What made a company a Texas bidder for state service contracts, and what could happen if it falsely claimed that status?
Apply this to your situation
This page answers the general question as of 2008. Ezel answers yours: what it means for your facts, under current Texas law, with citations.
TX AG Opinion GA-0685: Who qualified for Texas-bidder preferences?
Plain-English summary
In 2008, the Texas Attorney General answered general legal questions that arose from a protested contract for marketing and selling specialty license plates. The opinion expressly declined to review the particular award or decide disputed facts.
Government Code section 2155.444(c)(2) defined a "Texas bidder" through three alternatives. A business qualified if it was incorporated in Texas, had its principal place of business in Texas, or had an established physical presence in Texas. Incorporating in Texas was enough under the first alternative even if the business's other operations were elsewhere.
Whether a company had its principal place of business in Texas was different. The statute, cases, and legislative history did not supply a controlling definition for that phrase, so applying it to a particular company required factual findings outside the Attorney General's opinion process.
If a bidder inaccurately affirmed that it was a Texas bidder, several responses could have been available. Other bidders could use agency protest procedures; the vendor could face debarment or removal from bidder lists for material misrepresentation, fraud, or related grounds; a resulting contract could be voidable; and Penal Code section 37.10 could apply in some circumstances. The availability of any particular remedy depended on the facts.
For service purchases under section 2155.444(e), a Texas-bidder preference applied only when the service met state performance and quality requirements and its cost did not exceed the cost of similar services of similar expected quality from a bidder without the preference. In an actual cost tie, the preference still depended on similar expected quality, not only equal dollar bids.
The Purchasing Act required each agency to adopt vendor-protest procedures. Beyond those rules and any agency-specific statute, the opinion found no general Purchasing Act mechanism allowing a bidder or another person to compel an agency to reconsider its use of bidding preferences.
Currency note
This opinion was issued in 2008. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Who this opinion affected in 2008
Businesses bidding on state contracts: Texas incorporation, a Texas principal place of business, or an established physical presence could independently satisfy the statutory definition of a Texas bidder.
State procurement officials: The service preference required comparable state requirements, expected quality, and cost. Equal bid amounts alone did not answer whether the preference applied.
Unsuccessful bidders: Agency protest procedures were the general route for challenging inaccurate bidder claims or allegedly misapplied preferences. Additional recourse depended on the agency's statutes and rules.
State agencies: The opinion identified protest, debarment, bidder-list removal, contract remedies, and possible criminal referral as potential responses to inaccurate representations, with the correct response depending on the record.
Common questions
Did a company have to conduct most of its business in Texas to be a Texas bidder?
Not under every part of the definition. Texas incorporation alone satisfied one statutory alternative. The principal-place-of-business and physical-presence alternatives raised different questions.
Could the Attorney General decide where a bidder's principal place of business was?
No. The opinion treated that as a fact-sensitive inquiry that could not be resolved through the Attorney General opinion process.
What could happen after a false Texas-bidder certification?
Possible consequences included a bid protest, debarment, removal from bidder lists, a voidable contract, or criminal prosecution. The opinion did not say every consequence applied to every inaccurate certification.
Did a tie in bid price automatically require the Texas-bidder preference?
No. For services, the competing offerings also had to meet state requirements and be of similar expected quality.
Could a bidder force an agency to reconsider a preference decision?
The opinion found no general mechanism in the Purchasing Act beyond agency protest procedures and any agency-specific statutory remedies.
Background and statutory framework
The request arose from a Department of Transportation procurement for a private vendor to market and sell specialty license plates. Another firm protested the award, and the Department's executive director denied the appeal. The Attorney General used that setting only to answer general statutory questions and did not review the award itself.
Section 2155.444(e) gave first preference for qualifying services from a Texas bidder owned by a service-disabled Texas veteran and second preference to services from other Texas bidders, subject to performance, quality, and cost conditions. Section 2155.444(c)(2) supplied the three-part Texas-bidder definition.
Sections 2155.070, 2155.076, and 2155.077 addressed bidder lists, protest procedures, and vendor bars. The opinion also discussed contract voidability for material misrepresentation and possible prosecution under Penal Code section 37.10.
Citations
Statutes:
- Tex. Gov't Code §§ 402.042, 2155.070, 2155.076-.077, 2155.441-.444
- Tex. Transp. Code §§ 504.851-.852
- Tex. Penal Code § 37.10
Source
- Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0685
- Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2008/ga0685.pdf
Original opinion text
ATTORNEY GENERAL OF TEXAS
GREG ABBOTT
December 2, 2008
The Honorable Jerry Madden Opinion No. GA-0685
Chair, Committee on Corrections
Texas House of Representatives Re: Whether an out-of-state company may be
Post Office Box 2910 considered a "resident bidder" under particular
Austin, Texas 78768-2910 circumstances (RQ-0703-GA)
Dear Representative Madden:
You ask several questions regarding provisions ofthe State Purchasing and General Services
Act (the "Purchasing Act"). 1 See generally TEX. GOV'TCODEANN. §§ 2151.001-2177.103 (Vernon
2008). Your questions arise out of the implementation by the Texas Department of Transportation
(the "Department") ofa program involving the marketing and sale ofspecialty license plates through
a private vendor. See Request Letter, supra note 1, at 1; TEX. TRANSP. CODE ANN. §§ 504.851-.852
(Vernon 2007). That program requires, in part, that the Department "enter into a contract with the
private vendor whose proposal is most advantageous to the state, as determined from competitive
sealed proposals that satisfy the requirements of [section 504.851] for the marketing and sale of'
certain personalized license plates. TEX. TRANSP., CODE ANN. § 504.851(a) (Vernon 2007). A
contract entered into by the Department "must comply with any law generally applicable to a
contract for services entered into by the [D]epartment." Id. § 504.851(i)(1).
A contract under this specialty license plate program was awarded to a firm. See Request
Letter, supra note 1, at 1-2. You tell us that you have information indicating that the firm that was
awarded the bid
listed a Texas address in its proposal and certified it was a Texas
Resident Bidder yet conducted no business in Texas, nor had a place
of business save for apparently using an address in Austin of a
company that has no legal connection to the bidder. [The information
you have] also suggests that the firm's president appears to have been
the only employee of the entity prior to award of the contract, [and
he] purportedly resides and offices in Australia, and performs nearly
all of his business in that location rather than Texas.
ISee Letter from Honorable Jerry Madden, Chair, Committee on Corrections, Texas House ofRepresentatives,
to Honorable Greg Abbott, Attorney General ofTexas, at 2-3 (Apr. 22, 2008) (on file with the Opinion Committee, also
available at http://www.texasattorneygeneral.gov) [hereinafter Request Letter].
The Honorable Jerry Madden - Page 2 (GA-0685)
Id. at 2. You explain that the award of this bid resulted in a protest by another finn that had also
submitted a proposal but was not awarded the bid. See id at 1-2. The appeal of the bid award by
the other firm was ultimately denied by the Department's executive director. See id at 2.
As a result of arguments raised in the protest of this bid award and determinations made by
the Department as to the protest, you ask the following questions:
If a non-Texas resident or company located outside of Texas sets up
a Texas business entity, and that business entity conducts no business
in Texas other than retaining an attorney, is that company considered
a Texas Resident Bidder, and is it considered to have a Principal
Place of Business in Texas?
If a company does not have a Principal Place of Business in Texas
and is not a Texas Resident Bidder, and signs an affirmation that it is
a Texas Resident Bidder, and is subsequently awarded a state
purchase order, what recourse exists to address this discrepancy?
If there is a competitive procurement and each competing firm
submitted a $1 bid, and presented proposals to generate additional
state revenue which are scored differently by the procuring agency,
should bidding preferences apply, and if so which preferences are
applicable?
If bidding preferences were not appropriately applied by a state
agency during a procurement, and the agency disagrees that bidding
preferences should have been applied, what recourse exists to compel
the agency to re-consider preferences?
See ide at 2-3.
I. Procedural Issues
Before we begin our analysis of your questions, we .must address procedural challenges
regarding this request. First, briefs received in our office contend that by responding to your
questions we are conducting an "appellate review" ofthe Department's bid award. 2 This office has
historically refused to consider questions about the award of particular contracts or whether a
2See, e.g., Brief from Michael A. Shaunessy, Sedgwick, Detert, Moran and Arnold, L.L.P., on behalf of
MyPlates, Inc., to Honorable Greg Abbott, Attorney General of Texas, at 5 (June 3,2008) (on file with the Opinion
Committee) [hereinafter MyPlates Brief] ("If your office issues an opinion in response to [this] request, you will have
assumed the role of an appeals court. . .. In turn, every unsuccessful bidder for a state, county, or other government
contract who fails in a bid protest will then only need to ... appeal the denial ofthe bid protest to the Attorney General's
office.").
The Honorable Jerry Madden - Page 3 (GA-0685)
contract is subject to specific competitive-bidding requirements because those questions require
factual determinations. See, e.g., Tex. Att'y Gen. OPt No. DM-113 (1992) at 9, Tex. Att'y Gen.
LO-97-059, at 1. Our policy is unchanged. This opinion does not comment on the particular bid
award that gives rise to your questions but answers only your legal questions regarding the
Purchasing Act.
Second, briefs received in our office argue that we "should not issue an opinion in this matter
because the opinion request" does not come from an authorized requestor and the subject matter of
the request "does not concern a question of public interest or ... [the] official duties of the
requestor." See MyPlates Brief, supra note 2, at 2-3-. Government Code section 402.042 sets out
a list of persons to whom "the attorney general shall issue a written opinion on a question affecting
the public interest or concerning the official duties of the requesting person." TEx. GOV'T CODE
ANN. § 402.042(a)-(b) (Vernon 2005) (emphasis added); see also TEX. CaNST. art. IV, § 22
(providing that the attorney general shall "give legal advice in writing to the Governor and other
executive officers, when requested by them"). Included among the list ofpersons who may request
an attorney general opinion is "a committee of a house ofthe legislature." TEX. GOV'T CODE ANN.
§ 402.042(b)(7) (Vernon 2005). This request comes from the Texas House of Representatives
Committee on Corrections-elearly an authorized requestor. 3 Moreover, the questions presented
concern the meaning of provisions of the Purchasing Act, a matter of public interest. 4 The statute
does not require that a question concern both a matter ofpublic interest and the official duties ofthe
requestor. Id. § 402.042(a). We now tum to your questions.
II. Analysis
A. Section 2155.444
Government Code section 2155.444 requires that preferences be given by state agencies to
certain bidders. See ide § 2155.444(a)-(b) (Vernon 2008). Portions ofthis statutory provision relate
to the purchase of goods, including agricultural products. See, e.g., id We understand from the
background information you present, however, that your first three questions pe.rtain to section
2155.444(e), which involves preferences required in the purchase ofservices. See ide § 2155.444(e);
Request Letter, supra note 1, at 1.
3See Letter from Committee on Corrections, Texas House of Representatives, to Honorable Greg Abbott,
Attorney General of Texas (June 9, 2008) (on file with the Opinion Committee) [hereinafter Committee Letter]
(indicating, in this particular instance, by the signatures ofall members ofthe House Committee on Corrections, that the
Committee affmns Representative Madden's original request and fmding that an answer to these questions will work to
"ensure integrity in all state purchasing decisions, including the bidding on state contracts").
4In addition to disagreeing with the argument that this is not an authorized request, we reject any suggestion
made by the Honorable Terry Keel that it is not within the purview of this office to determine whether any particular
request is proper under section 402.042, Government Code. See Brief from Honorable Terry Keel, House
Parliamentarian, Texas House ofRepresentatives, to Honorable Greg Abbott, Attorney General of Texas, at 1(June 17,
2008) (on file with the Opinion Committee) (arguing that "whether or not the subject matter of an opinion request falls
within the purview ofa particular House committee would be exclusively an issue for the House ofRepresentatives, not
a subject for collateral evaluation outside of the legislature").
The Honorable Jerry Madden - Page 4 (GA-0685)
Section 2155.444(e) provides that
state agencies procuring services shall give first preference to services
offered by a Texas bidder that is owned by a service-disabled veteran
who is a Texas resident and shall give second preference to services
offered by other Texas bidders if:
(1) the services meet state requirements regarding the service
to be performed and expected quality; and
(2) the cost of the service does not exceed the cost of other
similar services of similar expected quality that are offered by a
bidder that is not entitled to a preference under this subsection.
TEX. GOV'T CODE ANN. § 2155.444(e) (Vernon 2008); see also id §§ 2155.001(2) (defining
"service"), 2151.002 (defining "state agency"), 2155.444(c)(I-a)-(2) (defining "service-disabled
veteran" and "Texas bidder"). This statutory provision was adopted by House Bill 845 of the 78th
Legislative Session. See Act of May 23,2003, 78th Leg., R.S., ch. 1033, § 2,2003 Tex. Gen. Laws
2981, 2981 (codified at Government Code section 2155.444(e)).
For the purposes of section 2155.444, the term
"Texas bidder" means a business:
(A) incorporated in this state;
(B) that has its principal place of business in this state; or
(C) that has an established physical presence in this state.
TEX. GOV'T CODE ANN. § 2155.444(c)(2) (Vernon 2008). This definition was also adopted by
House Bill 845. See Act of May 23, 2003, 78th Leg., R.S., ch. 1033, § 2,2003 Tex. Gen. Laws
2981, 2981 (codified at Government Code section 2155.444(c)).
B. The type of business that constitutes a "Texas bidder"
Your first question asks about the circumstances under which a company is considered a
"Texas Resident Bidder." Request Letter, supra note 1, at 2. 5 Section 2155.444 does not use the
5you note that Schedule 4 of the Department's request for proposal provided as follows: "By signing this
proposal, respondent certifies that if a Texas address is shown as the address ofthe respondent, respondent qualifies as
a Texas Resident Bidder as defmed in Rule 1 TAC 111.2." See Request Letter, supra note 1, at 1, and Supplement to
Request Letter received Apr. 29, 2008 (Schedule 4, Execution ofProposal RFP No. B442007005563000 (May 18,2007)
at 1) (on file with the Opinion Committee). The rule referenced in Schedule 4-1 Texas Administrative Code section
(continued...)
The Honorable Jerry Madden - Page 5 (GA-0685)
term "Texas Resident Bidder." Rather, that section uses the term "Texas bidder." See TEX. GOV'T
CODE ANN. § 2155.444(c)(2) (Vernon 2008). Under section 2155.444(c)(2) a business constitutes
a "Texas bidder" in one of three circumstances: (1) the business is incorporated in Texas; (2) the
business has its principal place of business in Texas; or (3) the business has an established physical
presence in Texas. Id;seealsoBd. ofIns. Comm'rsv. Guardian Life Ins. Co., 180 S.W.2d906, 908
(Tex. 1944) (explaining that unless the statute is ambiguous or the context demands otherwise, the
term "or" is construed as disjunctive).6
You ask "[i]f a non-Texas resident or company located outside of Texas" could constitute
. a Texas bidder if the business "sets up a Texas business entity" but "conducts no business in Texas
other than retaining an attorney." You do not explain what you mean by "sets up a Texas business
entity." Request Letter, supra note 1, at 2-3. To the extent that you mean a business that
incorporates as a Texas business entity, the Legislature has expressly provided that this action alone
is sufficient to make a business a "Texas bidder" as that term is defined by the Legislature in section
2155.444(c)(2)(A).
You also ask whether the business you describe is one that has its principal place ofbusiness
in Texas. Id. at 2. Neither section 2155.444 nor any judicial decision we find defines the term
"prin~ipal place ofbusiness" as used in section 2155.444. Moreover, the legislative history does not
provide insight as to the meaning of this term. And while there are discussions of the meaning of
5(... continued)
111.2-was originally adopted as 1 Texas Administrative Code section 113.6 pursuant to Texas Revised Civil Statutes
article 601g, section 1, which was the predecessor of section 2252.001, Government Code. See 10 Tex. Reg. 3280
(1985) (adopting section 113.6) amended by 19 Tex. Reg. 713 (amendment renumbering section 113.6 as section 111.2)
repealed by 33 Tex. Reg. 6129. Section 2155.444 contains its own defmition of"Texas bidder" and thus, the defmition
of"Texas Resident Bidder" in that rule is not relevant to your questions. See TEX. GOV'T CODE ANN. § 2155 .444(c)(2)
(Vernon 2008).
6In 2003, the Texas Building and Procurement Commission (now the Texas Facilities Commission) promulgated
a rule in response to the amendments to section 2155.444 adopted through House Bill 845. See 28 Tex. Reg. 10907,
10910 (2003). That rule contained the following defmition of "Texas bidder":
Texas Bidder-As applies to the use ofthe preference to "Texas and United
States Products and Services", "Texas Bidder" means a business:
(A) incorporated in this state;
(B) that has its principal place of business in this state; or
(C) that has an established physical presence in this state.
Id. The rule was transferred to the Comptroller ofPublic Accounts without change and is currently codified at 34 Texas
Administrative Code section 20.32(68). See 32 Tex. Reg. 4237-4239 (2007) (transferring various rules from the Texas
Building and Procurement Commission to the Comptroller of Public Accounts), 34 TEX. ADMIN. CODE § 20.32(68)
(2008) (Tex. Comptroller of Pub. Accounts, Defmitions). This defmition is essentially identical to the defmition
contained in Government Code section 2155.444(c)(2).
The Honorable Jerry Madden - Page 6 (GA-0685)
this term as used in other statutes, whether a business "has its principal place of business in this
state" under section 2155.444(c)(2)(B) requires the determination of facts that cannot be resolved
in the opinion process. Cf Tex. Att'y Gen. Ope No. JM-696 (1987) at 4; see also id (discussing the
meaning of "principal place of business" as used in 601g ofthe Revised Civil Statutes [predecessor
to Government Code chapter 2252] relating to the evaluation of out-of-state bidders).
c. Remedies and responses available when a bidder inaccurately affirms it is a Texas
bidder
In your second question you ask what recourse exists in a situation in which a company is
not a Texas bidder but signs an affirmation that it is a Texas bidder and is subsequently awarded a
state purchase order. Request Letter, supra note 1, at 2. You raise section 2.25 of The State of
Texas Procurement Manual (the "Manual") in relation to your questions. See TEXAS COMPTROLLER
OF PUBLIC ACCOUNTS, The State of Texas Procurement Manual § 2.25, available at http://www
.window.state.tx.us/procurement/pub/manual/2-25.pdf(last visited Oct. 28, 2008). Section 2.25 of
the Manual contains various affirmations that are characterized as "standard terms and conditions
that are required in all solicitations." Id. at 80. One such affirmation provides that "[b]y signing this
bid, bidder certifies that if a Texas address is shown as the address ofthe bidder, bidder qualifies as
a Texas Resident Bidder as defined in Texas Administrative Code, Title 34, Part 1, Chapter 20."
Id. at 81. We do not find the term "Texas Resident Bidder" defined or used in the portion of the
Administrative Code referenced in the Manual. See 34 TEX. ADMIN. CODE ch. 20 (2008) (Tex.
Comptroller of Pub. Accounts, Tex. Procurement & Support Servs.).
Regardless, a range of remedies and responses may be available under the Purchasing Act
if a bidder makes inaccurate representations in its bid proposal. See Tex. Logos,L.P. v. Tex. Dep't
ofTransp., 241 S.W.3d 105,121 (Tex. App.-Austin2007, no pet.). Agency protest procedures can
be initiated by other bidders in response to proposals that contain inaccuracies. See TEX. GOV'T
CODE ANN. § 2155.076 (Vernon 2008). Vendors can be barred from participating in state contracts
for various reasons including making material misrepresentations in a bid or proposal, committing
fraud, or breaching a contract with the state or,a state agency. See ide § 2155.077(a)-(d). A vendor
can be removed from the state's bidders lists ifrepeated complaints are received against the vendor.
See ide § 2155.070(d). A vendor can be removed from the state's Centralized Master Bidders List
for any of the reasons set forth in Government Code sections 2155.070 and 2155.077. See 34 TEX.
ADMIN. CODE § 20.34(d) (2008) (Tex. Comptroller of Pub. Accounts, Centralized Master Bidders
List).
Additionally, a contract may be rendered voidable as a result ofa vendor's misrepresentations
or fraud in its proposal. See Tex. Logos, 241 S.W.3d at 121 (indicating that allegations of fraud and
misrepresentation "are the types of allegations that render a contract voidable"); see also TEXAS
COMPTROLLER OF PUBLIC ACCOUNTS, THE STATE OF TEXAS PROCUREMENT MANUAL § 2.25,
available at http://www.window.state.tx.us/procurement/pub/manual/2-25.pdf(last visited Oct. 28,
2008) (affirmations "become part of any solicitation and are binding terms and conditions of any
resulting contract or purchase order[;] [a]ny misrepresentation or false statement that is deemed
material by the state, is a breach of contract, which shall void or make voidable any solicitation or
The Honorable Jerry Madden - Page 7 (GA-0685)
resulting contract"). And in some instances, criminal prosecution may be pursued. See TEX. PENAL
CODE ANN. § 37.10 (Vernon Supp. 2008) ("Tampering with Governmental Record"). The
availability ofany particular remedy or response in a specific bidding situation depends on the facts.
D. Whether the section 2155.444(e) preference applies in the case of a tie bid
You ask the following in your third question: "Ifthere is a competitive procurement and each
competing firm submitted a $1 bid, and presented proposals to generate additional state revenue
which are scored differently by the procuring agency, should bidding preferences apply, and if so
which preferences are applicable?" Request Letter, supra note 1, at 2. You explain that it is the
Department's contention that "no preferences should have been applied [in the award ofthe specialty
license plate program] because there was no tie in the scoring of the different proposals" but that
legal counsel for the protesting firm "asserts that it is not a tie of the proposal scores that matters,
but a tie in the dollar amount that was actually bid." Id. (emphasis added).
There are a multitude ofpreferences that might, depending on the facts, apply to a particular
purchase. See, e.g., TEX. GOV'TCODEANN. §§ 2155.441 (Vernon 2008) (providing a preference for
products by persons with disabilities), 2155.443 (providing preference for rubberized asphalt paving
made from scrap tires); see also TEXAS COMPTROLLER OF PUBLIC ACCOUNTS, THE STATE OF TEXAS
PROCUREMENT MANUAL § 2.38 available at http://www.window.state.tx.us/procurement/pub/
manual/2-38.pdf(last visited Oct. 28, 2008) (discussing preferences applicable to state purchasing).
In addition to preferences that apply to all state agencies, there are purchasing preferences applicable
to individual state agencies. See, e.g., TEX. GOV'TCODEANN. § 466.106 (Vernon 2004) (requiring
the Texas Lottery Commission.to give preference to Texas businesses).
As to section 2155 .444(e)-the apparent focus ofyour question-it provides that preferences
under this subsection apply if:
(1) the services meet state requirements regarding the service to be
performed and expected quality; and .
(2) the cost of the service does not exceed the cost of other similar
services of similar expected quality that are offered by a bidder that
is not entitled to a preference under this subsection.
. Id. § 2155.444(e) (Vernon 2008) (emphasis added). Assuming that the requirement in section
2155.444(e)(I) is met, if there is an actual tie in the proposed cost of the service, as your question
suggests, the preferences in section 2155.444(e) apply only if the service is "of similar expected
quality [to] that ... offered by a bidder that is not entitled to [the] preference." Id. § 2155.444(e)(2).
E. The recourse available to compel a state agency to reconsider the application of
a bid preference
In your fourth question you ask what recourse exists to compel a state agency to reconsider
the application of bidding preferences when it is believed that preferences have been incorrectly
The Honorable Jerry Madden - Page 8 (GA-0685)
applied by a state agency during a procurement process. Request Letter, supra note I, at 2-3.
Section 2155.076 ofthe Purchasing Act requires the "commission and each state agency by rule [to]
develop and adopt protest procedures for resolving vendor protests relating to purchasing issues."
TEX. GOV'TCODEANN. § 2155.076(a) (Vernon 2008). And·"[a]nagency's rules must be consistent
with the commission's rules." Id. Thus, as to any particular agency, these procedures, along with
any statutes related to that agency, must be reviewed to understand what recourse might be available
when a bidder believes preferences were applied incorrectly. See, e.g., TEX. GOV'T CODE ANN.
§ 466.101(d) (Vernon 2004) (providing that "[a] party who is aggrieved by the [state lottery]
commission's resolution of a protest under Subsection (c) may file an action in the district court of
Travis County"); 43 TEX. ADMIN. CODE §. 9.3 (2008) (Tex. Dep't of Transp., Protest of Dep't
Purchases). Other than requiring each state agency to develop and adopt rules to resolve vendor
protests, we find no provision in the Purchasing Act by which a bidder or any other person can
compel a state agency to reconsider the application of bidding preferences.
The Honorable Jerry Madden - Page 9 (GA-0685)
SUMMARY
The term "Texas bidder" as defined by Government Code
section 2155.444(c)(2) means a business that is incorporated in
Texas, a business that has its principal place of business in Texas, or
a business that has an established physical presence in Texas. See
TEX. GOV'T CODE ANN. § 2155.444(c)(2) (Vernon 2008). Whether
a business has its principal place of business in Texas under section
2155.444(c)(2) is a fact-sensitive inquiry.
A range ofremedies and responses may be available under the
State Purchasing and General Services Act ("Purchasing Act") if a
bidder inaccurately represents it is a Texas bidder in its proposal.
Agency protest procedures can be initiated by other bidders and
vendors can be barred from participating in state contracts or be
removed from certain bidders lists as the result of such inaccuracies.
Additionally, a contract entered into pursuant to such a proposal may
be rendered voidable and, in some instances, criminal prosecution
may be pursued. The availability of any remedy or response in any
particular bidding context depends upon the facts.
The purchasing preferences in Government Code section
2155.444(e) apply when (1) the service otherwise meets the state's
requirements and expected quality, and (2) "the cost of the service
does not exceed the cost of other similar services of similar expected
quality that are offered by a bidder that is not entitled to a preference
underth[e] subsection." Id. § 2155.444(e) (emphasis added). Under
the express provisions of section 2155.444(e)(2), ifthere is an actual
tie in the proposed cost of the service, a preference applies if the
service is "of similar expected quality."
Any statutes applicable to a particular state agency as well as
any rules adopted by the agency must be reviewed to determine what
recourse might be available when a bidder believes bidding
preferences were applied incorrectly.
KENT C. SULLIVAN
First Assistant Attorney General
The Honorable Jerry Madden - Page 10 (GA-0685)
ANDREW WEBER
Deputy Attorney General for Legal Counsel
NANCY S. FULLER
Chair, Opinion Committee
Christy Drake-Adams
Assistant Attorney General, Opinion Committee
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