Section 401.101 - Lottery Procurement Procedures(a) Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. (1) Act--The State Lottery Act.(2) Agency--For the purposes of this subchapter that deals with procurements for the administration of the lottery, the term "agency" refers to the commission as defined in paragraph (5) of this subsection.(3) Best and Final Offer (BAFO)--A revised final bid or proposal submitted after all clarifications, discussions, and negotiations with the agency.(4) Executive director--The executive director of the Commission.(5) Commission--The state agency established under Chapter 466 and Chapter 467, Government Code. However, this subchapter applies only to the procurement of goods and services for the administration of the lottery authorized by the State Lottery Act. For the sake of clarity, this subchapter will refer to the commission as "agency" and to the appointed board as the "Texas Lottery Commission".(6) Cost--The price at which the agency can purchase goods and/or services.(7) Electronic State Business Daily or Business Daily--An online directory administered by the Comptroller of Public Accounts, or its successor, that publishes solicitations for the purpose of informing vendors of procurement opportunities and provides public notice of contract awards.(8) Emergency procurement--A situation requiring the state agency to make the procurement more quickly to prevent a hazard to life, health, safety, welfare, or property or to avoid undue additional cost to the state.(9) Goods--Supplies, materials, and equipment.(10) IFB--A written invitation for bids.(11) Lottery--The procedures and operations of the agency 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.(12) Nonresident bidder or proposer--A person whose principal place of business is not in Texas, but does not include a bidder whose majority owner or parent company has its principal place of business in Texas.(13) Principal place of business--The state in which the head office of a business is located, and generally, where the executive management is located and the business records are maintained.(14) 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.(15) Proprietary purchase--A product or service that is unique to a single vendor or manufacturer and is not available from other sources.(16) Resident bidder or proposer--A person whose principal place of business is in this state, including a contractor whose ultimate parent company or majority owner has its principal place of business in this state.(17) RFP--A written request for proposals.(18) RFQ--A written request for qualifications.(19) Services--The furnishing of skilled or unskilled labor or professional work. (20) State or statewide contract--A contract for goods or services established and administered by another state agency (e.g., Texas Comptroller of Public Accounts, Texas Department of Information Resources) for use by all state agencies.(21) Texas Lottery Commission--The appointive board or commission established in Chapter 467, Government Code.(b) Use and Effect. This subchapter is prescribed for the performance of the statutory powers and functions vested in the agency. In no event shall they, or any of them, be construed as a limitation or restriction upon the exercise of any discretion authorized to be exercised by the Texas Lottery Commission.(c) Procurement method. (1) For the purchase or lease of goods and services not expected to exceed $10,000, 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 agency, at a minimum, will conduct an informal competitive solicitation in an attempt to obtain at least three competitive bids and will solicit at least two HUB vendors.(3) For the purchase or lease of goods and services expected to exceed $25,000, the agency will conduct a formal competitive solicitation in an attempt to obtain at least three competitive bids or proposals and will solicit at least two HUB vendors.(4) Printing services. For the purchase of printing services over $2,500, the agency will submit print job specifications and bid requests to the State Print Shops. If no responsive bids are received from a State Print Shop or, after the results of the bid evaluation, the agency determines that best value would be achieved through a private sector vendor, the agency may perform a competitive solicitation outlined in paragraph (2) or (3) of this subsection.(5) Emergency procurement. Notwithstanding paragraphs (1) - (4) of this subsection, the agency may make an emergency purchase or lease of goods or services. 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 $10,000, the agency may conduct an informal competitive solicitation in an attempt to obtain at least three competitive bids, whenever possible. For emergency purchases in excess of $25,000, the procurement will be posted on the Electronic State Business Daily; however, the minimum posting requirements do not apply. Posting of the advertisement and/or the award notice satisfies this requirement. In response to an emergency, the agency may procure goods or services in the most expeditious manner deemed appropriate, including from a sole source.(6) Proprietary purchase. When the agency believes that a purchase of goods or services over $10,000 is proprietary to one vendor or one manufacturer, a written proprietary purchase justification will be included in the procurement file. If the estimated purchase price exceeds $25,000, the procurement will be posted on the Electronic State Business Daily prior to a purchase order or contract being issued.(7) Notwithstanding paragraphs (1) - (4) of this subsection, the agency may make a purchase or lease of goods or services under any other procedure not otherwise prohibited by law.(d) Informal competitive solicitations. (1) An informal competitive solicitation is a process conducted in an effort to receive at least three competitive bids for a specifically identified good or service, without the advertisement and issuance of an IFB or RFP. The bids may be solicited by letter, electronic mail, facsimile, or telephone call. The following information will be recorded by the agency in the procurement file: (A) the name and telephone number of each person or company to which the solicitation was provided;(B) the name and telephone number of the person or company submitting the bid;(C) the date the bid was received;(D) the amount of the bid;(E) bidder's Historically Underutilized Business status; and(F) the name and telephone number of the person receiving the bid for the agency.(2) The agency will award a contract to the qualified bidder submitting the lowest and best bid, except that the agency may reject all bids if it is determined to be in the best interest of the state.(3) The contract will be awarded by the issuance of a written purchase order.(e) 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, RFP, RFQ, or another statewide contract process, respectively. (A) An IFB will be used when the agency 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.(B) An RFP will be used when the agency knows generally what it wishes to procure in order to accomplish a certain goal(s) or objective(s); requirements cannot be completely and accurately described; requirements can be satisfied in a number of ways, all of which could be acceptable; or, where oral or written communications with proposers may be necessary in order to effectively communicate requirements and/or assess proposals, and the agency wants proposers to offer a solution(s) to address such need(s) at a specific price(s). The RFP process allows for negotiations between a proposer and the issuing agency.(C) An RFQ will be used when the agency wants to procure professional services and evaluate proposers solely on their qualifications.(2) The agency will advertise formal competitive solicitations, whether by IFB, RFP, or RFQ on the Electronic State Business Daily in accordance with the Comptroller of Public Accounts posting time requirements. The agency may advertise such solicitations in other media determined appropriate by the agency.(3) For all formal competitive solicitations, the agency will award a contract to the most qualified bidder or proposer as determined during the evaluation of the bids or proposals. The agency may reject all bids or proposals if it is determined to be in the best interest of the agency. At the time a purchase order is issued or a contract is executed, the agency will notify, in writing, all other bidders or proposers of the contract award by facsimile, email or by certified mail. Any information relating to the solicitation not made privileged from disclosure by law will be made available for public disclosure, after award of a contract, pursuant to the Texas Public Information Act.(4) For those formal competitive solicitations where fewer than two bids or proposals are received, the agency will document the reasons, if known, for the lack of two bids or proposals. If fewer than two bids or proposals are received, the agency may cancel the solicitation and conduct another solicitation, or it may award a contract if one acceptable bid or proposal is received.(5) For formal competitive solicitations where an IFB is used, the agency will award a contract to the qualified bidder submitting the lowest cost responsible bid meeting all specifications and providing the best value for the agency, as determined during the evaluation of the bids. Negotiations are not authorized when utilizing an IFB procurement method; however, if only one response is received, negotiations are allowed, provided, negotiations may not result in a material change to the advertised specifications.(f) RFP. (1) Submission. When an RFP is used by the agency, the RFP will contain, at a minimum, the following: (A) a general description of the goods and/or services to be provided, 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 and person to whom they are to be submitted;(D) an identification of the process to be utilized in evaluating proposals; 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 agency's evaluation of the likelihood of the proposal to produce the desired outcome for the agency, considering, among other criteria: (I) the quality of the proposer's past performance in contracting with the agency, with other state entities, or with private sector entities;(II) the qualifications of the proposer's personnel;(III) the experience of the proposer in providing the requested goods or services;(IV) the financial status of the proposer; and(iv) whether the proposer performed the good faith effort required by the HUB subcontracting plan, when the agency has determined that subcontracting is probable.(2) Evaluation Process. The agency will, prior to the deadline for receipt of proposals, develop and establish comprehensive evaluation criteria to be utilized by an evaluation committee in evaluating the proposals. All proposals that are responsive to the RFP will be reviewed by the evaluation committee. Part of the initial evaluation process may include an inspection trip to the proposer's facilities, and/or proposers may be requested to make an oral presentation to the committee The evaluation committee may seek advice from consultants. If consultants are employed, they may be provided all information provided by the proposers. The evaluation committee will evaluate and score all proposals in accordance with the evaluation criteria.(3) Best and Final Offers (BAFO). The agency may select top proposers, which may each be given an opportunity to discuss, clarify, and negotiate with the agency, and submit revisions to their respective proposals to the agency through a BAFO process. During discussions between the proposers and the agency, no information from a competing proposal may be revealed by the agency to another competitor. Any type of auction practice or allowing the transfer of technical information is specifically prohibited. At the conclusion of the discussions, BAFOs may be formally requested from the proposers and a deadline will be set for submission. BAFOs will be submitted by supplemental pages and not a complete resubmission of the proposal. All BAFOs will be reviewed by the evaluation committee. The evaluation committee will evaluate and score the BAFO response together with the original proposal in accordance with the evaluation criteria.(4) Negotiation. If a BAFO process is not used, the agency will attempt to negotiate a contract with the selected proposer. If a contract cannot be negotiated with the selected proposer on terms the agency determines reasonable, negotiations with that proposer will be terminated, and negotiations will be undertaken with the next highest scored proposer. This process will be continued until a contract is executed by a proposer and the agency, or negotiations with all qualified proposers are terminated. If no contract is executed, the agency may cancel the solicitation.(5) Multiple Award. The agency may award a contract to two or more vendors or contractors using a single solicitation to furnish the same or similar supplies or services, where more than one vendor or contractor is needed to meet the agency's requirements for quantity, delivery, or service.(g) RFQ. (1) Submission. When an RFQ is used by the agency, the RFQ will contain, at a minimum, the following: (A) a general description of the professional 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 and person to whom they are to be submitted;(D) an identification of the process 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 demonstrated competence and qualifications to perform the services;(ii) the quality of the proposer's past performance in contracting with the agency, with other state entities, or with private sector entities;(iii) the financial status of the proposer;(iv) the qualifications of the proposer's personnel;(v) the experience of the proposer in providing the requested services; and(vi) whether the proposer performed the good faith effort required by the HUB subcontracting plan, when the agency has determined that subcontracting is probable.(2) Evaluation Process. The agency will, prior to the deadline for receipt of proposals, develop and establish comprehensive evaluation criteria to be utilized by an evaluation committee in evaluating the proposals. All proposals that are responsive to the RFQ will be reviewed by the evaluation committee. The evaluation committee will evaluate and score all proposals in accordance with the evaluation criteria.(3) Negotiation. The agency will then attempt to negotiate a contract, for a fair and reasonable price, with the selected proposer; or, the agency may engage in simultaneous negotiations with multiple proposers. If a contract cannot be negotiated with the selected proposer on terms the agency determines reasonable, negotiations with that proposer will be terminated, and negotiations will be undertaken with the next highest scored proposer. This process will continue until a contract is executed by a proposer and the agency, or negotiations with all qualified proposers are terminated. If no contract is executed, the agency may cancel the solicitation.(h) Preferences. (1) If, after application of the preferences required by Texas law, a tie continues, the contract award will be made by the drawing of lots.(2) A bidder or proposer entitled to a preference(s) under Texas law shall claim the preference(s) in its bid or proposal.(i) Contract terms. A contract for the purchase or lease of goods or services relating to the implementation, operation, or administration of the lottery will 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, § RSA 466.155. An IFB, RFP or RFQ may require that bidders or proposers provide in their bids or proposals sufficient information to allow the agency to determine whether the bidder or proposer meets the eligibility requirements for a sales agent license.16 Tex. Admin. Code § 401.101
The provisions of this §401.101 adopted to be effective March 16, 2009, 34 TexReg 1841; amended to be effective April 25, 2013, 38 TexReg 2507; Amended by Texas Register, Volume 40, Number 08, February 20, 2015, TexReg 814, eff. 2/25/2015; Amended by Texas Register, Volume 40, Number 52, December 25, 2015, TexReg 9632, eff. 12/31/2015; Amended by Texas Register, Volume 44, Number 17, April 26, 2019, TexReg 2156, eff. 5/2/2019; Amended by Texas Register, Volume 46, Number 45, November 5, 2021, TexReg 7597, eff. 11/11/2021