HBA-BSM S.B. 221 77(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 221 By: Staples State Affairs 4/29/2001 Engrossed BACKGROUND AND PURPOSE Reverse auctions are a form of competitive bidding whereby the buyer announces the product it wants to buy and prospective sellers bid against each other for the lowest offering price. The Internet makes real time reverse auctions possible, allowing prospective sellers to enter continuous bids over a period of several hours until the lowest bid is reached. However, in December 2000, the attorney general issued an opinion stating that the General Services Commission (GSC) may not purchase goods and services through reverse auctions without specific statutory authority to do so. Senate Bill 221 authorizes GSC and certain local governmental units to purchase goods and services using this method. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS Senate Bill 221 amends the Government, Local Government, and Education codes relating to reverse auctions. The bill includes the reverse auction procedure as an option that the General Services Commission (GSC) may use when purchasing goods or services. The bill also authorizes local governments to participate in GSC purchases that use the reverse auction procedure. The bill provides that all competitive bids or competitive proposals must be sealed. The bill authorizes a local government to use the reverse auction procedure in purchasing goods and services in place of any other method that would otherwise apply to the purchase. A local government that uses the reverse auction procedure must include in the procedure a notice provision and other provisions necessary to produce a method of purchasing that is advantageous to the local government and fair to the vendors. The bill authorizes certain school district and county contracts to be entered into through the use of a reverse auction. EFFECTIVE DATE On passage, or if the Act does not receive the necessary vote, the Act takes effect September 1, 2001.