TITLE economic-regulation

Part 2. PUBLIC UTILITY COMMISSION OF TEXAS

Chapter 26. SUBSTANTIVE RULES APPLICABLE TO TELECOMMUNICATIONS SERVICE PROVIDERS

Subchapter R. PROVISIONS RELATING TO MUNICIPAL REGULATION AND RIGHTS-OF-WAY MANAGEMENT

16 TAC §26.467

The Public Utility Commission of Texas (commission) proposes new §26.467, relating to Rates, Allocation, Compensation, Adjustments and Reporting. This section is proposed under Project Number 20935.

The proposed new rule implements certain provisions of House Bill 1777 (HB 1777), Act of May 25, 1999, 76th Legislature, Regular Session, chapter 840, 1999 Texas Session Law Service 3499 (Vernon) (to be codified as Local Government Code §§283.001 et seq. ), which authorizes the commission to determine a uniform method for calculating municipal franchise compensation paid by certificated telecommunications providers (CTPs). The proposed new rule is part of a series of rules that will be adopted by the commission to implement HB 1777.

D. Diane Parker, Senior Attorney, Office of Policy Development and Elango Rajagopal, Senior Policy Analyst, Office of Regulatory Affairs, have determined that for each year of the first five-year period the proposed section is in effect, that there may be fiscal implications to local governments as a result of enforcing or administering the section. Ms. Parker and Mr. Rajagopal do not anticipate any fiscal implications to state government.

Ms. Parker and Mr. Rajagopal have determined that for each year of the first five years the proposed section is in effect, the public benefit anticipated as a result of enforcing the section will be a uniform method of compensating municipalities for the use of the public rights-of-way by CTPs. This uniformity will promote competition for local telephone service in Texas by ensuring that CTPs do not obtain a competitive advantage or suffer a disadvantage in their ability to obtain use of a public right-of-way within a municipality. There is no anticipated effect on small businesses or micro-businesses as a result of enforcing this section.

Ms. Parker and Mr. Rajagopal have also determined that for each year of the first five years the proposed section is in effect there should be no effect on a local economy, and therefore no local employment impact statement is required under the Administrative Procedure Act 2001.022.

In proposing this rule, the commission's objective is to establish a method for compensating municipalities for the use of a public right-of-way by CTPs that: (1) is administratively simple for municipalities and telecommunications providers; (2) is nondiscriminatory; (3) is competitively neutral; (4) is consistent with the burdens on municipalities created by the incursion of CTPs into a public right-of-way; (5) provides fair and reasonable compensation for the use of a public right-of-way; and (6) is consistent with state and federal law.

The commission seeks any comments on the proposed rule that interested parties believe are appropriate. Parties should organize their comments in a manner consistent with the organization of the proposed rule. In particular, the commission invites comments regarding the following issue: Are municipalities whose agreements or ordinances include fee rate escalation provisions entitled to receive such additional compensation until the natural expiration date of their franchise agreement or ordinance, even though those agreements or ordinances may have been terminated by CTPs by December 1, 1999? Parties that believe that municipalities are entitled to this additional compensation, please provide specific implementation details for including this compensation as part of the base amount. For example, explain how the commission should establish new rates for those municipalities with fee rate escalation provisions. Please provide specific statutory citation for your rationale. Parties are also requested to respond to the costs associated with, and benefits that will be gained by, implementation of the proposed section.

Comments on the proposed new rule may be submitted to the Filing Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, P.O. Box 13326, Austin, Texas 78711- 3326, within 20 days after publication. All comments should refer to Project Number 20935. The commission staff will conduct a public hearing on this rulemaking under Government Code §2001.029 at the commission's offices, located in the William B. Travis Building, 1701 North Congress Avenue, Austin, Texas 78701, on Friday, January 21, 2000 at 1:30 p.m.

This new section is proposed under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998) (PURA), which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. The proposed rule is also authorized by House Bill 1777 (HB 1777), Act of May 25, 1999, 76th Legislature, Regular Session, chapter 840, 1999 Texas Session Law Service 3499 (Vernon) (to be codified as an amendment to the Local Government Code §283.055), which provides that not later than March 1, 2000, the commission shall establish rates per access line by category for the use of a public right-of-way by certificated telecommunications providers in each municipality and the statewide average of those rates. The rates shall be applied to the total number of access lines b category in the municipality. The commission shall establish an allocation of the base amount over the categories of access lines if a municipality does not file its proposed allocation by December 1, 1999. On a quarterly basis, certificated telecommunication utilities are required to file a report with the commission that shows the number of access lines the provider has within each municipality at the end of each month of the quarter, and are required to pay the municipality a quarterly amount calculated monthly based on the reported access line counts and the commission's access line rates.

Cross Reference to Statutes: Public Utility Regulatory Act §14.002 and Local Government Code §283.055.

§26.467. Rates, Allocation, Compensation, Adjustments and Reporting.

(a)

Purpose. This section establishes the following:

(1)

rates for categories of access lines;

(2)

default allocation formula for municipalities;

(3)

adjustments to the base amount and allocation formula;

(4)

compensation; and

(5)

associated reporting requirements.

(b)

Application. The provisions of this section apply to certificated telecommunication providers (CTPs) and municipalities in the State of Texas.

(c)

Rate determination. The sum of the amounts derived from the rate for each category of access lines multiplied by the total number of access lines in that category in a municipality shall be equal to the base amount.

(1)

Initial rates. No later than March 1, 2000, the commission shall establish rates for each category of access lines in a municipality. These rates shall be considered to be initial rates. The initial rates may be updated before April 1, 2000, pursuant to subsection (d) of this section. The updated rates shall be in effect until a municipality makes revisions to its rates pursuant to subsection (f) of this section.

(2)

Access line count period. The commission shall use a 1998 access line count for establishing rates for access lines.

(3)

Estimating 1998 access line count. If a CTP does not provide an actual 1998 access line count, the commission shall use the reported 1999 access line count to derive an estimated 1998 access line count as follows:

(A)

Estimating access lines in category 1. The commission shall estimate the 1998 access line count for category 1 from the reported 1999 line count by discounting the growth that has occurred for category 1 during the year 1999. The commission shall estimate the growth of lines for 1999 by using the statewide growth rates for residential access lines reported in the 1997 and 1999 Scope of Competition Reports. The estimated statewide growth rate for category 1 lines is 4.5%.

(B)

Estimating access lines in category 2 and category 3. The commission shall estimate the 1998 access line count for categories 2 and 3 from the reported 1999 line count by discounting the growth that has occurred for categories 2 and 3 during the year 1999. The commission shall estimate the growth of category 2 and category 3 lines for 1999 by using the statewide growth rates for business access lines reported in the 1997 and 1999 Scope of Competition Reports. The estimated statewide growth rate for category 2 and category 3 lines is 7.0%.

(C)

Municipality's estimate for 1998 access lines. A municipality may petition the commission to use different growth factors for 1999 than those derived using subparagraphs (A) and (B) of this paragraph for estimating its 1998 access line count. The municipality's petition shall be accompanied by its proposed growth figure along with adequate proof and methodology for deriving the growth figures from public and verifiable sources. Subject to approval by the commission, the municipality's proven growth figures shall be used for estimating 1998 access line count for that municipality.

(d)

Updates to municipality filings. Municipalities shall have a one-time opportunity in the year 2000 to update their base amount and their allocation formula filed using the Forms for Calculating Rights-of-Way Compensation.

(1)

Base amount. Before April 1, 2000, a municipality may petition the commission to update its base amount with appropriate justification for the update. Appropriate justification may include, but is not limited to: receipt of late payments from CTPs attributable to 1998 usage of rights-of-way, reduction to judgment of disputed payments attributable to 1998 usage of rights-of-way, settlement of disputed payments attributable to 1998 usage of rights-of-way or an inadvertent base amount computational error.

(2)

Allocation formula. A municipality that has filed its own allocation formula before December 1, 1999 may petition the commission and file an updated allocation formula before April 1, 2000.

(3)

Updating initial rates. The commission shall use the new base amount and allocation formula filed pursuant to paragraphs (1) and (2) of this subsection to establish updated access line rates for a municipality.

(4)

Maximum Rates. A municipality that wishes to choose lower access line rates than its initial or updated rates shall notify the commission and all CTPs in that municipality of the lower rate(s) it chooses no later than April 1, 2000. The new lower rates shall be in effect until the municipality petitions for a change in access line rates pursuant to subsection (f) of this section.

(e)

Default allocation. A municipality that does not allocate the base amount over the categories of access lines by December 1, 1999, shall use the default allocation established by the commission. The commission shall develop a default allocation formula for each municipality such that the rates for each category of access line in that municipality shall be the same.

(f)

Annual revision of access line rates. Beginning in the year 2000, certain municipalities may revise their access line rates, as follows.

(1)

Adjustments within established rates. A municipality that wishes to change its rates within the maximum established rates, may do so by notifying the commission and all CTPs with access lines in that municipality during September of the year that the municipality wishes to revise its access line rate for the next calendar year.

(2)

Revising allocation formula.

(A)

Revising municipality's allocation formula. A municipality that has adequately filed its allocation formula by December 1, 1999, may revise its allocation formula once every 12 months. Beginning in the year 2000, a municipality that wishes to revise its allocation may do so by notifying the commission and all affected CTPs in September of that year that the municipality wishes to revise the allocation for the next calendar year.

(B)

Revising default allocation formula. A municipality may request a modification of the commission's allocation not more than once every 24 months by notifying the commission and all affected CTPs in September of that year that the municipality wishes to revise the allocation for the next calendar year.

(g)

Subsequent reporting for CTPs.

(1)

A CTP shall report access line counts in each municipality quarterly to the commission.

(2)

Beginning in the year 2001, CTPs shall report annually to the commission the amounts collected in municipal franchise fees from ratepayers and the total franchise fees paid to municipalities. This report shall be filed with the commission no later than January 31 for municipal franchise fees remitted and collected for the preceding year.

(h)

Franchise fee compensation to a municipality pursuant to the Local Government Code, Chapter 283.

(1)

CTPs that own facilities in the rights-of-way of municipalities shall compensate each municipality quarterly, based upon a monthly access line count. The compensation shall be equal to the rate per category of access line multiplied by the number of access lines in that category in that municipality for the preceding quarter.

(2)

A CTP may not be required to remit a right-of-way fee to a municipality on those access lines that have been resold, leased, or otherwise provided to another CTP except as provided under paragraph (3) of this subsection.

(3)

If the provider of services to the end-use customer through resold or leased access lines directly remits to the municipality a right-of-way fee based on those access lines, that CTP shall furnish adequate proof of such payments to the underlying CTP.

(4)

Adequate proof may include copies of municipal receipts or copies of payments made.

(5)

Nothing in this section shall prevent a CTP from charging to another CTP an appropriate tariffed administrative fee for compensating a municipality on behalf of another CTP to which it has resold, leased, or otherwise provided access lines.

(i)

Pass-through. A CTP recovering its municipal franchise compensation from its customers within the boundaries of a municipality pursuant to PURA §54.206, shall not recover a total amount greater than the sum of the amounts derived from the multiplication of access line rates by the number of lines, per category, for that municipality. Consistent with PURA §54.206, pass-through of the commission's rates established under this chapter shall be considered to be a pro rata charge to customers. Where a CTP chooses to pass through the pro rata charge, such CTP shall not pass through any costs associated with its administration of municipal franchise fees. The pass-through amount shall not exceed the access line rate by category established by the commission for that municipality except as outlined below:

(1)

To the extent that a CTP can document failed attempts to collect its pass-through fees from its customers within the boundaries of a municipality, an adjustment equal to the uncollected municipal fee amount is allowed to the commission's established access line rates for that municipality.

(2)

The access line rate adjustment for uncollectible municipal fees under paragraph (1) of this subsection shall be made on a one-time annual basis during the last quarter of the calendar year.

(3)

This adjustment shall be a proportional increase to the commission established rates.

(j)

Compensation from Lifeline or other low-income assistance programs. A municipality may choose to forgo municipal franchise compensation from access lines serving Lifeline customers or customers of other similar low-income assistance programs. A municipality electing this option shall timely notify its CTPs of this decision. Upon receipt of such notification, CTPs shall not pass through a municipal franchise fee to those end-use customers.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on December 17, 1999.

TRD-9908804

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: December 17, 1999

For further information, please call: (512) 936-7308


Part 9. TEXAS LOTTERY COMMISSION

Chapter 401. ADMINISTRATION OF STATE LOTTERY ACT

Subchapter A. PROCUREMENT

16 TAC §401.101

The Texas Lottery Commission proposes amendments to 16 TAC §401.101, relating to lottery procurement procedures. The proposed 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 proposed 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 proposed amendments also implement several provisions set forth in Senate Bill (SB) 177, §5, 76th Legislature, Regular Session. The proposed amendments also delete the portions of the rule that set out procurement protest procedures. Protest procedures may become the subject of separate rules.

Richard Sookiasian, Budget Analyst, has determined that for each year of the first five-year period the proposed amendments will be in effect, there will be no fiscal implications to state government or local government as a result of administering the proposed amendments.

Mr. Sookiasian has also determined that for each year of the first five-year period the proposed amendments will be in effect, there will be no estimated reductions in costs to the state and to local governments as a result of administering the proposed amendments.

Mr. Sookiasian has also determined that for each year of the first five-year period the proposed amendments will be in effect, there will be no estimated increases in revenue to the state or to local governments as a result of administering the proposed amendments. Mr. Sookiasian has also determined that for each year of the first five-year period the proposed amendments will be in effect, there will be no estimated decreases in revenue to the state or to local governments as a result of administering the proposed amendments.

Mr. Sookiasian has also determined that administering the proposed amendments does not have foreseeable implications relating to cost or revenues of the state or local governments.

Mr. Sookiasian has also determined that for each year of the first five-year period the proposed amendments will be in effect, the public benefits anticipated as a result of administering the proposed amendments will be to clarify the procedures used by the agency in procuring goods and/or services made pursuant to its authority under the State Lottery Act.

Mr. Sookiasian has also determined that for each year of the first five-year period the proposed amendments will be in effect, there will be no probable economic cost to persons required to comply with the proposed amendments.

Mr. Sookiasian has also determined that there will be no cost to small businesses or individuals who are required to comply with the proposed amendments, and no effect on local employment is anticipated.

Comments on the proposed amendments may be submitted to Ridgely C. Bennett, Deputy General Counsel, Texas Lottery Commission, P.O. Box 16630, Austin, Texas 78761-6630.

A public hearing to receive public comments regarding proposed amendments to 16 TAC §401.101, concerning lottery procurement procedures, will be held at 12:30 p.m. on January 20, 2000 at the William P. Hobby Building, 333 Guadalupe, Room 100, Austin, Texas 78701. Persons requiring any accommodation for a disability should notify Michelle Guerrero, Executive Assistant to the General Counsel, Texas Lottery Commission at (512) 344-5113 at least 72 hours prior to the public hearing.

The amendments to this section are proposed under Texas Government Code, Section 466.015 which provides the Texas Lottery Commission with the authority to adopt rules governing the operation of the lottery.

Texas Government Code, Chapter 466 is affected by the proposed section.

§401.101.Lottery Procurement Procedures

(a)

Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1)

Act--The State Lottery Act.

(2)

Executive director--The executive director of the Texas Lottery Commission.

(3)

Commission--The agency created under chapter 467, Government Code [ by House Bill 54, 72nd Legislature, First Called Session, as amended by House Bill 1587 and House Bill 1013, 73rd Legislature, Regular Session ].

(4)

Emergency purchase--The purchase or lease of goods or services that are so badly needed that the commission will suffer financial or operational damage if the goods or services are not secured immediately.

(5)

Goods--Supplies, materials, and equipment.

(6)

IFB--A written invitation for bids [ bid ].

(7)

Lottery--The procedures operated by the commission under the State Lottery Act through which prizes are awarded or distributed by chance among persons who have paid, or unconditionally agreed to pay, for a chance or other opportunity to receive a prize.

(8)

Nonresident bidder or proposer--A bidder or proposer whose principal place of business is not in Texas . [ , but excludes a bidder or ] A [ a ] proposer whose ultimate parent company or majority owner has its principal place of business in Texas is considered a resident bidder or proposer .

(9)

Principal place of business in Texas--A business entity that has at least one [ permanent ] office located in Texas, from which business activities other than submitting bids or proposals to governmental agencies are conducted, with at least one employee working in that office.

(10)

Produced in Texas--Those goods that are manufactured in Texas, excluding the sole process of packaging or repackaging. Packaging or repackaging does not constitute being manufactured in Texas.

(11)

RFP--A written request for proposals.

(12)

Resident bidder or proposer--A bidder or proposer whose principal place of business is in Texas . [ , and includes ] A [ a ] bidder or proposer whose ultimate parent company or majority owner has its principal place of business in Texas is considered a resident bidder or proposer .

(13)

Services--Includes consultant services, personal services, professional services, facility services (i.e., the lease of real property, including utility and custodial service), [ public relations, ] telecommunications services, and advertising services.

(14)

State contract--A term contract for goods or services established and administered by the General Services Commission.

(15)

Electronic State Business Daily or Business Daily--the website administered by the Department of Economic Development, or its successor, on which procurement opportunities are advertised in electronic format via the Texas Marketplace.

(b)

Competitive solicitations.

(1)

For the purchase or lease of goods and services not expected to exceed $5,000, or for the purchase or lease of goods and services available under a state contract, a competitive solicitation, whether formal or informal, may be conducted, but is not required.

(2)

For the purchase or lease of goods and services not expected to exceed $25,000, the commission, at a minimum, must conduct an informal competitive solicitation in an attempt to obtain at least three competitive price quotations.

(3)

For the purchase or lease of goods and services expected to exceed $25,000, the commission must conduct a formal competitive solicitation in an attempt to obtain at least three competitive bids or proposals.

(4)

For the purchase of printing services, regardless of the amount, the commission must conduct a formal competitive solicitation in an attempt to obtain at least three competitive bids or proposals.

(5)

For those formal or informal competitive solicitations where less than three bids, proposals, or price quotations are received, the commission must document the reasons, if known, for the lack of three bids, proposals, or price quotations. If less than three bids, proposals, or price quotations are received, the commission may cancel the solicitation and conduct another solicitation, or it may award a contract if one acceptable bid, proposal, or price quotation is received.

(6)

Notwithstanding paragraphs (1)-(3) of this subsection, the commission may make an emergency purchase or lease of goods or services if the commission will suffer financial or operational damage. Prior to making an emergency purchase or lease of goods or services, the existence of an emergency should be documented. For emergency purchases in excess of $5,000, the commission, at a minimum, must conduct an informal competitive solicitation in an attempt to obtain at least [ lease ] three competitive price quotations. The commission may ask the General Services Commission or any other appropriate entity for advice and assistance in the handling of an emergency purchase.

(7)

Notwithstanding paragraphs (1)-(3) of this subsection, the commission may make a purchase or lease of goods or services under any other procedure authorized by law.

(c)

Informal competitive solicitations.

(1)

An informal competitive solicitation is a process conducted in an effort [ order ] to receive at least three competitive price quotations for a specifically identified good or service, without the advertisement and issuance of an IFB or RFP. The price quotations may be solicited by letter, electronic mail [ telegram ], facsimile, or telephone call. The following information must be recorded by the commission in the solicitation file:

(A)

the name and telephone number of each person or company to which the price quotation was provided;

(B)

[ (A) ] the name and telephone number of the person or company submitting the price quotation;

(C)

[ (B) ] the time and date the price quotation was received;

(D)

[ (C) ] the amount of the price quotation; and

(E)

[ (D) ] the name and telephone number of the person receiving the price quotation for the commission [ division ].

(2)

The executive director or the executive director's designees shall award a contract to the qualified bidder submitting the [ lowest ] price quotation that provides the best value to the state, except that the executive director may reject all price quotations if it is determined to be in the best interest of the state . In determining the lowest price quotation, an amount will be added to a nonresident bidder's or proposer's price quotation equal to the amount a Texas resident bidder or proposer would be required to underbid a nonresident bidder or proposer to obtain a comparable contract in the state in which the nonresident bidder or proposer has its principal place of business. This added amount will only be used for evaluation purposes, and will not be included in the nonresident bidder's or proposer's contract if one is awarded.

(3)

The contract shall be awarded by the issuance of a written purchase order.

(d)

Formal competitive solicitations.

(1)

A formal competitive solicitation is a process conducted in order to receive at least three sealed competitive bids or proposals pursuant to the issuance of an IFB or RFP, respectively. An IFB will be used when the commission is able to describe, by way of established specifications, exactly what it wishes to procure, and wants bidders to offer such at a specific price. An RFP will be used when the commission knows generally what it wishes to procure in order to accomplish a certain goal(s) or objective(s), and wants proposers to offer a solution(s) to address such need(s) at a specific price(s).

(2)

When an RFP is used by the commission, the RFP shall contain, at a minimum, the following:

(A)

a general description of the goods to be provided and/or the services to be performed, and a specific identification of the goals or objectives to be achieved;

(B)

a description of the format proposals must follow and the elements they must contain;

(C)

the time and date proposals are due, and the location/person they are to be submitted to; [ and ]

(D)

an identification of the process [ criteria ] to be utilized in evaluating proposals and awarding a contract ; and [ . ]

(E)

a listing of the factors to be utilized in evaluating proposals and awarding a contract. At a minimum, the factors should include:

(i)

the proposer's price to provide the goods or services;

(ii)

the probable quality of the offered goods or services;

(iii)

the quality of the proposer's past performance in contracting with the commission, with other state entities, or with private sector entities;

(iv)

the financial status of the proposer;

(v)

the qualifications of the proposer's personnel;

(vi)

the experience of the proposer in providing the requested goods or services; and

(vii)

whether the proposer made a good faith effort to reach the minority participation goals set forth by the commission.

(3)

Where time permits, the commission shall advertise formal competitive solicitations, whether by IFB or RFP, on [ in ] the electronic state business journal [ Texas Register ]. The commission may advertise such solicitations in other media determined appropriate by the commission. [ In addition, the commission shall provide a copy of the IFB or RFP to those vendors who have specifically expressed, in writing, an interest in providing certain goods or services to the commission and whose names and addresses are on file with the commission. ]

(4)

For formal competitive solicitations where an IFB is used, the executive director or the executive director's designee shall award a contract to the qualified bidder submitting the [ lowest ] bid that provides the best value to the state , except that the executive director may reject all bids if it is determined to be in the best interest of the lottery [ state ]. In determining the lowest bid, an amount will 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. This added amount will only be used for evaluation purposes, and will not be included in the nonresident bidder's contract if one is awarded. The contract shall be awarded by the issuance of a written purchase order. At the time the purchase order is issued, the commission shall also notify, in writing, all other bidders of the contract award by facsimile, or by certified mail, return receipt requested, or by overnight mail. Any information relating to the solicitation not made privileged from disclosure by law shall be made available for public disclosure after issuance of the purchase order pursuant to the Texas Open Records Act.

(5)

For formal competitive solicitations where an RFP is used, the executive director or the executive director's designee(s) shall, prior to the deadline for receipt of proposals, develop and establish a comprehensive evaluation criteria [ plan ] to be utilized by an evaluation committee in evaluating the proposals and awarding a contract. In determining the lowest price, [ The evaluation plan shall be based upon the evaluation criteria used by the evaluation committee appointed by the executive director. If the evaluation criteria include price as one of the criteria ] an amount will be added to a nonresident proposer's price proposal equal to the amount a Texas resident proposer would be required to underbid a nonresident proposer to obtain a contract in the state in which the nonresident proposer has its principal place of business. This added amount will only be used for evaluation purposes, and will not be included in the nonresident proposer's contract if one is awarded. All proposals that are responsive to the RFP [ received ] will be reviewed by the evaluation committee. The evaluation committee will evaluate and rank all proposals in accordance with the evaluation criteria [ plan ]. As part of the evaluation process, the top proposers may be requested to make an oral presentation to the committee, which may include an inspection trip to the proposer's facilities [ at a mutually agreeable time and place ]. The evaluation committee will then make a final ranking of all proposers who have made a presentation, based upon the presentation and the evaluation criteria [ plan ]. The committee will forward its written recommendation to the executive director, who will review the recommendation and make the final decision, including the acceptance of a proposal in whole or in part. The executive director or the executive director's designee(s) shall then attempt to negotiate a contract with the selected proposer. If a contract cannot be negotiated with the selected proposer on terms [ at a price ] the executive director determines reasonable, negotiations with that proposer will be terminated, and negotiations will be undertaken with the next highest ranked proposer. This process will be continued until a contract is executed by a proposer and the executive director, or negotiations with the highest ranked proposers are terminated. If no contract is executed, the executive director or the executive director's designee(s) may attempt to negotiate a contract with any of the other proposers. Negotiations will continue until a contract is executed or all proposals are rejected. If a contract is executed, the commission shall promptly notify, in writing, all other proposers of the contract award by facsimile, or by certified mail, return receipt requested, or by overnight mail. Any information relating to the solicitation not made privileged from disclosure by law shall be made available for public disclosure after execution of the contract pursuant to the Texas Open Records Act.

(e)

Preferences.

(1)

In the award of any contract for the purchase or lease of services, preference shall be given to a Texas resident bidder or proposer. Preference means the right of a Texas resident bidder or proposer to receive a contract award over a nonresident bidder or proposer, the cost to the state and quality being equal.

(2)

In the award of any contract for the purchase or lease of goods, preference shall be given to goods produced in Texas. Goods produced in Texas shall have the same preference as services offered by a Texas resident bidder or proposer.

(3)

In the award of any contract for the purchase or lease of goods or services where the goods or services produced in Texas or offered by a Texas resident bidder or proposer are not equal in cost and quality, preference shall be given to those goods or services produced in another state or offered by a bidder or proposer from another state over those goods or services produced in a foreign country or offered by a bidder or proposer from a foreign country, the cost to the state and quality being equal.

(4)

After application of the preferences established in paragraphs (1)-(3) of this subsection, preference shall be given to a minority business, as defined in the State Lottery Act, Texas Government Code, §466.107.

(5)

If, after application of the preferences established in paragraphs (1)-(4) of this subsection, a tie continues, the contract award shall be made by the drawing of lots.

(6)

A bidder or proposer entitled to a preference(s) under this subsection should claim the preference(s) in its bid or proposal. [ However, a preference(s) may be granted to a bidder or proposer who fails to claim the preference(s) if documents attached to the bid or proposal clearly indicate entitlement to the preference(s). ]

[ (f)

Protests.]

[ (1)

Any bidder or proposer aggrieved by the terms of any formal competitive solicitation, or with any contract award made pursuant to such a solicitation, may protest the commission's or the executive director's action. For the protest of a formal competitive solicitation, a protest must be filed, in writing, with the commission's general counsel within 72 hours after issuance of the IFB or RFP. For the protest of a contract award, a protest must be filed, in writing, with the commission's general counsel within 72 hours after receipt of notice of the execution of the contract. Protests not filed timely will not be considered, and the protestant will be so notified in writing by the commission's general counsel.]

[ (2)

To be considered, a protest must contain.]

[ (A)

a specific identification of the statutory provision, rule provision, or procurement procedure allegedly violated;]

[ (B)

a brief statement of the relevant facts;]

[ (C)

an identification of the issue or issues to be resolved;]

[ (D)

arguments and authorities in support of the protest;]

[ (E)

an affidavit that the contest of the protest are true and correct; and]

[ (F)

a certification that a copy of the protest (if to a contract award) has been served on the successful proposer.]

[ (3)

In the event of a timely filed protest of a solicitation, the executive director shall not proceed with issuance of a purchase order or execution of a contract unless the commission determines, in writing, that such action is necessary to protest the interests of the state.]

[ (4)

In the event of a protest of a contract award, the successful proposer may file a written response to the protest within 72 hours after the commission's receipt of the protest.]

[ (5)

The executive director will review the protest, any response, and the solicitation file; and will make a written determination of the protest. The written determination on the protest may include a determination cancelling the solicitation or voiding the contract. The executive director's written determination will be served, by facsimile, on the protestant and the successful proposer (if any). Confirmation of delivery to the designated facsimile machine will be conclusive proof that delivery was made. The protestant may appeal the determination of the executive director to the Texas Lottery Commission by filing a request with the general counsel not later than 72 hours after receipt of notice of the executive director's determination. Any appeal to the Texas Lottery Commission will be based solely on the written protest, any responses filed with the executive director, and the executive director's written determination The Texas Lottery Commission's determination of any appeal shall be administratively final when issued.

(f)

[ (g) ] Contract terms.

(1)

When determined appropriate by the executive director, a contract for the purchase or lease of goods or services related to the implementation, operation, or administration of the lottery shall provide for liquidated damages and a performance bond in an amount equal to the executive director's best available estimate of the revenue that would be lost by the state if the contractor fails to meet deadlines specified in the contract or materially fails to perform its contractual obligations in any other manner. When such contract terms are determined appropriate by the executive director, the IFB or RFP shall reflect such requirement.

(2)

When determined appropriate by the executive director, a contract for the purchase or lease of goods or services related to the implementation, operation, or administration of the lottery shall provide that the contractor, when utilizing subcontractors, shall give a preference to minority businesses, as defined in the State Lottery Act, Texas Government Code, §466.107. When such contract term is determined appropriate by the executive director, the IFB and RFP shall reflect such requirement.

(3)

A contract for the purchase or lease of goods or services relating to the implementation, operation, or administration of the lottery shall provide that the executive director may terminate the contract, without penalty, if an investigation made pursuant to the Act reveals that the person to whom the contract was awarded would not be eligible to receive a sales agent license under the State Lottery Act, Texas Government Code, §466.155. An IFB or RFP may require that bidders or proposers provide in their bids or proposals sufficient information to allow the commission to determine whether the bidder or proposer meets the eligibility requirements for a sales agent license.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on December 17, 1999.

TRD-9908775

Ridgely C. Bennett

Deputy General Counsel

Texas Lottery Commission

Earliest possible date of adoption: January 30, 2000

For further information, please call: (512) 344-5113


16 TAC §401.102

The Texas Lottery Commission proposes new 16 TAC §401.102, relating to protests of the terms of a formal competitive solicitation. The new section sets forth the procedures to be followed during a protest of the terms of a formal competitive solicitation.

Richard Sookiasian, Budget Analyst, has determined that for each year of the first five-year period the proposed section will be in effect, there will be no fiscal implications to state government or local government as a result of administering the proposed section.

Mr. Sookiasian has also determined that for each year of the first five-year period the proposed section will be in effect, there will be no estimated reductions in costs to the state and to local governments as a result of administering the proposed section.

Mr. Sookiasian has also determined that for each year of the first five-year period the proposed section will be in effect, there will be no estimated increases in revenue to the state or to local governments as a result of administering the proposed section. Mr. Sookiasian has also determined that for each year of the first five-year period the proposed section will be in effect, there will be no estimated decreases in revenue to the state or to local governments as a result of administering the proposed section.

Mr. Sookiasian has also determined that administering the proposed section does not have foreseeable implications relating to cost or revenues of the state or local governments.

Mr. Sookiasian has also determined that for each year of the first five-year period the proposed section will be in effect, the public benefits anticipated as a result of administering the proposed section will be to provide clear guidance relating to the procedures to be followed during a protest of the terms of a formal competitive solicitation.

Mr. Sookiasian has also determined that for each year of the first five-year period the proposed section will be in effect, there will be no probable economic cost to persons required to comply with the proposed section.

Mr. Sookiasian has also determined that there will be no cost to small businesses, micro businesses or individuals who are required to comply with the proposed section, and no effect on local employment is anticipated.

Comments on the proposed section may be submitted to Ridgely C. Bennett, Deputy General Counsel, Texas Lottery Commission, P.O. Box 16630, Austin, Texas 78761-6630.

A public hearing to receive public comments regarding proposed new 16 TAC §401.102, concerning protests of the terms of a formal competitive solicitation, will be held at 12:30 p.m. on January 20, 2000 at the William P. Hobby Building, 333 Guadalupe, Room 100, Austin, Texas 78701. Persons requiring any accommodation for a disability should notify Michelle Guerrero, Executive Assistant to the General Counsel, Texas Lottery Commission at (512) 344-5113 at least 72 hours prior to the public hearing.

The section is proposed under Texas Government Code, Section 466.015 which provides the Texas Lottery Commission with the authority to adopt rules governing the operation of the lottery.

Texas Government Code, Chapter 466 is affected by the proposed section.

§401.102.Protests of the Terms of a Formal Competitive Solicitation.

(a)

Any person aggrieved by the terms of any formal competitive solicitation may protest the commission's or the executive director's action.

(b)

A protest of the terms of any formal competitive solicitation must be filed, in writing, with the commission's general counsel within 72 hours after issuance of the formal competitive solicitation. The stamp affixed by the office of the general counsel shall determine the time and date of filing. If the protest is filed by facsimile transmission, the quality of the original hard copy shall be clear and dark enough to transmit legibly and it shall be the sender's sole responsibility to ensure complete, timely, and legible delivery to the office of the general counsel. A protests not filed timely will not be considered, and the protestant will be so notified in writing by the commission's general counsel.

(c)

To be considered, a protest must contain:

(1)

a specific identification of the statutory provision, rule provision, or procurement procedure allegedly violated;

(2)

a brief statement of the relevant facts;

(3)

an identification of the issue or issues to be resolved;

(4)

arguments and authorities in support of the protest; and

(5)

an affidavit that the contents of the protest are true and correct.

(d)

In the event of a timely filed protest of a competitive solicitation, the executive director shall not proceed with issuance of a purchase order or execution of a contract unless the commission determines, in writing, that such action is necessary to protect the interests of the lottery.

(e)

The executive director will review the protest, and the solicitation file; and will make a written determination of the protest. The written determination on the protest may include a determination canceling the solicitation. The executive director's written determination will be served, by facsimile, on the protestant. Confirmation of delivery to the designated facsimile machine will be conclusive proof that delivery was made.

(f)

The protestant may appeal the determination of the executive director to the Texas Lottery Commission by filing an appeal with the office general counsel not later than 72 hours after receipt of notice of the executive director's determination. The stamp affixed by the office of the general counsel shall determine the time and date of filing. If the appeal is filed by facsimile transmission, the quality of the original hard copy shall be clear and dark enough to transmit legibly and it shall be the sender's sole responsibility to ensure complete, timely, and legible delivery to the office of the general counsel. An appeal not filed timely will not be considered, and the appellant will be so notified in writing by the commission's general counsel.

(g)

To be considered, an appeal must contain:

(1)

a specific identification of the points of error alleged to be contained in the executive director's determination;

(2)

a brief statement of the relevant facts;

(3)

an identification of the issue or issues to be resolved;

(4)

arguments and authorities in support of the appeal; and

(5)

an affidavit that the contents of the appeal are true and correct.

(h)

Any appeal to the Texas Lottery Commission will be based solely on the written protest, the executive director's written determination, and the written appeal.

(1)

The Texas Lottery Commission, at its discretion, may allow oral argument by the protestant. The following procedure shall be followed if the Texas Lottery Commission grants oral argument:

(A)

Each oral argument may be limited in time as deemed appropriate by the Texas Lottery Commission.

(B)

Each oral argument will be based solely on the written protest, the executive director's written determination, and the written appeal.

(C)

The executive director may be present, have the opportunity to make a presentation to the Texas Lottery Commission regarding the determination, and may be available to respond to questions by the Texas Lottery Commission.

(2)

The Texas Lottery Commission's determination of any appeal shall be administratively final when issued.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on December 17, 1999.

TRD-9908776

Ridgely C. Bennett

Deputy General Counsel

Texas Lottery Commission

Earliest possible date of adoption: January 30, 2000

For further information, please call: (512) 344-5113


16 TAC §401.103

The Texas Lottery Commission proposes new 16 TAC §401.103, relating to protests of contract award. The proposed section will set forth the procedures to be followed during a protest filed by a bidder or proposer aggrieved by the executive director's award of a contract made pursuant to a formal competitive solicitation.

Richard Sookiasian, Budget Analyst, has determined that for each year of the first five-year period the proposed section will be in effect, there will be no fiscal implications to state government or local government as a result of administering the proposed section.

Mr. Sookiasian has also determined that for each year of the first five-year period the proposed section will be in effect, there will be no estimated reductions in costs to the state and to local governments as a result of administering the proposed section.

Mr. Sookiasian has also determined that for each year of the first five-year period the proposed section will be in effect, there will be no estimated increases in revenue to the state or to local governments as a result of administering the proposed section. Mr. Sookiasian has also determined that for each year of the first five-year period the proposed section will be in effect, there will be no estimated decreases in revenue to the state or to local governments as a result of administering the proposed section.

Mr. Sookiasian has also determined that administering the proposed section does not have foreseeable implications relating to cost or revenues of the state or local governments.

Mr. Sookiasian has also determined that for each year of the first five-year period the proposed section will be in effect, the public benefits anticipated as a result of administering the proposed section will be to provide clear guidance relating to the procedures to be followed during a protest filed by a bidder or proposer aggrieved by the executive director's award of a contract made pursuant to a formal competitive solicitation.

Mr. Sookiasian has also determined that for each year of the first five-year period the proposed section will be in effect, there will be no probable economic cost to persons required to comply with the proposed section.

Mr. Sookiasian has also determined that there will be no cost to small businesses, micro businesses or individuals who are required to comply with the proposed section, and no effect on local employment is anticipated.

Comments on the proposed section may be submitted to Ridgely C. Bennett, Deputy General Counsel, Texas Lottery Commission, P.O. Box 16630, Austin, Texas 78761-6630.

A public hearing to receive public comments regarding proposed new 16 TAC §401.103, concerning protests of contract award, will be held at 12:30 p.m. on January 20, 2000 at the William P. Hobby Building, 333 Guadalupe, Room 100, Austin, Texas 78701. Persons requiring any accommodation for a disability should notify Michelle Guerrero, Executive Assistant to the General Counsel, Texas Lottery Commission at (512) 344-5113 at least 72 hours prior to the public hearing.

The section is proposed under Texas Government Code, Section 466.015 which provides the Texas Lottery Commission with the authority to adopt rules governing the operation of the lottery.

Texas Government Code, Chapter 466 is affected by the proposed section.

§401.103.Protests of Contract Award.

(a)

Any bidder or proposer aggrieved by a contract award made pursuant to a formal competitive solicitation may protest the executive director's action. For the protest of a contract award made pursuant to a formal competitive solicitation, a protest must be filed, in writing, with the commission's general counsel within 72 hours after receipt of notice of execution of the contract. The stamp affixed by the office of the general counsel shall determine the time and date of filing. If the protest is filed by facsimile transmission, the quality of the original hard copy shall be clear and dark enough to transmit legibly and it shall be the sender's sole responsibility to ensure complete, timely, and legible delivery to the office of the general counsel. A protest not filed timely will not be considered, and the protestant will be so notified in writing by the commission's general counsel.

(b)

To be considered, a protest must contain:

(1)

a specific identification of the statutory provision, rule provision, or procurement procedure allegedly violated;

(2)

a brief statement of the relevant facts;

(3)

an identification of the issue or issues to be resolved;

(4)

arguments and authorities in support of the protest;

(5)

an affidavit that the contents of the protest are true and correct; and

(6)

a certification that a copy of the protest has been served on the successful proposer(s).

(c)

In the event of a protest of a contract award made pursuant to a formal competitive solicitation, the successful proposer(s) may file a written response to the protest within 72 hours after the commission's receipt of the protest. The stamp affixed by the office of the general counsel shall determine the time and date of filing. If the response is filed by facsimile transmission, the quality of the original hard copy shall be clear and dark enough to transmit legibly and it shall be the sender's sole responsibility to ensure complete, timely, and legible delivery to the office of the general counsel. Responses not filed timely will not be considered, and the respondent will be so notified in writing by the commission's general counsel.

(d)

The executive director will review the protest, any response, and the solicitation file; and will make a written determination of the protest. The written determination on the protest may include a determination voiding the contract. The executive director's written determination will be served, by facsimile, on the protestant and the successful proposer (if any). Confirmation of delivery to the designated facsimile machine will be conclusive proof that delivery was made.

(e)

Any aggrieved bidder or proposer may appeal the determination of the executive director to the Texas Lottery Commission by filing an appeal with the office of the general counsel not later than 72 hours after receipt of notice of the executive director's determination. The stamp affixed by the office of the general counsel shall determine the time and date of filing. If the appeal is filed by facsimile transmission, the quality of the original hard copy shall be clear and dark enough to transmit legibly and it shall be the sender's sole responsibility to ensure complete, timely, and legible delivery to the office of the general counsel. Appeals not filed timely will not be considered, and the appellant will be so notified in writing by the commission's general counsel.

(f)

To be considered, an appeal must contain:

(1)

a specific identification of the points of error alleged to be contained in the executive director's determination;

(2)

a brief statement of the relevant facts;

(3)

an identification of the issue or issues to be resolved;

(4)

arguments and authorities in support of the appeal; and

(5)

an affidavit that the contents of the appeal are true and correct.

(g)

In the event of an appeal of the executive director's determination, the successful proposer(s) may file a written response to the appeal within 72 hours after the commission's receipt of the appeal. The stamp affixed by the office of the general counsel shall determine the time and date of filing. If the response is filed by facsimile transmission, the quality of the original hard copy shall be clear and dark enough to transmit legibly and it shall be the sender's sole responsibility to ensure complete, timely, and legible delivery to the office of the general counsel. Responses not filed timely will not be considered, and the respondent will be so notified in writing by the commission's general counsel.

(h)

Any appeal to the Texas Lottery Commission will be based solely on the written protest, any timely filed responses to the written protest, the executive director's written determination, the written appeal, and any timely filed responses to the written appeal.

(i)

The Texas Lottery Commission, at its discretion, may allow oral arguments by the aggrieved bidder or proposer and the successful bidder or proposer. The following procedure shall be followed if the Texas Lottery Commission grants oral argument:

(1)

Each oral argument may be limited in time as deemed appropriate by the Texas Lottery Commission.

(2)

Each oral argument will be based solely on the written protest, any timely filed responses to the written protest, the executive director's written determination, the written appeal, and any timely filed responses to the written appeal.

(3)

The executive director may be present, have the opportunity to make a presentation to the Texas Lottery Commission regarding the determination, and may be available to respond to questions by the Texas Lottery Commission.

(j)

The Texas Lottery Commission's determination of any appeal shall be administratively final when issued.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on December 17, 1999.

TRD-9908777

Ridgely C. Bennett

Deputy General Counsel

Texas Lottery Commission

Earliest possible date of adoption: January 30, 2000

For further information, please call: (512) 344-5113