Office of the Governor Rick Perry

  • Phone: (512) 463-1778
  • Fax: (512) 463-1975
  • Address: 1100 San Jacinto
    Austin, Texas 78701

Consultant Contract Guidelines

General Agency Requirements and Guidelines For Consultant Contracts

Background

Government Code, Chapter 2254, Subchapter B, establishes six oversight requirements for all state agencies using private consultants. Because different state entities oversee these requirements, the distinctions between them may not be obvious. The statutory guideline for each of the requirements is:

Requirement Statutory Reference Government Code, Chapter 2254, Subchapter B Contact Agency
Notification Section 2254.028 Governor's Office of Budget and Planning (GOBP)/Legislative Budget Board (LBB)
30-Day RFP Publication Section 2254.029 Secretary of State
Finding of Fact Section 2254.028 GOBP
20-Day Selection Publication Section 2254.030 Secretary of State
Archives Section 2254.036 Texas State Library
Payment Sections 2254.034,2254.039 Comptroller's Office

Purpose

This document is intended to serve as a reference source, clarifying the statutory requirements for providing notice of consultant contracts to the Governor's Office of Budget and Planning (GOBP) and the Legislative Budget Board (LBB) and for obtaining certification from the GOBP in meeting the finding of fact requirement.

Publication requirements are the responsibility of the Secretary of State's Texas Register section. Requirements regarding the filing of all consultant reports are the responsibility of the Texas State Library. Adoption of rules for the administration of Government Code, Chapter 2254, Subchapter B, and requirements for the payment of consultants are the responsibility of the Office of the Comptroller of Public Accounts. This document is not intended to replace specific rules established by these agencies.

Definitions

The definitions provided below are those found in statutes that determine the review requirements for consultant contracts.

  • "Major Consulting Service" means the practice of studying and advising a state agency in a manner not involving the traditional employer/employee relationship (Government Code, Section 2254.021). A finding of fact by the GOBP is required for all contracts over $15,000, except for services specifically exempted.

  • "Professional Services" are those services directly related to the professional practices as defined by the Professional Services Procurement Act (Government Code, Section 2254.002). These include services within the scope of the practice of: accounting; architecture; optometry; medicine; land surveying; and professional engineering. Services provided by professionals outside the scope of their profession, e.g., management consulting services provided by accounting firms, are not considered professional services for the purposed of this document.

  • "Catalog Purchase" means the purchase or lease of an automated information system through the procedure established under Chapter 2157, Government Code. A contract with a "qualified information systems vendor" is not exempt from consultant contract requirements unless the service provided is itself exempt. A service, to be exempt, must be directly related to the automation of the system.

Exemptions

All state agencies, the jurisdictions of which are not limited to a geographical portion of the state, must comply with the consultant contract requirements outlined in this document. Agencies within the legislative, judicial, and executive branches of the state that meet this qualification must comply. University systems and institutions of higher education are not exempt and, therefore, must comply. Public community/junior colleges are exempt.

The Governor, Comptroller, and General Services Commission have authority to decide if it is more beneficial to procure particular consulting services through the purchasing procedures of the Government Code, Chapters 2155-2158. This option has not been exercised.

The Comptroller may define, by rule, a particular consulting service as exempt from regular consultant contract requirements. This option has not been exercised.

Certain types of contracts and certain types of professional services are exempt from notification, publication, finding of fact, and final reporting requirements. Catalog purchases are not automatically exempted from the consultant contract requirements. The following guides should be used in determining the need to comply with the consultant contract regulations.

Services

Contracts for professional and consulting services provided by the following types of professionals are exempt from complying with the provisions of Government Code, Chapter 2254, Subchapter B:

  • actuaries
  • investment counselors
  • registered architects
  • private legal counselors
  • registered engineers
  • optometrists
  • land surveyors · physicians and surgeons
  • certified public accountants
  • other medical and dental providers
  • certified real estate appraisers
  • consultants assisting the governing board of a retirement system trust fund to perform its constitutional fiduciary duties

Contracted services provided by the above professionals that fall outside their scope of practice are governed by the consultant contract process. For instance, management consulting services provided by a licensed attorney would not be exempt, and in order to contract for such services, an agency must comply with all consultant contract requirements.

Mixed Services

When a contract involves both consulting services and one or more other services, an agency must comply with the consultant service requirements when the primary objective of the contract is the purchase of consulting services. For instance, if a contractor proposes to analyze an agency's information systems needs and develop and implement an automated information system, the primary objective of the contract is not the analysis provided, but is the delivery of a data information system. This contract is not a consultant contract and the requirements for consulting contracts do not apply. However, the agency must comply with the purchasing procedures under Chapters 2151-2158, Texas Government Code, administered by the General Services Commission.

It is often difficult to determine whether a contract for mixed services such as that described above is subject to the consulting contract requirements or to bid purchasing procedures. If such circumstances arise, please contact your budget analyst at the GOBP for assistance.

Funding

Only in rare circumstances will a consultant contract be exempted from the requirements laid out by Government Code, Chapter 2254, Subchapter B, because of its method of finance. The single uniform exception to this rule is when the entire cost of the contract will be $15,000 or less. Otherwise, all proposed consultant contracts should conform to all oversight requirements. This includes contracts funded by:

  • appropriated funds, including all educational and general funds in the General Appropriations Act;
  • federal funds; and
  • revenue generated by the statutory duties of the agency.

Section 2254.024(a)(6) provides that certain consultant contracts, where the governing board of a retirement system trust fund deems the contract necessary for the performance of its fiduciary duties under the state constitution, need only comply with 20-day selection publication requirement.

Explanatory Note

A sometimes confusing aspect of dealing with a consultant contract is recognizing one. A contract with someone who calls himself or herself a consultant is not necessarily a "consultant contract" within the meaning of the Government Code and visa-versa.

The code defines "consulting service" as the service of studying or advising a state agency under a contract that does not involve the traditional relationship of employer and employee. [Government Code, Subsection 2254.021(1)]

"Studying or advising…." is the core of a true consultant contract and should be construed broadly. To "study" a state agency typically would mean to consider some aspect of the agency in detail, such as its financial status or its method of performing an administrative function, and to present that information to the agency. To "advise" a state agency typically would mean to provide a recommendation or identify options with respect to some course of action. The service of studying or advising also would include certain direct activities, such as "to assist" or "to coordinate" unless those activities are performed with respect to an exempted service.

One way to recognize whether a would-be consultant is "studying or advising" as opposed to doing something else, is to look at the deliverable involved. Generally speaking, a true "consultant" delivers information or provides assistance that enables the state agency to take some course of action. On the other hand, if the information simply enables the would-be consultant to take some course of action on the agency's behalf which is itself not a consulting service (such as developing software), then one is likely not dealing with a true "consultant contract" within the meaning of the code.

However, the statute recognizes that sometimes true consultant contracts will necessarily involve a mixture of consulting (studying or advising) and other services. Such contracts are referred to as "mixed contracts." [Government Code, Section 2254.038] A mixed contract is still a true consultant contract when its primary objective is to study or advise.

Example: A consulting firm proposes to analyze an agency's economic performance in the business sector of the community and deliver a report to the agency. The firm will analyze data with a computer program it develops for this specific project. This mixed contract is still a true consultant contract, even though the firm will also write a computer program, because the development of the software is ancillary to the primary objective of the contract - to provide an economic analysis of the agency. Had the firm proposed selling the agency the software to enable the agency to conduct its own analysis, the contract would not be a true consulting contract.

"…Does not involve the traditional relationship of employer and employee…. " In employment law, the central focus of a traditional employer-employee relationship is the employer's right to control various aspects of the employee's work, such as when, where, and how the work is to be done. A true "consultant" would be someone who is not treated like an employee but like an independent contractor.

For example, the contractor:

  • does not have to comply with employer's instructions concerning when, where, and how the work is to be done;
  • does not have a continuing relationship with the employer;
  • performs work on his or her own premises;
  • provides his or her own tools and materials;
  • may work for more than one employer at a time;
  • offers his or her services to the general public;
  • cannot be fired by the employer; and/or
  • cannot quit work at any time without incurring a liability.

In summary, a true "consultant contract" under the code is one in which the primary objective of the contract is to study or advise a state agency in a manner that involves an independent contractor relationship with the employer.

Original Contracts

The following guide should be used in determining application of specific requirements in Government Code, Chapter 2254, Subchapter B, as they apply to an original contract for private consultant services.

Cost
Requirement for an Original Contract
30-Day RFP Publication Finding of Fact 20-Day Selection Publication Final Report
Less than or equal to $15,000 No No No Yes
Greater than $15,000 Yes Yes Yes Yes

Notice of Intent and Finding of Fact

Before entering into a major consulting contract (consulting contracts exceeding $15,000), a state agency or institution must notify the LBB and the GOBP that the agency or institution intends to contract with a consultant and must obtain a finding of fact from the GOBP that the consulting services are necessary.

Notification of intent to hire a consultant should be submitted with the finding of fact request.

In order to obtain a finding of fact from the GOBP, an agency must explain why there is a substantial need for the contract. This justification should describe:

  • the need to be addressed;
  • the proposed role of the consultant;
  • the consequence of not procuring the assistance of a consultant;
  • how the cost was determined; and
  • how the cost relates to the expected benefits or level of effort to be undertaken.

The agency should include a copy of the proposed or published request for proposals (or invitation for contracts) and any further information about the services to be delivered under the contract. The agency should also explain how the final product would be incorporated into agency operations, or into the agency's future legislative appropriations requests.

The LBB receives notifications, in a form prescribed by the LBB, not later than the 10th day after an agency or institution of higher education enters into a contract over $14,000. This requirement is delineated in Article IX, Section 9-7.05 of the General Appropriations Act. Instructions and forms were sent to agencies on August 23, 1999.

Publication Requirements

Not later than the 30th day before the date it enters into a major consulting contract, a state agency or institution must file with the Secretary of State for publication in the Texas Register:

  • an invitation for consultants to provide offers of consulting services (RFP);
  • the name of the person to be contacted by a consultant that intends to make an offer;
  • the closing date for the receipt of offers; and
  • the procedure by which the contract will be awarded.

Not later than the 20th day after entering into a major consultant contract, a state agency or institution of higher education must file with the Secretary of State for publication in the Texas Register:

  • a description of the activities to be performed by the consultant;
  • the name and business address of the consultant;
  • the total value and beginning and ending dates of the contract; and
  • the dates that the deliverables (reports, documents, etc.) will be presented to the agency.

Note: During the biennial budget hearing process, a state agency shall report to the LBB and GOBP any action the agency has taken in response to recommendations resulting from consultant contracts in the previous biennium.

RENEWALS, EXTENSIONS, AND AMENDMENTS

When a contract is renewed, extended, or amended, compliance with consultant contract requirements is determined by the cost of the original contract and the renewal, extension, or amendment. The following guidelines should be used in such cases:

Cost of
Original Contract
Requirements for Renewals, Amendments, or Extensions
Other 30-Day
RFP
Publication
Finding of
Fact
20-Day Selection
Publication
Final Report
Greater
than
$15,000
Renewal, Amendment,
or Extension < $15,000
No No Yes Yes
Greater
than
$15,000
Renewal, Amendment,
or Extension > $15,000
Yes Yes Yes Yes
Less than
or Equal to $15,000
Original Amount Plus
Renewal, Amendment, or
Extension > $15,000
Yes Yes Yes Yes
Less than or
equal to $15,000
Original Amount Plus
Renewal, Amendment, or
Extension < $15,000
No No Yes Yes

Less than or equal to $15,000 Original Amount PlusRenewal, Amendment, orExtension < $15,000 No No Yes Yes

Like "new" consultant contracts, requirements for contract renewal, amendment, or extension depend on the dollar value of the "new" contract.

  1. Renewals, Amendments, and Extensions of Contracts with a Total Value Less Than $15,000

    For original consultant contracts initially valued under $15,000 and that will remain under $15,000 following renewal, amendment, or restriction, the following publication requirements applies:

    Not later than the 20th day after a state agency or an institution of higher education enters in to a contract for consulting services, written notification must be filed with the Secretary of State for publication in the Texas Register.

  2. Renewals, Amendments, and Extension of Contracts Exceeding $15,000

    For major consultant contract modifications and non-major contracts which, when modified, will cause the total value to exceed $15,000, notification, finding of fact, publication, and reporting requirements are similar to those of original major consultant contracts.

    For major consultant contracts (those exceeding $15,000) in which the renewed contract will have a total value less than $15,000, the following publication requirement applies:

    Not later than the 20th day after entering into a renewal consultant contract with a renewal value under $15,000, a state agency or institution must file with the Secretary of State for publication in the Texas Register:
  • a description of the activities to be performed by the consultant;
  • the name and business address of the consultant;
  • the total value and beginning and ending dates of the contract; and
  • the dates that the deliverables (reports, documents, etc.) will be presented to the agency.

Law specifically prohibits agencies from dividing, renewing, extending, or amending consultant contracts to avoid the requirements otherwise specified in this document.

Deadlines

Government Code, Chapter 2254, Subchapter B, specifies certain time constraints in meeting the publication and reporting requirements. Below are the filing deadlines included in the law and other process deadlines:

Requirement Submission Document Filing
Date
Administering
Agency
30-Day RFP Publication Contract Invitation 30* Secretary of State
Finding of Fact** Consultant Contract Notification Form 30* GOBP
20-Day Selection
Publication
Contract Selection Information 20*** Secretary of State
Copies to: GOBP/LBB
Final Reporting** All Reports Produced by Consultant *** Texas State Library

* Number of days before executing contract with consultant.
** No specific deadline established by statute.
*** Number of days after executing contract with consultant.

Emergency Waiver

"Unforeseen Emergency" is a situation that suddenly and unexpectedly causes a need for consulting services (Government Code, Section 2254.025). The term includes, but is not limited to, the issuance of a court order, an actual or imminent natural disaster, and new state or federal legislation. An emergency is unforeseen only to the extent that a state agency was not negligent in anticipating the occurrence of the emergency. The statute provides that if an "unforeseen emergency" causes a need for the services of a private consultant in a time frame that precludes compliance with all or part of the requirements outlined in this document, the agency may request from the Governor a limited waiver. Each waiver will be considered on a case-by-case basis. The specific requirements to be temporarily waived by the Governor will be dependent upon individual circumstances.

In order to request an emergency limited waiver, the agency must submit to the GOBP a completed Consultant Contract Notification Form with a cover letter that fully describes the nature of the emergency and justification for the waiver.

If the Governor grants a waiver, Section 2254.025 of the Government Code mandates that the agency fully comply with the requirements outlined in this document. The granting of a waiver by the Governor fulfills the finding-of-fact requirement for the consultant contract. Publication in the Texas Register should detail the description of the emergency that necessitated the Governor's temporary waiver.


Final Reports

Section 2254.036 requires agencies to forward copies of all consultant documents, files, recordings, or reports to the Texas State Library. Final reports should be submitted to the GOBP.


Noncompliance

If an agency does not comply with any of the requirements of Section 2254, Subchapter B, the contract is void.


Questions

Questions concerning these procedures and instructions should be directed to your agency's GOBP budget analyst at (512) 463-1778.