HBA-NRS S.B. 487 77(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 487
By: Ogden
Transportation
4/17/2001
Committee Report (Amended)



BACKGROUND AND PURPOSE 

Currently, the Texas Department of Transportation (TxDOT) is authorized to
establish an electronic bidding system to eliminate the need for
contractors to manually deliver their bids. However, TxDOT still requires a
bidder on a highway improvement contract to submit a bid guaranty, payable
by cashier's check, money order, or teller's check. Electronic bidding is
intended to reduce errors in the bids, thereby reducing the number of
disqualified bids and increasing the bids that TxDOT is able to consider.
Senate Bill 487 provides TxDOT with various alternative methods by which to
accept and use a bid guaranty for a state highway improvement contract. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Texas Transportation Commission in
SECTION 1 (Section 223.014, Transportation Code) of this bill. 

ANALYSIS

Senate Bill 487 amends the Transportation Code to require the Texas
Transportation Commission (commission) by rule to provide a method by which
a bidder may submit a bid guaranty. The bill authorizes a rule to authorize
the use of an electronic funds transfer, a check, a money order, an escrow
account, a trust account, a credit card, or another suitable method as
determined by the commission. The bill authorizes the Texas Department of
Transportation (TxDOT) to require the payment of a discount or service
charge for the use of a credit card. The bill prohibits the commission's
rules from prohibiting a bidder from submitting a bid guaranty by use of a
cashier's check, money order, or teller's check. 

The bill authorizes TxDOT to establish one or more escrow accounts in the
state highway fund for  the prepayment of bid guaranties. The bill requires
the bid guaranties, and any fees TxDOT establishes to administer bid
guaranties for a state highway improvement contract, to be administered in
accordance with an agreement approved by TxDOT. The bill requires any
available accumulated interest and other income earned on money in an
escrow account to be paid to the bidder or credited to the escrow account.  

The bill requires TxDOT to deposit each administrative fee and discount and
service charge collected to the credit of the state highway fund.  

The bill authorizes TxDOT to authorize the use of a trust account for the
purpose of providing a required bid guaranty and requires the bid guaranty
to be deposited in accordance with a trust agreement with a state or
nationally chartered financial institution. The bill  sets forth
requirements to govern the deposit and investment of a bid guaranty in a
trust account.  

The bill prohibits the commission, unless by a two-thirds vote of the
membership, from awarding a contract to a bidder that has a total amount
under contract that equals more than 40 percent of the total amount of
highway construction under contract in the highway district in which the
highway project under bid is located.  

 EFFECTIVE DATE

On passage, or if the Act does not receive the necessary vote, the Act
takes effect September 1, 2001. 

EXPLANATION OF AMENDMENTS

Committee Amendment No. 1 amends the original bill by removing the
provision prohibiting the Texas Transportation Commission, unless by a
two-thirds vote of the membership, from awarding a contract to a bidder
that has a total amount under contract that equals more than 40 percent of
the total amount of highway construction under contract in the highway
district in which the highway project under bid is located.