Procuring Construction Services from Contractors

What are the basics of procuring construction services under Texas law?

Competitive Procurement

Generally, school districts must purchase all goods and services, including construction services, valued at $50,000 or more in the aggregate for each 12-month period by using one of a list of permitted methods that the district determines will provide the best value for the district. Tex. Educ. Code § 44.031(a).

How Does a District Procure Construction Services?

Districts must procure construction services using a method in Texas Government Code chapter 2269 or an interlocal contract, depending on which method will provide the best value to the district. Tex. Educ. Code § 44.031(a)(4)-(5). Most districts delegate the best value determination to the superintendent. See TASB Policy CV(LOCAL). The superintendent recommends a procurement method to the board, which then makes the final decision as to what method to use.

A best value determination is not required if the district uses the competitive bidding procurement method. If the district does not use competitive bidding, it must compare the other available contracting methods and select the method that provides the best value for the district. Tex. Gov’t Code § 2269.056(a). The term “best value” means more than simply the lowest price. When comparing contracting methods, a district might also assign value to other criteria, such as the speed of delivery and completion of the project or whether the use of district resources or personnel will be required.

The Texas attorney general has stated that a school district “should establish, by rule, its own procedure and criteria to determine the purchasing method that will provide the best value in a particular instance.” Tex. Att’y Gen. Op. No. JC-0037, at 4 (1999). Districts can establish rules in administrative regulations or purchasing procedures to assist in this determination.

The board must determine best value unless it has delegated that authority to an individual or committee. Tex. Gov’t Code §§ 2269.053(a), .056(a). If the board delegates such authority, it must provide notice of that delegation, the limits of the delegation, and the name or title of each person to whom authority is delegated “by rule or in the request for bids, proposals, or qualifications or in an addendum to the request.” Tex. Gov’t Code §2269.053(b).

What Methods of Procurement Are Available for Construction Contracts?

The contracting methods provided by Texas Government Code chapter 2269 include competitive bidding, competitive sealed proposals, construction manager-agent, construction manager-at-risk, design-build, and job order contracts. The statutes related to each method address to what extent an architect or engineer is required for the project.

For example, a district that uses competitive bidding or competitive sealed proposals must have an architect or engineer prepare the construction documents required for the project. Tex. Gov’t Code §§ 2269.102, .152.

For projects using a construction manager-agent or construction manager-at-risk, a district must select or designate an architect or engineer to prepare the construction documents before the selection of the construction manager. Tex. Gov’t Code §§ 2269.205(a), .252(a). For construction manager-agent, the architect or engineer may not serve as the construction manager unless hired separately to serve in that capacity. Tex. Gov’t Code § 2269.205(b). For construction manager-at-risk, the architect or engineer, or related entity, may not serve as the construction manager-at-risk. Tex. Gov’t Code § 2269.252(b).

A design-build firm is a company that includes an architect or engineer as well as a construction contractor. Tex. Gov’t Code § 2269.304. If the district hires a design-build firm, the district must still have an independent architect or engineer to act as the district’s representative for the duration of the project. Tex. Gov’t Code § 2269.305.

A job order contract is used for minor construction, remediation, or repair of a facility when the work is of a recurring nature, but the delivery times, type, and quantities of the required work are indefinite. Tex. Gov’t Code § 2269.401. If a job order project requires architectural or engineering services, the district must have an architect or engineer prepare the construction documents. Tex. Gov’t Code § 2269.408(a). An exception applies for work performed on portable buildings, as long as the contractor employs the services of an architect or engineer who approves the documents for the project. Tex. Gov’t Code § 2269.408(b).

Interlocal Contracts

Items such as roofing systems, HVAC units, gym floors, and modular buildings can often be found for sale by a purchasing cooperative, a type of interlocal contract. Certainly, these are construction-related items if the installation of these items involves construction, rehabilitation, alteration, or repair of a facility.

The Interlocal Cooperation Act addresses when school districts can purchase construction-related goods and services through purchasing cooperatives. A district may not enter into a contract to purchase construction-related goods or services through a purchasing cooperative in an amount greater than $50,000 unless a person designated by the district certifies in writing that (1) the project does not require the preparation of plans and specifications by an architect or engineer, or (2) required plans and specifications have been prepared by an architect or engineer in accordance with state law. Tex. Gov’t Code § 791.011(j).

Conclusion

Construction law is complicated. As good stewards of district funds and facilities, school officials should consult legal counsel before signing any construction-related contract, regardless of the method of procurement, and should modify a contractor’s standard contract (as well as architect’s and engineer’s contracts) to ensure compliance with Texas laws and school district needs.

See TASB Legal Services’ eSource article, “A Legal Overview of School District Construction,” for more information on school district construction.

This article is provided for educational purposes and contains information to facilitate a general understanding of the law. References to judicial or other official proceedings are intended to be a fair and impartial account of public records, which may contain allegations that are not true. This publication is not an exhaustive treatment of the law, nor is it intended to substitute for the advice of an attorney. Consult your own attorney to apply these legal principles to specific fact situations.