Part 9.
TEXAS LOTTERY COMMISSION
Chapter 401.
ADMINISTRATION OF STATE LOTTERY ACT
Subchapter A. PROCUREMENT
16 TAC §401.101
The Texas Lottery Commission adopts amendments to section
16 TAC §401.101, relating to lottery procurement procedures. The section
is adopted without changes to the proposed text published in the April 28,
2000, issue of the
Texas Register
, (25TexReg3686).
The amendments clarify the procedures to be followed by the agency when
procuring goods and/or services pursuant to its authority under the State
Lottery Act. Additionally, the amendments incorporate recommendations made
by the State Auditor's Office in SAO Report No. 99-050 entitled "A Report
on the Procurement Practices at the Texas Lottery Commission." The amendments
also implements several provisions set forth in Senate Bill (SB) 177, §5,
76th Legislature, Regular Session. The amendments also delete the portions
of the rule that set out procurement protest procedures. Procurement protest
procedures may become the subject of separate rules.
Proposed amendments to the rule were originally published in the December
31, 1999, issue of the
Texas Register
, (24TexReg11848)
(hereinafter referred to as "the proposed amendments as originally published").
The proposed amendments contained April 28, 2000, issue of the
Texas Register
, (25TexReg3686) differ from the proposed amendments
as originally published as follows: First, the amendments now provide for
a definition for the term "cost." Second, the amendments now require, when
conducting an informal competitive solicitation or an invitation for bids,
the executive director or the executive director's designee to award a contract
to the qualified bidder submitting the lowest and best price quotation, except
that the executive director may reject all price quotations if it is determined
to be in the best interest of the state. Third, the amendments now require
an amount to be added to a nonresident bidder's bid equal to the amount a
Texas resident bidder would be required to underbid a nonresident bidder to
obtain a comparable contract in the state in which the nonresident bidder
has its principal place of business in determining the lowest bid submitted
in response to an invitation for bids. Fourth, the amendments now permit the
executive director, or the executive director's designee to engage in simultaneous
negotiations with proposers. Fifth, the proposed amendments correct several
typographical errors that were contained in the rule as originally published.
No comments were received regarding the proposed amendments as published
in the April 28, 2000, issue of the
Texas Register
, (25TexReg3686).
While Scientific Games, Inc. submitted comments to the amendments as originally
published, it neither stated that is was for or against the proposed amendments.
The following is a summary of the comments received during the comment
period for the proposed amendment as originally published:
Comment: One commenter wants the proposed amendments to be revised to include
a definition of the term "cost."
Response: The Commission agrees with the commenter and has included a definition
of the term "cost."
Comment: One commenter wants the proposed amendments to include a statement
indicating that any procedure utilized by the Commission to purchase goods
or services must be consistent with the overriding goal of promoting competition
to the maximum extent possible, and cannot prefer in-state businesses except
to the extent competing bids are equal in price and quality.
Response: The commission disagrees with the commenter because all goods
and/or services procured pursuant under the amended section are subject to
the provisions of §401.101 and §466.106, Government Code. Simply
repeating the requirements set forth therein is repetitive and unnecessary.
Additionally, the requested change to the amendment would be incomplete because
it does not take into account all of the other statutorily required factors
that the Executive Director is required to take into account in making procurement
decisions.
Comment: One commenter requests that the proposed amendments be revised
to state that, when the Commission procures goods and/or services utilizing
an Invitation for Bids, contracts shall be awarded to the qualified bidder
submitting the lowest bid.
Response: The Commission disagrees with the commenter because Senate Bill
(SB) 177, §5, 76th Legislature, Regular Session, (the relevant portions
of which are now codified at chapter 2259, Government Code) requires that
each procurement of goods or services made by a state agency that is neither
made by the General Services Commission nor made under the purchasing authority
delegated the agency under §51.9335 or §73.115, Education Code,
or §§2155.131, 2155.132, 2155.133, Government Code, look at additional
factors beyond cost in determining the lowest and best bid. Such additional
factors are incorporated into the amendment.
Comment: One commenter suggests that the amendment as written could arguably
allow the Commission to create an unauthorized preference for in-state companies
in that the "best value to the state" could arguably be interpreted to include
a wide array of considerations that are inconstant with the promotion of competition
and the limited preference for Texas businesses authorized by §466.106,
Government Code.
Response: The commission disagrees with the commenter because all goods
and/or services procured pursuant under the amended section are subject to
the provisions of §401.101 and §466.106, Government Code and any
interpretation of the rule must be consistent with those sections of the Government
Code.
Comment: One commenter requests that proposed amendment be revised to include
a statement limiting the Executive Director's authority to reject all bids
if it is in the best interest of the lottery to situations where such action
is consistent with the mandates of the State Lottery Act to promote competition
to the maximum extent possible and to not create an unlawful preference for
in-state companies.
Response: The Commission disagrees with the commenter because the requested
change because merely parrots a portion of the statutorily mandated factors
the Executive Director must take into account in making procurement decisions.
Additionally, the requested change to the amendment would be incomplete because
it does not take into account all of the other statutorily required factors
that the Executive Director is required to take into account in making procurement
decisions.
Comment: One commenter requests that the proposed amendments be revised
to include a statement indicating that the criteria developed by the Executive
Director to evaluate proposals and award contracts be consistent with the
overriding goal of promoting competition to the maximum extent possible as
required by §466.101 and to take into account only those preferences
for in-state businesses expressly set forth in §466.406, Government Code.
Response: The Commission disagrees with the commenter because the requested
change merely parrots a portion of the statutorily mandated factors the Executive
Director must take into account in making procurement decisions. Additionally,
the requested change to the amendment would be incomplete because it does
not take into account all of the other statutorily required factors that the
Executive Director is required to take into account in making procurement
decisions.
A public hearing to receive comments regarding the proposed amendments
as originally published was held on January 20, 2000. No one submitted comments
at the public hearing.
The amendments adopted under §466.105, Government Code,
which provides the Texas Lottery Commission with the authority to adopt rules
governing the establishment and operation of the lottery, §466.101, Government
Code, which provides the Texas Lottery Commission with the authority to adopt
rules requiring any person seeking to contract for goods or services relating
to the implementation and administration of the State Lottery Act to submit
to competitive bidding procedures in accordance with the rules adopted by
the Commission, §467.102, Government Code, which provides the Texas Lottery
Commission with the authority to adopt rules for the enforcement and administration
of the State Lottery Act and the laws under the Commission's jurisdiction,
and Chapter 2001, Government Code, which provides for the adoption of administrative
rules.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on June 15, 2000.
TRD-200004203
Kimberly L. Kiplin
General Counsel
Texas Lottery Commission
Effective date: July 5, 2000
Proposal publication date: April 28, 2000
For further information, please call: (512) 344-5113