1, Sec. 56(b); amended by 1993 Tex. Laws, ch. 749, Sec. 1 and ch. 757, Sec. 11; amended by 1995 Tex. Laws, ch. 45, Sec. 1; amended by 1997 Tex. Laws, ch. 790, Sec. 1; amended by 1999 Tex. Laws, ch. 571, Sec. 1; amended by 2001 Tex. Laws, ch. 115, Sec. 1; by ch. 436, Sec. 2; by ch. 436, Sec. 3; by ch. 1409, Sec. 1; amended by HB 211, 78th Tex. Leg., 2003, effective June 18, 2003 and by HB 3507, 78th Tex. Leg., effective September 1, 2003.

Sec. 252.0215. Competitive Bidding in Relation to Historically Underutilized Business.

A municipality, in making an expenditure of more than $3,000 but less than $25,000, shall contact at least two historically underutilized businesses on a rotating basis, based on information provided by the General Services Commission pursuant to Chapter 2161, Government Code. If the list fails to identify a historically underutilized business in the county in which the municipality is situated, the municipality is exempt from this section.

Added by 1993 Tex. Laws, ch. 749, Sec. 3; amended by 1997 Tex. Laws, ch. 165, Sec. 17.18; amended by 2001 Tex. Laws, ch. 115, Sec. 2.

Sec. 252.022. General Exemptions.

(a) This chapter does not apply to an expenditure for:

(1) a procurement made because of a public calamity that requires the immediate appropriation of money to relieve the necessity of the municipality's residents or to preserve the property of the municipality;

(2) a procurement necessary to preserve or protect the public health or safety of the municipality's residents;

(3) a procurement necessary because of unforeseen damage to public machinery, equipment, or other property;

(4) a procurement for personal, professional, or planning services;

(5) a procurement for work that is performed and paid for by the day as the work progresses;

(6) a purchase of land or a right-of-way;

(7) a procurement of items that are available from only one source, including:

(A) items that are available from only one source because of patents, copyrights, secret processes, or natural monopolies;

(B) films, manuscripts, or books;

(C) gas, water, and other utility services;

(D) captive replacement parts or components for equipment;

(E) books, papers, and other library materials for a public library that are available only from the persons holding exclusive distribution rights to the materials; and

(F) management services provided by a nonprofit organization to a municipal museum, park, zoo, or other facility to which the organization has provided significant financial or other benefits;

(8) a purchase of rare books, papers, and other library materials for a public library;

(9) paving drainage, street widening, and other public improvements, or related matters, if at least one-third of the cost is to be paid by or through special assessments levied on property that will benefit from the improvements;

(10) a public improvement project, already in progress, authorized by the voters of the municipality, for which there is a deficiency of funds for completing the project in accordance with the plans and purposes authorized by the voters;

(11) a payment under a contract by which a developer participates in the construction of a public improvement as provided by Subchapter C, Chapter 212;

(12) personal property sold:

(A) at an auction by a state licensed auctioneer;

(B) at a going out of business sale held in compliance with Subchapter F, Chapter 17, Business & Commerce Code;

(C) by a political subdivision of this state, a state agency of this state, or an entity of the federal government; or

(D) under an interlocal contract for cooperative purchasing administered by a regional planning commission established under Chapter 391;

(13) services performed by blind or severely disabled persons;

(14) goods purchased by a municipality for subsequent retail sale by the municipality; or

(15) electricity.

(b) This chapter does not apply to bonds or warrants issued under Subchapter A, Chapter 421.

(c) This chapter does not apply to expenditures by a municipally owned electric or gas utility or unbundled divisions of a municipally owned electric or gas utility in connection with any purchases by the municipally owned utility or divisions of a municipally owned utility made in accordance with procurement procedures adopted by a resolution of the body vested with authority for management and operation of the municipally owned utility or its divisions that sets out the public purpose to be achieved by those procedures. This subsection may not be deemed to exempt a municipally owned utility from any other applicable statute, charter provision, or ordinance.

(d) This chapter does not apply to an expenditure described by Section 252.021(a) if the governing body of a municipality determines that a method described by Subchapter H, Chapter 271, provides a better value for the municipality with respect to that expenditure than the procedures described in this chapter and the municipality adopts and uses a method described in that subchapter with respect to that expenditure.

Added by 1987 Tex. Laws, ch. 149, Sec. 1; amended by 1989 Tex. Laws, ch. 1, Sec. 47(c) and by ch. 1001, Sec. 1; amended by 1991 Tex. Laws, ch. 42, Sec. 1; amended by 1993 Tex. Laws, ch. 749, Sec. 7 and by ch. 757; amended by 1995 Tex. Laws, ch. 207, Sec. 2, and by ch. 746, Sec. 1; amended by 1997 Tex. Laws, ch. 125, Sec. 1, and by ch. 1370, Sec. 3; amended by 1999 Tex. Laws, ch. 405, Sec. 41; amended by 2001 Tex. Laws, ch. 1409, Sec. 2, and by ch. 1420, Sec. 8.290.

Sec. 252.023. Exemptions from Referendum Provisions.

The referendum provisions prescribed by Section 252.045 do not apply to expenditures that are payable:

(1) from current funds;

(2) from bond funds; or

(3) by time warrants unless the amount of the time warrants issued by the municipality for all purposes during the current calendar year exceeds:

(A) $7,500 if the municipality's population is 5,000 or less;

(B) $10,000 if the municipality's population is 5,001 to 24,999;

(C) $25,000 if the municipality's population is 25,001 to 49,999; or

(D) $100,000 if the municipality's population is more than 50,000.

Added by 1987 Tex. Laws, ch. 149, Sec. 1; amended by 1991 Tex. Laws, ch. 109, Sec. 1.

Sec. 252.024. Selection of Insurance Broker.

This chapter does not prevent a municipality from selecting a licensed insurance broker as the sole broker of record to obtain proposals and coverages for excess or surplus insurance that provides necessary coverage and adequate limits of coverage in structuring layered excess coverages in all areas of risk requiring special consideration, including public official liability, police professional liability, and airport liability. The broker may be retained only on a fee basis and may not receive any other remuneration from any other source.

Added by 1987 Tex. Laws, ch. 149, Sec. 1.

Subchapter C. Procedures.

Sec. 252.041. Notice Requirement.

(a) If the competitive sealed bidding requirement applies to the contract, notice of the time and place at which the bids will be publicly opened and read aloud must be published at least once a week for two consecutive weeks in a newspaper published in the municipality. The date of the first publication must be before the 14th day before the date set to publicly open the bids and read them aloud. If no newspaper is published in the municipality, the notice must be posted at the city hall for 14 days before the date set to publicly open the bids and read them aloud.

(b) If the competitive sealed proposals requirement applies to the contract, notice of the request for proposals must be given in the same manner as that prescribed by Subsection (a) for the notice for competitive sealed bids.

(c) If the contract is for the purchase of machinery for the construction or maintenance of roads or streets, the notice for bids and the order for purchase must include a general specification of the machinery desired.

(d) If the governing body of the municipality intends to issue time warrants for the payment of any part of the contract, the notice must include a statement of:

(1) the governing body's intention;

(2) the maximum amount of the proposed time warrant indebtedness;

(3) the rate of interest the time warrants will bear; and

(4) the maximum maturity date of the time warrants.

Added by 1987 Tex. Laws, ch. 149, Sec. 1; amended by 1991 Tex. Laws, ch. 109, Sec. 2; amended by 1993 Tex. Laws, ch. 749, Sec. 4, and by ch. 757, Sec. 6.

Sec. 252.0415. Procedures for Electronic Bids or Proposals.

(a) A municipality may receive bids or proposals under this chapter through electronic transmission if the governing body of the municipality adopts rules to ensure the identification, security, and confidentiality of electronic bids or proposals and to ensure that the electronic bids or proposals remain effectively unopened until the proper time.

(b) Notwithstanding any other provision of this chapter, an electronic bid or proposal is not required to be sealed. A provision of this chapter that applies to a sealed bid or proposal applies to a bid or proposal received through electronic transmission in accordance with the rules adopted under Subsection (a).

Added by 2001 Tex. Laws, ch. 1063, Sec. 6.

Sec. 252.042. Requests for Proposals for Certain Procurements.

(a) Requests for proposals made under Section 252.021 must solicit quotations and must specify the relative importance of price and other evaluation factors.

(b) Discussions in accordance with the terms of a request for proposals and with regulations adopted by the governing body of the municipality may be conducted with offerors who submit proposals and who are determined to be reasonably qualified for the award of the contract. Offerors shall be treated fairly and equally with respect to any opportunity for discussion and revision of proposals. To obtain the best final offers, revisions may be permitted after submissions and before the award of the contract.

Added by 1987 Tex. Laws, ch. 149, Sec. 1; amended by 1989 Tex. Laws, ch. 1, Sec. 56(c); amended by 1995 Tex. Laws, 74th Leg., ch. 45, Sec. 2.

Sec. 252.043. Award of Contract.

(a) If the competitive sealed bidding requirement applies to the contract for goods or services, the contract must be awarded to the lowest responsible bidder or to the bidder who provides goods or services at the best value for the municipality.

(b) In determining the best value for the municipality, the municipality may consider:

(1) the purchase price;

(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 goods or services meet the municipality's needs;

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

(6) the impact on the ability of the municipality to comply with laws and rules relating to contracting with historically underutilized businesses and nonprofit organizations employing persons with disabilities;

(7) the total long-term cost to the municipality to acquire the bidder's goods or services; and

(8) any relevant criteria specifically listed in the request for bids or proposals.

(c) Before awarding a contract under this section, a municipality must indicate in the bid specifications and requirements that the contract may be awarded either to the lowest responsible bidder or to the bidder who provides goods or services at the best value for the municipality.

(d) The contract must be awarded to the lowest responsible bidder if the competitive sealed bidding requirement applies to the contract for construction of:

(1) highways, roads, streets, bridges, utilities, water supply projects, water plants, wastewater plants, water and wastewater distribution or conveyance facilities, wharves, docks, airport runways and taxiways, drainage projects, or related types of projects associated with civil engineering construction; or

(2) buildings or structures that are incidental to projects that are primarily civil engineering construction projects.

(e) If the competitive sealed bidding requirement applies to the contract for construction of a facility, as that term is defined by Section 271.111, the contract must be awarded to the lowest responsible bidder or awarded under the method described by Subchapter H, Chapter 271.

(f) The governing body may reject any and all bids.

(g) A bid that has been opened may not be changed for the purpose of correcting an error in the bid price. This chapter does not change the common law right of a bidder to withdraw a bid due to a material mistake in the bid.

(h) If the competitive sealed proposals requirement applies to the contract, the contract must be awarded to the responsible offeror whose proposal is determined to be the most advantageous to the municipality considering the relative importance of price and the other evaluation factors included in the request for proposals.

(i) This section does not apply to a contract for professional services, as that term is defined by Section 2254.002, Government Code.

Added by 1987 Tex. Laws, ch. 149, Sec. 1; amended by 1997 Tex. Laws, ch. 1370, Sec. 4; amended by 2001 Tex. Laws, ch. 1409, Sec. 3.

Sec. 252.0435. Safety Record of Bidder Considered.

In determining who is a responsible bidder, the governing body may take into account the safety record of the bidder, of the firm, corporation, partnership, or institution represented by the bidder, or of anyone acting for such a firm, corporation, partnership, or institution if:

(1) the governing body has adopted a written definition and criteria for accurately determining the safety record of a bidder;

(2) the governing body has given notice to prospective bidders in the bid specifications that the safety record of a bidder may be considered in determining the responsibility of the bidder; and

(3) the determinations are not arbitrary and capricious.

Added by 1989 Tex. Laws, ch. 1, Sec. 58(b).

Sec. 252.0436. Contract with Person Indebted to Municipality.

(a) A municipality by ordinance may establish regulations permitting the municipality to refuse to enter into a contract or other transaction with a person indebted to the municipality.

(b) It is not a violation of this chapter for a municipality, under regulations adopted under Subsection (a), to refuse to award a contract to or enter into a transaction with an apparent low bidder or successful proposer that is indebted to the municipality.

(c) In this section, "person" includes an individual, sole proprietorship, corporation, nonprofit corporation, partnership, joint venture, limited liability company, and any other entity that proposes or otherwise seeks to enter into a contract or other transaction with the municipality requiring approval by the governing body of the municipality.

Added by SB 850, 78th Tex. Leg., effective September 1, 2003.

Sec. 252.044. Contractor's Bond.

(a) If the contract is for the construction of public works, the bidder to whom the contract is awarded must execute a good and sufficient bond. The bond must be:

(1) in the full amount of the contract price;

(2) conditioned that the contractor will faithfully perform the contract; and

(3) executed, in accordance with Chapter 2253, Government Code, by a surety company authorized to do business in the state.

(b) Repealed September 1, 1993.

(c) The governing body of a home-rule municipality by ordinance may adopt the provisions of this section and Chapter 2253, Government Code, relating to contractors' surety bonds, regardless of a conflicting provision in the municipality's charter.

Added by 1987 Tex. Laws, ch. 149, Sec. 1; amended by 1993 Tex. Laws, ch. 865, Sec. 2; amended by 1995 Tex. Laws, ch. 76, Sec. 5.95(17).

Sec. 252.045. Referendum on Issuance of Time Warrants.

(a) If, by the time set for letting a contract under this chapter, a written petition with the required signatures is filed with the municipal secretary or clerk requesting the governing body of the municipality to order a referendum on the question of whether time warrants should be issued for an expenditure under the contract, the governing body may not authorize the expenditure or finally award the contract unless the question is approved by a majority of the votes received in the referendum. The petition must be signed by at least 10 percent of the qualified voters of the municipality whose names appear as property taxpayers on the municipality's most recently approved tax rolls.

(b) If a petition is not filed, the governing body may finally award the contract and issue the time warrants. In the absence of a petition, the governing body may, at its discretion, order the referendum.

(c) The provisions of Subtitles A and C, Title 9, Government Code, relating to elections for the issuance of municipal bonds and to the issuance, approval, registration, and sale of bonds govern the referendum and the time warrants to the extent those provisions are consistent with this chapter. However, the time warrants may mature over a term exceeding 40 years only if the governing body finds that the financial condition of the municipality will not permit payment of warrants issued for a term of 40 years or less from taxes that are imposed substantially uniformly during the term of the warrants.

(d) This section does not supersede any additional rights provided by the charter of a special-law municipality and relating to a referendum.

Added by 1987 Tex. Laws, ch. 149, Sec. 1; amended by 1999 Tex. Laws, ch. 1064, Sec. 38.

Sec. 252.046. Circumstances in Which Current Funds to be Set Aside.

If an expenditure under the contract is payable by warrants on current funds, the governing body of the municipality by order shall set aside an amount of current funds that will discharge the principal and interest of the warrants. Those funds may not be used for any other purpose, and the warrants must be discharged from those funds and may not be refunded.

Added by 1987 Tex. Laws, ch. 149, Sec. 1.

Sec. 252.047. Payment Method for Certain Contracts.

If the contract is for the construction of public works or for the purchase of materials, equipment, and supplies, the municipality may let the contract on a lump-sum basis or unit price basis as the governing body of the municipality determines. If the contract is let on a unit price basis, the information furnished to bidders must specify the approximate quantity needed, based on the best available information, but payment to the contractor must be based on the actual quantity constructed or supplied.

Added by 1987 Tex. Laws, ch. 149, Sec. 1.

Sec. 252.048. Change Orders.

(a) If changes in plans or specifications are necessary after the performance of the contract is begun or if it is necessary to decrease or increase the quantity of work to be performed or of materials, equipment, or supplies to be furnished, the governing body of the municipality may approve change orders making the changes.

(b) The total contract price may not be increased because of the changes unless additional money for increased costs is appropriated for that purpose from available funds or is provided for by the authorization of the issuance of time warrants.

(c) If a change order involves a decrease or an increase of $25,000 or less, the governing body may grant general authority to an administrative official of the municipality to approve the change orders.

(d) The original contract price may not be increased under this section by more than 25 percent. The original contract price may not be decreased under this section by more than 25 percent without the consent of the contractor.

Added by 1987 Tex. Laws, ch. 149, Sec. 1; amended by 1995 Tex. Laws, ch. 706, Sec. 1, and by ch. 746, Sec. 2.

Sec. 252.049. Confidentiality of Information in Bids or Proposals.

(a) Trade secrets and confidential information in competitive sealed bids are not open for public inspection.

(b) If provided in a request for proposals, proposals shall be opened in a manner that avoids disclosure of the contents to competing offerors and keeps the proposals secret during negotiations. All proposals are open for public inspection after the contract is awarded, but trade secrets and confidential information in the proposals are not open for public inspection.

Added by 1987 Tex. Laws, ch. 149, Sec. 1.

Sec. 252.050. Lease-Purchase or Installment Purchase of Real Property.

(a) This section applies only to a lease-purchase or installment purchase of real property financed by the issuance of certificates of participation.

(b) The governing body of a municipality may not make an agreement under which the municipality is a lessee in a lease-purchase of real property or is a purchaser in an installment purchase of real property unless the governing body first obtains an appraisal by a qualified appraiser who is not an employee of the municipality. The purchase price may not exceed the fair market value of the real property, as shown by the appraisal.

Added by 1989 Tex. Laws, ch. 10, Sec. 2.

Subchapter D. Enforcement.

Sec. 252.061. Injunction.

If the contract is made without compliance with this chapter, it is void and the performance of the contract, including the payment of any money under the contract, may be enjoined by any property tax paying resident of the municipality.

Added by 1987 Tex. Laws, ch. 149, Sec. 1.

Sec. 252.062. Criminal Penalties.

(a) A municipal officer or employee commits an offense if the officer or employee intentionally or knowingly makes or authorizes separate, sequential, or component purchases to avoid the competitive bidding requirements of Section 252.021. An offense under this subsection is a Class B misdemeanor.

(b) A municipal officer or employee commits an offense if the officer or employee intentionally or knowingly violates Section 252.021, other than by conduct described by Subsection (a). An offense under this subsection is a Class B misdemeanor.

(c) A municipal officer or employee commits an offense if the officer or employee intentionally or knowingly violates this chapter, other than by conduct described by Subsection (a) or (b). An offense under this subsection is a Class C misdemeanor.

Added by 1987 Tex. Laws, ch. 149, Sec. 1; amended by 1989 Tex. Laws, ch. 1250, Sec. 3.

Sec. 252.063. Removal; Ineligibility.

(a) The final conviction of a municipal officer or employee for an offense under Section 252.062(a) or (b) results in the immediate removal from office or employment of that person.

(b) For four years after the date of the final conviction, the removed officer or employee is ineligible:

(1) to be a candidate for or to be appointed or elected to a public office in this state;

(2) to be employed by the municipality with which the person served when the offense occurred; and

(3) to receive any compensation through a contract with that municipality.

(c) This section does not prohibit the payment of retirement or workers' compensation benefits to the removed officer or employee.

Added by 1989 Tex. Laws, ch. 1250, Sec. 4.