In addition to their other responsibilities, city and county officials are often responsible for overseeing local projects to meet the needs of constituents, such as building roads and public buildings. Texas has in place specific statutes that local officials must follow to encourage competitive pricing and quality work. This competitive bidding process is governed by The Texas Local Government Code.
Statute for Competitive Bidding
Section 252.043 of the Texas Local Government Code outlines the specific process required for competitive bidding:
(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.
Tex. Loc. Gov't Code Ann. § 252.043 (West)
While the language of this section is directed at municipalities, the requirements are similar for counties as well. The code indicates that local government is obligated to choose the lowest bid for a project. However, the statute also indicates that in addition to the lowest bid, officials should consider “best value,” reputation of the bidder,” and the “quality of the bidder’s goods or services.” Such subjective terminology provides a broad interpretation when determining which bidder is best for the job.
Recent Allegations of Fraud in Houston
Texas law states that if the contract awarded for the project does not comply with chapter 252.043, the contract may be voided “and the performance of the contract, including the payment of any money under the contract, may be enjoined by:
(1) any property tax paying resident of the municipality; or
(2) a person who submitted a bid for a contract for which the competitive sealed bidding requirement applies, regardless of residency, if the contract is for the construction of public works.”
Tex. Loc. Gov't Code Ann. § 252.061 (West)
The focus on fair bidding has come into focus in recent months as allegations of bid-rigging have surfaced in Houston. On September 21, 2021, a Fox News report told of Houston Housing Director Tom McCasland’s being fired by Mayor Sylvester Turner. McCasland has made allegations that Turner rigged bids for an affordable housing complex to be funded by Hurricane Harvey relief money. McCasland asserts that Mayor Turner rigged the bid to benefit his former law partner. These allegations have resulted in an investigation about the use of the Harvey relief money.
Another Harris County official, Judge Lina Hidalgo, has also been accused recently of bid-rigging. A Fox News Report dated March 22, 2022, focuses on her part in awarding an $11 million contract to Elevate Strategies. Allegations are that Elevate Strategies did not present the best bid and that this bid would benefit a friend of Judge Hidalgo. Amidst the allegations, Hidalgo has canceled the $11 million contract in September. The investigation continues.
Both instances highlight how many contractors are at a disadvantage if local officials do not comply with competitive bidding procedures under the law. Cronyism and nepotism undermine the process for fair bidding.
Enforcement of the Code
Unfortunately, contractors who feel that their bids are not fairly considered often struggle to address their concerns. The subjectivity of a concept like “good value” is difficult to quantify in court. Also challenging is that government entities such as municipalities and counties have sovereign immunity, which means that they are exempt from certain types of civil lawsuits.
Of the ten cases with reported opinions on this statute, the three most recent cases have ruled against contractors based on subjective language in the statutes and sovereign immunity issues. Those cases are City of Brownsville v. Brownsville GMS, Ltd., City of New Braunfels v. Carowest, Ltd., and City of Austin v. Utility Associates, Inc. So, although the code provides an enforcement mechanism, in at least three recent cases, contractors have been unsuccessful in their attempts to enforce the code for fair bidding.
Given the complexity of bidding for a job through local government, not to mention the difficulty of enforcing that statute if local officials fail to follow the statute, working with an experience attorney is a smart move for contractors.
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