Proposed Rules Title 34

TITLE 34. PUBLIC FINANCE

PART 1. COMPTROLLER OF PUBLIC ACCOUNTS

CHAPTER 16. COMPTROLLER GRANT PROGRAMS

SUBCHAPTER B. TEXAS BROADBAND DEVELOPMENT OFFICE [~~PROGRAM~~]

DIVISION 1. BROADBAND DEVELOPMENT MAP

The Comptroller of Public Accounts proposes new §16.21, concerning broadband development map; §16.22, concerning map challenges and criteria; §16.23, concerning challenge process and deadlines; §16.24, concerning map challenge determinations. These new sections implement changes to Government Code, §490I.0109, made by Senate Bill 1238, 88th Legislature, R.S., 2023. The new sections will be located in Subchapter B, in new Division 1 (Broadband Development Map).

The comptroller also proposes to rename Subchapter B as Texas Broadband Development Office.

The new sections replace §16.33, concerning designated area eligibility, and §16.34, concerning designated area reclassification, which the comptroller will repeal in a separate rulemaking.

Section 16.21 implements the requirement for the comptroller to create, and annually update, a broadband development map depicting the availability of broadband service for each broadband serviceable location in this state. As required by Senate Bill 1238, the new section updates the minimum information that must be displayed on the map regarding the availability of broadband service for each designated area. The section updates the scope of designated areas from a census block level to a county level perspective to provide a more relatable way to visualize broadband availability but retains the discretion of the comptroller to adjust the scope as needed if displaying the required information is not technically feasible or impractical at the county level.

Section 16.22 permits internet service providers and political subdivisions of this state to submit challenges to the broadband development map. Challengers will be permitted to challenge the classification of broadband serviceable locations as shown on the broadband development map. The section limits the reasons for which a challenge can be submitted and requires the office to publish the requirements and criteria for submitting a challenge on its website. The section will also limit the ability to submit a challenge if the comptroller adopts the federal broadband map by imposing a preliminary requirement to first submit a challenge to the federal broadband map before submitting a challenge to the state broadband map.

Section 16.23 outlines the challenge process and deadlines. The section gives the office the discretion to reject a challenge without further action if the challenge does not comply with the requirements of the section or criteria established by the office. To ease administration, the section changes the manner that required notices may be provided to affected broadband service providers and political subdivisions.

Section 16.24 establishes the criteria the office must consider in making a map challenge determination, including: the availability of reliable broadband service; actual internet speed and reliability data; the existence or non-existence of existing federal commitments; and, any other information the office determines may be useful in making a determination. The section tracks statutory language regarding when a location that is subject to an existing federal commitment for the deployment of broadband services may be reclassified as eligible to receive funds and re-adopts provisions for recapturing funds if, after making an award, the office later determines that a location was ineligible to receive funding.

Brad Reynolds, Chief Revenue Estimator, has determined that during the first five years that the proposed new rules are in effect, the rules: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rule's applicability; and will not positively or adversely affect this state's economy.

Mr. Reynolds also has determined that the proposed new rules would have no significant fiscal impact on the state government, units of local government, or individuals. The proposed new rules would benefit the public by implementing the current statute. There would be no significant anticipated economic cost to the public. The proposed new rules would have no significant fiscal impact on small businesses or rural communities.

Comments on the proposal may be submitted to Greg Conte, Director, Broadband Development Office, at broadband@cpa.texas.gov or at P.O. Box 13528, Austin, Texas 78711-3528. Comments must be received no later than 30 days from the date of publication of the proposal in the Texas Register.

The new sections are proposed under Government Code, §490I.0109, which permits the comptroller to adopt rules as necessary to implement Chapter 490I regarding the Texas Broadband Development Office.

The new sections implement Government Code, Chapter 490I.

§16.21.Broadband Development Map.

(a) The comptroller shall create, update annually, and publish on the comptroller's website a broadband development map depicting the availability of broadband service for each broadband serviceable location in this state. The office shall use the best available information, including information available from the Federal Communications Commission, political subdivisions, and broadband service providers, to create or update the map.

(b) Except as provided by subsection (c) of this section, for the purpose of developing the broadband development map, the scope of a designated area in this state shall consist of a county.

(c) If the comptroller determines that developing the broadband development map at the county level is not technically feasible or practical, the comptroller may develop the map using a smaller geographic unit for which information is available from the Federal Communications Commission.

(d) The comptroller shall, at a minimum, display for each designated area on the broadband development map:

(1) each unserved, underserved, and served broadband serviceable location;

(2) an indication of whether each broadband serviceable location is ineligible to receive funding on account of an existing federal commitment to deploy qualifying broadband service;

(3) the number of broadband service providers that serve the designated area;

(4) an indication of whether the designated area has access to internet service that is not broadband service, regardless of the technology used to provide the service;

(5) each public school campus with an indication of whether the public school campus has access to broadband service; and

(6) the number and percentage of unserved, underserved, and served broadband serviceable locations within the designated area.

§16.22.Map Challenges; Criteria.

(a) Subject to subsection (c) of this section, a broadband service provider or a political subdivision of this state may challenge the designation of a broadband serviceable location located in this state and petition the office to reclassify the location on the broadband development map.

(b) A challenge submitted under this section must be submitted on forms and contain the information prescribed by the office. The office shall publish on its website the requirements and criteria for submitting a challenge under this section.

(1) that reliable broadband service at the location is or is not available within 10 days of a request for service;

(2) that the actual speed of the fastest available service tier at the location does or does not meet the broadband service speed thresholds as established by Government Code, §490I.0105(a);

(3) that the actual round-trip latency of broadband service at the location exceeds 100 milliseconds;

(4) that the availability of reliable broadband service at the location is subject to a data cap that results in actual speeds of the fastest available service tier falling below the broadband service speed thresholds as established by Government Code, §490I.0105(a); or

(5) that the location is or is not subject to an existing federal commitment to deploy qualifying broadband service to the location.

(d) If the comptroller adopts a map produced by the Federal Communications Commission as provided under Government Code, §490I.0105(q), a challenge may only be submitted under this section if the person or entity submitting the challenge provides evidence that the person or entity previously submitted a successful challenge to the Federal Communications Commission for the broadband serviceable locations for which the entity is seeking a reclassification.

§16.23.Challenge Process; Deadlines.

(a) A challenge under this subchapter must be submitted to the office not later than the 60th day after the broadband development map is published on the comptroller's website.

(b) The office may reject a challenge without further action if the challenge is not submitted on forms prescribed by the office or does not otherwise comply with this division or any criteria established by the office as provided by this subchapter.

(c) The office shall provide notice of an accepted challenge to each affected political subdivision and broadband service provider by posting notice of the challenge on the comptroller's website. For the purposes of this section, an affected political subdivision or broadband service provider shall be deemed to have received notice on the date the notice is posted on the comptroller's website.

(d) Not later than the 45th day after the date that the office posts the notice required under subsection (c) of this section, an impacted political subdivision or a broadband service provider may provide information to the office showing whether the broadband serviceable locations that have been challenged should or should not be reclassified.

(e) Not later than the 75th day after the date that the office posts the notice required under subsection (c) of this section, the office shall determine whether to reclassify the challenged broadband serviceable locations and shall update the map as necessary.

§16.24.Challenge Determinations.

(a) The office shall consider the following in making a determination of whether to reclassify a designated area:

(1) the availability of reliable broadband service;

(2) an evaluation of actual Internet speed test and reliability data;

(3) the existence or non-existence of an existing federal commitment to deploy qualifying broadband service to a location; and

(4) any other information the office determines may be useful in determining whether a location should be reclassified.

(b) A broadband serviceable location that is classified as a served location solely because the location is subject to an existing federal commitment to deploy qualifying broadband service may be reclassified if:

(1) federal funding is forfeited or the recipient of the funding is disqualified from receiving the funding; and

(2) the location is otherwise eligible to receive funding under the program.

(c) A determination made by the office under this subsection is not a contested case for purposes of Government Code, Chapter 2001.

(d) If after making an award the office determines that at the time of making the award a broadband serviceable location was not eligible to receive funding under this subchapter, the office may proportionately reduce the amount of the award and the grant recipient shall be required to return any grant funds that were awarded as a result of the classification error. The office shall reduce the amount required to be returned under this subsection if the office determines, in its sole discretion, that the grant funds or any portion thereof were expended in good faith.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 2, 2023.

TRD-202303649

Victoria North

General Counsel, Fiscal and Agency Affairs Legal Services

Comptroller of Public Accounts

Earliest possible date of adoption: November 12, 2023

For further information, please call: (512) 475-2220

DIVISION 2. BROADBAND DEVELOPMENT PROGRAM

34 TAC §§16.30, 16.31, 16.35 - 16.38, 16.40 - 16.42

The Comptroller of Public Accounts proposes amendments to §16.30, concerning definitions, §16.31, concerning notice of funds availability, §16.35, concerning program eligibility requirements, §16.36, concerning application process generally, §16.37, concerning overlapping applications or project areas, §16.38, concerning special rule for overlapping project areas in noncommercial applications, §16.40, concerning evaluation criteria, §16.41, concerning application protest process, and §16.42, concerning awards; grant agreement.

The comptroller proposes to rename Subchapter B as Texas Broadband Development Office, reorganize it into two divisions, and move all sections located in Subchapter B to Division 2 (Broadband Development Program).

The amendments to §16.30 add new definitions.

The amendments to §16.31 expand the methods by which the office may publish the required notice of funds availability.

The amendments to §16.35 make conforming changes required by Senate Bill 1238, 88th Legislature, R.S., 2023, by deleting the prohibition against making an award to a broadband service provider that does not report certain information to the office and renumbering accordingly.

The amendments to §16.36 provide the office with greater discretion to reject an application that does not comply with applicable program requirements on its face. The amendments also update the reasons for which an applicant may amend and resubmit an application after a protest has been upheld. The amendments also make conforming changes required by Senate Bill 1238, 88th Legislature, R.S., 2023, by prohibiting a broadband service provider from submitting an application protest if the provider has not provided certain information requested by the office.

The amendments to §16.37 revise and streamline the process by which overlapping project locations are resolved by removing the requirement allowing broadband service providers to collaboratively resolve project area overlaps and providing for the office to independently resolve the overlapping areas to avoid duplication. The proposed amendments make changes to how the remaining project area is calculated after overlapping project areas are resolved by the office. The proposed amendments also require the office to provide notice to applicants affected by the determination of the office.

The amendments to §16.38 revise the process by which overlapping project locations are resolved between applications from noncommercial broadband service providers and applications from commercial broadband service providers.

The amendments to §16.40 provide for a new process through which the office shall establish eligibility and award criteria and requires the office to provide notice of the criteria in a notice of funds availability. The amendments expand the mandatory criteria that the office must consider when establishing the eligibility and award criteria, including establishing a preference for fiber optic projects while also allowing the office to consider non-fiber optic projects for high-cost areas.

The amendments to §16.41 update the application protest process by requiring the office to publish on its website the criteria and requirements for submitting a protest. The amendments clarify the basis for which a protest may be submitted and eliminates specific documentation requirements set out by rule. The amendments provide additional notice requirements for applicants affected by a protest determination and makes changes to when an affected applicant may submit an amended application if a protest is upheld.

The amendments to §16.42 clarify that the restriction on the use of grant funds only applies to grants for the deployment of broadband infrastructure.

Brad Reynolds, Chief Revenue Estimator, has determined that during the first five years that the proposed amended rules are in effect, the rules: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rule's applicability; and will not positively or adversely affect this state's economy.

Mr. Reynolds also has determined that the proposed amended rules would have no significant fiscal impact on the state government, units of local government, or individuals. The proposed amended rules would benefit the public by conforming the rule to current statute. The proposed amended rules would have no significant fiscal impact on small businesses or rural communities.

The amendments are proposed under Government Code, §490I.0109, which permits the comptroller to adopt rules as necessary to implement Chapter 490I regarding the Texas Broadband Development Office.

The amendments implement Government Code, Chapter 490I.

§16.30.Definitions.

As used in this subchapter and in these rules, the following words and terms shall have the following meanings, unless the context clearly indicates otherwise:

(1) Applicant--A person that has submitted an application for an award under this subchapter.

(2) Application protest period--A period of at least thirty days beginning on the first day after an application is posted under §16.36(d) of this subchapter.

(3) Broadband service--Internet service that delivers transmission speeds capable of providing [~~a minimum download or upload threshold speed that are the greater of~~]:

(A) a download speed of not less than 25 Mbps [~~or faster; and an upload speed of three Mbps or faster as established under Government Code, §490I.0101~~] ; [or]

(B) an [~~the~~] upload speed of not less than three Mbps [or download threshold speeds for advanced telecommunications capability under 47 U.S.C. §1302 as adopted by the Federal Communications Commission and as published on the comptroller's website under Government Code, §490I.0101.] ; and

(C) network round-trip latency of less than or equal to 100 milliseconds based on the 95th percentile of speed measurements.

(4) Broadband development map--The map adopted or created under Government Code, §490I.0105.

(5) Broadband serviceable location--A business or residential location in this state at which broadband internet service is, or can be, installed, including a community anchor institution.

(6) [~~(5)~~] Census block--The smallest geographic area for which the U.S. Bureau of the Census collects and tabulates decennial census data as shown on the most recent on Census Bureau maps.

(7) [~~(6)~~] Census tract--A cluster of census blocks consisting of small, relatively permanent statistical subdivisions of a county or statistically equivalent entity that can be updated by local participants prior to each decennial census as part of the U.S. Census Bureau's Participant Statistical Areas Program.

(8) [~~(7)~~] Commercial broadband service provider--A broadband service provider engaged in business intended for profit, a telephone cooperative, an electric cooperative, or an electric utility that offers broadband service or middle-mile broadband service for a fare, fee, rate, charge, or other consideration.

(9) Community anchor institution--An entity such as a school, library, health clinic, health center, hospital or other medical provider, public safety entity, institution of higher education, public housing organization, or community support organization that facilitates greater use of broadband service by vulnerable populations, including, but not limited to, low-income individuals, unemployed individuals, children, the incarcerated, and aged individuals.

(10) [~~(8)~~] Designated area--A census block or other area as determined under §16.33 of this subchapter.

(11) [~~(9)~~] Grant funds--Grants, low-interest loans, and other financial incentives awarded to applicants under this subchapter for the purpose of expanding access to and adoption of broadband service in designated areas determined to be eligible areas by the office under Government Code, §490I.0105.

(12) [~~(10)~~] Grant recipient--An applicant who has been awarded grant funds under this subchapter.

(13) [~~(11)~~] Mbps--Megabits per second.

(14) [~~(12)~~] Middle mile infrastructure--Any broadband infrastructure that does not connect directly to an end-user location, including a community anchor institution. The term includes: [broadband service--The provision of excess fiber capacity on an electric utility's electric delivery system or other facilities to an Internet service provider to provide broadband service. The term does not include provision of Internet service to end-use customers on a retail basis.]

(A) leased dark fiber, interoffice transport, backhaul, carrier-neutral internet exchange facilities, carrier-neutral submarine cable landing stations, undersea cables, transport connectivity to data centers, special access transport, and other similar services; and

(B) wired or private wireless broadband infrastructure, including microwave capacity, radio tower access, and other services or infrastructure for a private wireless broadband network, such as towers, fiber, and microwave links.

(15) [~~(13)~~] Non-commercial broadband service provider--A broadband service provider that is not a commercial broadband service provider.

(16) [~~(14)~~] Office--The Broadband Development Office created under Government Code, §490I.0102.

(17) [~~(15)~~] Project area--The area, consisting of one or more broadband serviceable locations, identified by an applicant in which the applicant proposes to deploy broadband service or middle mile infrastructure [~~and consisting of the entirety of one or more contiguous designated areas that are eligible to receive funding under this subchapter~~].

(18) Public school--A school that offers a course of instruction for students in one or more grades from prekindergarten through grade 12 and is operated by a governmental entity.

(19) Served location--A broadband serviceable location that has access to reliable broadband service that exceeds the minimum threshold for an underserved location or a location that is subject to an existing federal commitment to deploy qualifying broadband service.

(20) [~~(16)~~] Unserved location [~~area~~] --A broadband serviceable [~~designated area or~~] location [~~within a designated area~~] that does not have access to reliable broadband service.

(21) [~~(17)~~] Underserved location [~~area~~]--A broadband serviceable [~~designated area or~~] location [~~within a designated area~~] that has access to reliable broadband service but does not have [~~has~~] access to reliable broadband service with the capability of providing: [~~but lacks access to internet service offered with a download speed of at least 100 Mbps and an upload speed of at least 20 Mbps.~~]

(A) a download speed of not less than 100 Mbps;

(B) an upload speed of not less than 20 Mbps; and

(C) a network round-trip latency of less than or equal to 100 milliseconds based on the 95th percentile of speed measurements as established under Government Code, §490I.0101.

§16.31.Notice of Funds Availability.

(a) The office shall use one or more methods as necessary to provide notice of the availability of funds for competitive grant awards, including publication [~~publish~~] in the Texas Register or Electronic State Business Daily [~~a notice that a notice of funds availability will be published on the Texas.gov eGrants~~] website. The comptroller may make available a copy of the notice of funds availability on the comptroller's website. For the purposes of these rules, the date the notice of funds availability is issued is the earlier of the first day the notice is published in the Texas Register or on the Electronic State Business Daily [~~Texas.gov eGrant's~~] website.

(b) The notice of funds availability published under subsection (a) of this section [~~on the Texas.gov eGrants website~~] shall include:

(1) the total amount of grant funds available for award;

(2) the minimum and maximum amount of grant funds available for each application;

(3) eligibility requirements;

(4) application requirements;

(5) award and evaluation criteria; and

(6) the date by which applications must be submitted to the office;

(1) limitations on the geographic distribution of grant funds;

(2) the anticipated date of award; and

(3) any other information the office determines is necessary for award.

§16.35.Program Eligibility Requirements.

(a) Eligible participants of the program include:

(1) political subdivisions of this state;

(2) commercial broadband service providers;

(3) non-commercial broadband service providers; and

(4) partnerships between political subdivisions of this state, commercial broadband service providers, noncommercial broadband service providers, or any combination thereof.

(b) The office may not award grant funds for a broadband serviceable location to an otherwise eligible participant under subsection (a)(3) of this section if a commercial broadband service provider has submitted an eligible application for the same location [~~area~~].

[(c) An entity that does not provide information requested by the office under Government Code, §490I.0105, is not eligible to participate in the program and the office may not award grant funds to a broadband service provider that does not report information requested by the office under Government Code, §490I.0105.]

(c) [~~(d)~~] For the purposes of this subchapter, a joint application submitted by any combination [~~partnership consisting~~] of a political subdivision, commercial broadband service provider, or a non-commercial broadband service provider that includes at least one commercial broadband service provider shall be deemed to be an application submitted by a commercial broadband service provider.

§16.36.Application Process Generally.

(a) No award [~~awards~~] for competitive grant funding will be disbursed by the office except pursuant to an application submitted in accordance with this subchapter.

(b) An application for funding under this subchapter shall be submitted on the forms and in the manner prescribed by the office. The office may require that applications be submitted electronically.

(c) Prior to publication of application information pursuant to Government Code, §490I.0106(e), the office may undertake an examination to determine whether the application appears on its face to comply with applicable program requirements. The office may reject and take no further action on [~~not accept~~] an application that does not appear to comply with applicable program requirements on its face.

(d) The office shall for a period of at least 30 days publish on its website information from each accepted application, including the applicant's name, the project area targeted for expanded broadband service access or adoption by the application, and any other information the office considers relevant or necessary. The information will remain on the website for a period of at least 30 days before the office makes a decision on the application.

(e) During the 30-day application protest period described by subsection (d) of this section for an application, the office shall accept from any interested party a written protest of the application relating to whether the applicant or project is eligible for an award or should not receive an award based on the criteria prescribed by the office. A protest of an application must be submitted as provided under §16.41 of this subchapter.

(f) Notwithstanding any deadline for submitting an application, if the office upholds a protest on the grounds that one or more of the broadband serviceable locations in a project area is not eligible to receive funding [~~have access to broadband service~~], the applicant may resubmit an amended application as provided under §16.41 of this subchapter without the challenged locations not later than 30 days after the date that the office upheld the protest. An amended application may not include additional areas or locations not already included in the original application.

(g) If the office upholds a protest and the applicant resubmits an application in accordance with subsection (f) of this section, the resubmitted application is not subject to further protest.

(h) For the purposes of this section "interested party" means a person, including an individual, corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, or any other legal entity, that resides, is located, or conducts business in the project [~~designated~~] area subject to protest and also includes a broadband service provider that is not located in the project [~~designated~~ ] area but who proposes to provide broadband service in the designated area.

(i) Notwithstanding subsection (e) of this section, a broadband service provider who has not provided information requested by the office under Government Code, §490I.0105 or §490I.01061, may not submit a protest of an application made under this subchapter.

§16.37.Overlapping Applications or Project Areas.

(a) Except as provided under §16.38 of this subchapter, if at the close of the application period the office has received multiple [~~one or more~~] applications that propose to provide broadband service to the same broadband serviceable locations [or project areas overlap one or more other applications or project areas, relative to one or more unserved or underserved areas, including census blocks, census tracts, shapefile areas, individual addresses, or portions thereof] , the office shall, [~~inform the impacted applicants of the project area overlap~~] prior to publishing information regarding the applications as required by §16.36 of this subchapter, resolve the overlapping areas to ensure that the award of grant funds are not duplicated for a broadband serviceable location [~~and provide the impacted applicants with an opportunity to resolve the overlapping unserved or underserved area~~].

[(b) Applicants working to resolve an instance of overlapping applications or project areas shall jointly notify the office of such efforts not later than the 10th business day after the first day of the application protest period.]

[(c) Applicants who have provided notice under subsection (b) of this section may submit their proposed resolution to the office and may amend their application not later than the last day of the application protest period. The proposed resolution between impacted applicants may not result in the addition of partners to a previously submitted application or project area nor the expansion of an application's project area.]

(b) [~~(d)~~] The office shall resolve overlapping applications [~~If the impacted applicants do not resolve the overlapping unserved census blocks, census tracts, shapefile areas, individual addresses, or portions thereof~~], by evaluating each impacted application [~~shall be evaluated~~] independently; and the office shall:

(1) score each impacted application and the application receiving the highest score shall proceed to grant funding consideration with its project area locations [~~boundary~~] intact; and[.]

(2) remove the overlapping project locations [~~area~~] from the lower scored applications and provide notice to the impacted applicants that the overlapping project locations [~~areas~~] have been removed from the application.

(c) The office shall provide notice of a determination made by the office under subsection (b) to each affected applicant including notice of the right, if any, to submit an amended application under subsection (e) of this section.

(d) [~~(e)~~] If removing overlapping project locations [~~areas~~] as provided under subsection (b) [~~(d)~~] of this section results in the application [~~remaining project area~~] retaining less than 50% of the broadband serviceable locations originally proposed for the [~~original~~] project area, the office may, at its sole direction, remove the application from grant funding consideration. [~~The office may use any reasonable method to calculate the remaining project area.~~]

(e) [~~(f)~~] If the office removes an overlapping location [~~project area~~] from an application, an applicant may amend and resubmit an application without the overlapping location [~~area~~] if:

(1) The remaining project area is greater than 50% of the original project area; or

(2) The remaining number of locations in the application [~~project area~~] is less than 50% of the broadband serviceable locations originally proposed for the [~~original~~] project area and the [~~office does not remove the~~] application has not been removed from grant funding consideration under subsection (d) [~~(e)~~] of this section.

(f) [~~(g)~~] If an amended application without the overlapping location [~~areas~~] is not received by the office by the 10th business day after an applicant receives [~~receiving~~] notice that it may amend its application under subsection (c) [~~(d)~~ ] (2) of this section, the office shall [~~may~~] remove the application from grant funding consideration.

§16.38.Special Rule for Overlapping Project Areas in Noncommercial Applications.

(a) If both a commercial and noncommercial broadband service provider submit an eligible application to provide broadband service access to the same broadband serviceable locations [~~project area, or a portion thereof~~], the office shall inform the noncommercial provider of the overlap and the noncommercial provider shall be required to submit an amended application eliminating the overlapping locations [~~areas of overlap~~] for which the commercial provider proposes to provide expanded broadband service access.

(b) If a noncommercial broadband service provider required to amend its application under subsection (a) of this section does not submit an amended application to the office by the 10th business [~~30th~~] day after receiving notice of the overlapping areas, the office may remove the application from grant funding consideration.

§16.40.Evaluation Criteria.

(a) The office shall establish the eligibility and award criteria applicable for each round of competitive grant funding by publishing the criteria in a notice of funds availability as provided by §16.31 of this subchapter. In establishing eligibility and award criteria, the office shall [~~prioritize applications that~~]:

(1) prioritize applications that expand access to and adoption of broadband service in designated areas [~~that are eligible for funding~~] in which the highest [~~lowest~~ ] percentage of [~~addresses have access to~~] broadband serviceable locations are unserved or underserved locations [~~service~~]; [~~and~~]

(2) prioritize applications that expand access to broadband service in public and private primary and secondary schools and institutions of higher education;[.]

(3) prioritize applications that connect end-user locations with end-to-end fiber optic facilities that meet speed, latency, reliability, consistency, scalability, and related criteria as the office shall determine;

(4) give preference to applicants that provide the information requested by the office under Government Code, §490I.0105 and §490I.01061; and

(5) take into consideration whether an applicant has forfeited federal funding for defaulting on a project to deploy qualifying broadband service.

(b) In addition to the evaluation criteria provided under subsection (a) of this section [~~making award decisions~~], the office may include and provide preferences for [~~shall consider and may give preference to applications based upon~~] the following evaluation criteria in the notice of funds availability:

(1) application participant(s) experience;

(2) technical specifications including broadband transmission speeds (Mbps upload and download) that will be deployed as a result of the project;

(3) estimated project completion date;

(4) the availability of matching funds including amount, percentage, and source of matching funds;

(5) cost effectiveness and overall impact as measured by the total project cost, the total number of prospective broadband service locations to be served by the project, the proportion of unserved and underserved locations to be served by the project compared to the number of serviceable locations with the designated area, the proportion of recipients to be served by the project compared to the population in the designated area, and the project cost per prospective broadband service recipient;

(6) geographic location including, but not limited to, designated areas located in rural areas where because of population density the cost of broadband expansion is characterized by disproportionately high capital and operational costs;

~~[(7) the number and percentage of unserved and underserved households and businesses in the project area;]~~

(7) [~~(8)~~] community, non-profit, or cooperative involvement or participation in the project;

(8) [~~(9)~~] affordability of broadband services in the designated areas in which the proposed project is located prior to the deployment of broadband services as a result of the project;

(9) [~~(10)~~] consumer price of broadband services that applicant proposes to deploy as a result of the project;

(10) [~~(11)~~] participation in federal programs that provide low-income consumers with subsidies for broadband services;

(11) [~~(12)~~] small business and historically underutilized business involvement or subcontracting participation; and

(12) [~~(13)~~] any additional factors [~~listed in a notice of funds availability published by~~] the office may determine are necessary to further the expansion and adoption of broadband service.

(c) Notwithstanding subsection (a)(3) of this section, the office may consider an application for a broadband infrastructure project that does not employ end-to-end fiber optic facilities if the use of an alternative technology is proposed for a high-cost area and may be deployed at a lower cost than deploying fiber optic technology.

§16.41.Application Protest Process.

(a) The office shall publish on the office's website criteria and requirements for submitting a challenge under this section. An application protest may only be made on the following basis: [~~The protesting party bears the burden to establish that an applicant or project is ineligible for an award or should not receive an award based on the criteria prescribed by the office~~].

(1) the applicant is ineligible to receive an award;

(2) the application contains broadband serviceable locations that are not eligible to receive funding because of an existing federal commitment to deploy qualifying broadband service to the location; or

(3) the project is ineligible to receive or should not receive an award based on the criteria prescribed by the office.

(b) A protest submitted under this section [~~Protests~~] shall be submitted electronically in the manner and on the forms prescribed by the office and shall be accompanied by all relevant supporting documentation. The protesting party bears the burden to establish that an applicant or project should not receive or is ineligible for an award based on the criteria prescribed by the office.

~~[(c) As set forth in greater detail in the application instructions prescribed by the office, each protest shall, at a minimum, include:]~~

~~[(1) a notarized statement verifying that the protest and submitted information are true and submitted in good faith;]~~

~~[(2) data from the broadband development map, if available, or if not available the current Federal Communications Commission (FCC) Form 477 or equivalent;]~~

[(3) a detailed map, using the project area map(s) submitted by the applicant, delineating the general challenged areas and indicating where the protested serviceable locations are within the proposed project area; and]

[(4) street level data for broadband serviceable locations within the challenged area including, but not limited to, the number of serviceable locations within the proposed project area and the minimum and maximum speeds those serviceable locations are able to receive].

(c) [~~(d)~~] The office shall review the protest and make a [~~written~~] determination as to whether the protest should be upheld. The office shall provide notice of its determination to each affected applicant, including the right, if any, to submit an amended application under subsection (d) of this section.

(d) [~~(e)~~] If the office upholds a protest on the basis that one or more broadband serviceable locations are not eligible to receive funding under the criteria prescribed by the office, an applicant may amend and resubmit an application without the challenged locations and re-scope the application or project area if, after the protest is upheld: [.]

(1) the remaining number of broadband serviceable locations in the project area is greater than 50% of the original number of locations in the project area; or

(2) the remaining number of broadband serviceable locations in the project area is less than 50% of the original number of locations in the project area and the office permits, at its sole discretion, the applicant to amend the application.

(e) [~~(f)~~] If an amended application without the challenged locations [~~areas~~] is not received by the office by the 30th day after receiving notice of the determination under subsection (c) [~~(d)~~] of this section, the office may remove the application from grant funding consideration.

(f) [~~(g)~~] A determination made by the office under this section is not a contested case for purposes of Government Code, Chapter 2001.

§16.42.Awards; Grant Agreement.

(a) All award decisions shall be made at the sole discretion of the office and are not appealable or subject to protest.

(b) Grants for the deployment of broadband infrastructure awarded [~~Awards for grant funds awarded to applicants~~] under this subchapter may only be used for capital expenses, purchase or lease of property, and other expenses, including backhaul and transport, that will facilitate the provision or adoption of broadband service.

(c) A grant recipient shall have 30 days from the date of award to negotiate and sign the grant agreement. The comptroller may extend the deadline to fully execute the grant agreement upon a showing of good cause by the grant recipient(s). If the grant agreement is not signed by the grant recipient and received by the office by the later of the 30th day after the award of the grant agreement or the extended deadline date, the office may rescind the award.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 2, 2023.

TRD-202303650

Victoria North

General Counsel, Fiscal and Agency Affairs Legal Services

Comptroller of Public Accounts

Earliest possible date of adoption: November 12, 2023

For further information, please call: (512) 475-2220

SUBCHAPTER B. BROADBAND DEVELOPMENT PROGRAM

34 TAC §16.33, §16.34

The Comptroller of Public Accounts proposes the repeal of §16.33, concerning designated area eligibility, and §16.34, concerning designated area reclassification.

The comptroller will propose new §16.21, concerning the broadband development map, §16.22, concerning map challenges and criteria, §16.23, concerning the challenge process and deadlines, and §16.24, concerning map challenge determinations, in a separate rulemaking to replace §16.33 and §16.34. These new sections will implement changes to Government Code, §490I.0109, made by Senate Bill 1238, 88th Legislature, R.S., 2023, and will be located in Subchapter B, in new Division 1 (Broadband Development Map).

The comptroller also proposes to rename Subchapter B as Texas Broadband Development Office.

Brad Reynolds, Chief Revenue Estimator, has determined that during the first five years that the proposed rule repeal is in effect, the repeal: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rules' applicability; and will not positively or adversely affect this state's economy.

Mr. Reynolds also has determined that the proposed rule repeal would have no significant fiscal impact on the state government, units of local government, or individuals. The proposed rule repeal would benefit the public by conforming the rule to current statute. There would be no anticipated significant economic cost to the public. The proposed rule repeal would have no significant fiscal impact on small businesses or rural communities.

The repeals are proposed under Government Code, §490I.0109, which permits the comptroller to adopt rules as necessary to implement Chapter 490I regarding the Texas Broadband Development Office.

The repeals implement Government Code, Chapter 490I.

§16.33.Designated Area Eligibility.

§16.34.Designated Area Reclassification.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 2, 2023.

TRD-202303648

Victoria North

General Counsel, Fiscal and Agency Affairs Legal Services

Comptroller of Public Accounts

Earliest possible date of adoption: November 12, 2023

For further information, please call: (512) 475-2220

SUBCHAPTER D. RURAL LAW ENFORCEMENT SALARY ASSISTANCE PROGRAM

34 TAC §§16.300 - 16.305

The Comptroller of Public Accounts proposes new §16.300, concerning definitions, §16.301, concerning applications, §16.302, concerning review by comptroller, §16.303, concerning awards; grant agreement, §16.304, concerning authorized uses of grant funds; limitations, §16.305, concerning reporting and compliance; §16.306, concerning provisions applicable to fiscal year 2024. These new sections will be located in 34 Texas Administrative Code Chapter 16, new Subchapter D (Rural Law Enforcement Salary Assistance Program). The new sections are required by Local Government Code, §§130.911, 130.912 and 130.913 which were enacted by Senate Bill 22, 88th Legislature, R.S., (2023). Senate Bill 22 establishes a new grant program to provide financial assistance to qualified sheriff's offices, constable's offices, and prosecutor's offices in rural counties.

Section 16.300 provides definitions.

Section 16.301 describes the application process.

Section 16.302 describes review by the comptroller.

Section 16.303 describes award decisions and the requirement for grant agreements.

Section 16.304 describes the authorized uses of grant funds and limitations on uses of grant funds.

Section 16.305 describes reporting requirements and available remedies for noncompliance.

Section 16.306 describes provisions applicable to Fiscal Year 2024.

Brad Reynolds, Chief Revenue Estimator, has determined that during the first five years that the proposed new rules are in effect, the rules: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rules' applicability; and will not positively or adversely affect this state's economy.

You may submit comments on the proposal to Russell Gallahan, Manager, Local Government & Transparency at Russell.Gallahan@cpa.texas.gov or at P.O. Box 13528, Austin, Texas 78711-3528. The comptroller must receive your comments no later than 30 days from the date of publication of the proposal in the Texas Register.

The new sections are proposed under Local Government Code, §§130.911, 130.912 and 130.913, which require the comptroller to adopt rules to implement a new grant program to provide financial assistance to qualified sheriff's offices, constable's offices, and prosecutor's offices in rural counties.

The new sections implement Local Government Code, §§130.911, 130.912 and 130.913.

§16.300.Definitions.

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Applicant--A qualified county or a qualified prosecutor's office that applies for a grant under this subchapter.

(2) County jailer--A person employed by the county sheriff as a licensed county jailer, under the provisions and requirements of Local Government Code, §85.005 and Occupations Code, §1701.301.

(3) County sheriff--A person elected or appointed as the county sheriff and who performs the duties of the office after complying with Local Government Code, §85.001.

(4) Deputy sheriff--A person appointed as deputy sheriff pursuant to Local Government Code, §85.003 who performs motor vehicle stops in the routine performance of their duties.

(5) Fiscal year--The twelve consecutive calendar months during which an applicant tracks its finances for budget and accounting purposes.

(6) Grant--A grant awarded under this subchapter that is a rural sheriff's office salary assistance grant under Local Government Code, §130.911, a rural constable's office salary assistance grant under Local Government Code, §130.912, or a rural prosecutor's office salary assistance grant under Local Government Code, §130.913.

(7) Grant agreement--An agreement between the comptroller and a grant recipient that governs the terms of a grant.

(8) Grant recipient--A qualified county or a qualified prosecutor's office that receives a grant under this subchapter.

(9) Population--The population shown by the most recent federal decennial census.

(10) Qualified constable--A constable who meets the following standards:

(A) is elected to, and currently holds, an office created on or before January 1, 2023;

(B) performs makes motor vehicle stops in the routine performance of their duties for the majority of their time on duty; and

(C) meets all eligibility requirements to serve under Local Government Code, §86.0021, and Code of Criminal Procedure, article 2.12(2).

(11) Qualified county--A county with a population of 300,000 or less.

(12) Qualified prosecutor's office--An office of a district attorney, criminal district attorney, or county attorney with criminal prosecution duties whose jurisdiction has a population of 300,000 or less.

(13) Safety equipment--Any tangible equipment used by a sheriff's office that is necessary to protect the health and physical safety of a county sheriff or deputy sheriff or county jailer while performing their duties, including ballistic helmets, ballistic plates, ballistic shields, entry tools, body armor, medical gear & masks, outer carriers, pepper spray, plate carriers, personal alarm, riot batons, riot helmets, riot shields, and miscellaneous safety gear which consists of door jams, disposable cuffs and knee pads.

(14) Vehicle--A law enforcement vehicle used by a sheriff's office for transportation while performing duties of the office such as patrols, responses to calls for service, and transport of persons in custody, and includes equipment affixed to the vehicle for law enforcement purposes.

§16.301.Applications.

(a) In order to receive payment under this subchapter, an applicant must submit a completed application.

(b) An application for funding under this subchapter shall be submitted electronically. The electronic form may require information the comptroller determines is necessary to make an award determination including a certification that the county has not and will not reduce the amount of funds provided to the sheriff's office, constable's office or prosecutor's office, as applicable, because of the award of grant funds under this subchapter. The electronic application process may require the applicant to sign the grant agreement contingent on approval of a grant award by the comptroller.

(c) An application under this subchapter must be submitted during the period that begins 60 days prior to the first day of the applicant's fiscal year and ends on the 30th day of the applicant's fiscal year.

(d) The application must be electronically signed by an official of the applicant that is authorized to bind the applicant. The authorized official must certify that all information in the application is true and correct.

§16.302.Review by Comptroller.

(a) Upon receipt of an application, the comptroller shall review the application to ensure that it is complete. If the application is incomplete, as determined by the comptroller, the comptroller may contact the applicant and request any required information. Any required information requested by the comptroller must be submitted by the applicant within 14 calendar days of the request.

(b) An application shall be rejected by the comptroller if the application is submitted:

(1) by an applicant that does not meet the definition of a qualified county or qualified prosecutor's office;

(2) before 60 days prior to the first day of the applicant's fiscal year for which the applicant is seeking a grant;

(3) after the 30th day of a fiscal year for which the applicant is seeking a grant; or

(4) on a form other than the electronic form prescribed by the comptroller.

(c) The comptroller may reject an application if the applicant or the application does not comply with this subchapter, or does not comply with Local Government Code, §§130.911, 130.912, or 130.913, as applicable.

(d) The comptroller shall make a determination of award not later than 90 days after the date the application is received.

§16.303.Awards; Grant Agreement.

(a) All funding is contingent upon the appropriation of funds by the Texas Legislature and upon approval of a grant application by the comptroller.

(b) If the comptroller makes an award, the comptroller shall notify the applicant of the award decision and shall provide a grant agreement to the applicant for signature if the grant agreement was not already submitted as part of the application.

(c) All award decisions shall be made at the sole discretion of the comptroller and are not appealable or subject to protest.

(d) A grant agreement shall require the comptroller to disburse funds as soon as practicable and shall require funds to be expended during the grant period. Funds for purchases are considered expended when the grant recipient is legally obligated to expend the funds.

(e) Grant award payments are subject to Government Code, §403.055 and §403.0551.

§16.304.Authorized uses of grant funds; Limitations.

(a) A rural sheriff's office salary assistance grant awarded under this subchapter and Local Government Code, §130.911, may only be used:

(1) to provide a minimum annual salary of at least:

(A) $75,000 for the county sheriff;

(B) $45,000 for each deputy sheriff who makes motor vehicle stops in the routine performance of their duties; and

(C) $40,000 for each jailer whose duties include the safekeeping of prisoners and the security of a jail operated by the county; and

(2) provided that each county sheriff that meets the definition in §16.300(3) of this title, and each deputy sheriff that meets the definition in §16.300(4) of this title, and county jailer that meets the definition in §16.300(2) of this title that is employed by the county sheriff receives the minimum salary described by paragraph (1) of this section:

(A) to increase the salary of a person described by paragraph (1) of this section;

(B) to hire additional deputies or staff for the sheriff's office; or

(b) A rural constable's office salary assistance grant awarded under this subchapter and Local Government Code, §130.912:

(1) may only be used to provide a minimum annual salary of $45,000 to a qualified constable; and

(2) for each qualified constable whose salary is funded in part by the grant awarded under this subchapter, the county must contribute at least 75% of the money required to meet the minimum annual salary requirement.

(c) A rural prosecutor's office salary assistance grant awarded under this subchapter and Local Government Code, §130.913, may only be used:

(1) to increase the salary of an assistant attorney, an investigator, or a victim assistance coordinator employed at the prosecutor's office; or

(2) to hire additional staff for the prosecutor's office.

(d) The cost of requiring a minimum annual salary as described in this section includes the increase of legally required nonmonetary benefits and taxes for that salary. A county may only use grant funds for the legally required nonmonetary benefits and taxes for a salary if the county provides the minimum annual salary required by this section. A county may not reduce a salary below the minimum salary required in this section in order to use grant funds for legally required nonmonetary benefits and taxes for that salary. For example, in Fiscal Year 2023, a county sheriff's minimum annual salary is $50,000 and the county pays $3825.00 for the employer's share of payroll taxes, pays $2500 to Texas County and District Retirement System (TCDRS) for an employer's matching retirement contribution, and $2500 for health insurance premiums. In Fiscal Year 2024, because of the grant, the annual salary is $75,000, the employer's share of payroll taxes is $5737.50, the employer's matching contribution to TCDRS is $3750, and health insurance premiums are $2500. The county may use grant funds to increase the sheriff's annual budget by $25,000 + $1912.50 + $1250 = $28,162.50.

(e) Subject to subsection (a)(2) of this section, if a grant recipient does not have sufficient grant funding to fund the minimum annual salaries required by this subsection, the grant recipient may use grant funds to increase the salaries of the persons described in this subsection on a pro-rata basis.

(f) If a person described by this section is a part-time or hourly employee, or holds a dual office or otherwise divides work hours between a position described in this section and another position, the minimum annual salary required by this section may be converted to a minimum hourly wage and will apply only to the hours of work performed for a position described in this section. The minimum hourly wage shall be the product of:

(1) the minimum annual salary described in this section; and

(2) a quotient:

(A) the numerator of which is equal to the number of hours the employee normally works performing duties for a position described in this section each week, not to exceed 40; and

(B) the denominator of which is equal to 40.

§16.305.Reporting and compliance.

(a) A grant recipient shall submit a compliance report detailing expenditures of grant funds using the comptroller's electronic form. The comptroller may request supporting documentation regarding expenditures and any other information required to substantiate that grant funds are being used for the intended purpose and that the grant recipient has complied with the terms, conditions, and requirements of the applicable statute, the grant agreement and this subchapter. Any information requested by the comptroller must be submitted by the grant recipient within 14 calendar days of the request.

(b) Grant recipients must comply with:

(1) the terms and conditions of the grant agreement;

(2) the requirements of Local Government Code, §§130.911, 130.912, or 130.913, as applicable;

(3) the relevant provisions of the Texas Grant Management Standards and the State of Texas Procurement and Contract Management Guide, or their successors, adopted in accordance with Texas law; and

(4) all applicable state or federal statutes, rules, regulations, or guidance applicable to the grant award, including this subchapter.

(c) If the comptroller finds that a grant recipient has failed to comply with any requirement described in subsection (b) of this section, the comptroller may:

(1) require the grant recipient to return the grant award or a portion of the grant award;

(2) withhold grant award amounts from the current grant or future grants to be received by a grant recipient pending correction of the deficiency;

(3) disallow all or part of the cost of the activity or action that is not in compliance;

(4) terminate the grant award in whole or in part;

(5) bar the grant recipient from future consideration for grant funds under this subchapter; or

(6) exercise any other legal remedies available at law.

§16.306.Provisions Applicable to Fiscal Year 2024.

(a) Notwithstanding anything to the contrary in §16.301(c) of this title, the first application period for all applicants in Fiscal Year 2024 will be from January 1, 2024 through January 31, 2024.

(b) For the purpose of §16.304(b)(2) of this title, for a grant recipient whose fiscal year begins on October 1, 2023, the county's contribution shall include county funds used to pay an annual minimum salary from October 1, 2023 through the end of the grant agreement awarded for Fiscal Year 2024.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 2, 2023.

TRD-202303651

Victoria North

General Counsel, Fiscal and Agency Affairs Legal Services

Comptroller of Public Accounts

Earliest possible date of adoption: November 12, 2023

For further information, please call: (512) 475-2220

CHAPTER 20. STATEWIDE PROCUREMENT AND SUPPORT SERVICES

SUBCHAPTER F. CONTRACT MANAGEMENT

DIVISION 2. REPORTS AND AUDITS

34 TAC §20.509

The Comptroller of Public Accounts proposes amendments to §20.509, concerning vendor performance reporting.

The amendments delete subsection (a), which contained a requirement that is adequately stated in subsection (b).

The amendment of former subsection (b), now subsection (a), removes language providing that a state agency shall submit a vendor performance report and grade within 30 days of completion or termination of a purchase order or contract. The subsection now states only that the submission is mandatory. The time for submitting a vendor performance report is addressed in relettered subsection (c).

The amendment also revises subsection (b)(1) through (b)(4). Amended paragraph (1) provides the requirement to report and grade a vendor's performance applies to a purchase exceeding $25,000 from a contract administered by the comptroller and the Department of Information Resources, which refers to contracts entered into by the comptroller under Government Code, §2155.061, and by the Department of Information Resources under Government Code, §2157.068, respectively. Amendments to paragraph (2) state that the requirement applies to any agency contract, and to remove the reference to purchases made through an agency's delegated authority. This revised language is consistent with Government Code, §2155.089, which provides that the requirement applies to all contracts aside from those expressly exempted by Government Code, §2155.089(c). The amendments delete paragraphs (3) and (4) because all contracts subject to the requirement to report and grade a vendor's performance in Government Code, §2155.089, are covered by amended paragraphs (1) and (2).

The amendment of former subsection (c), now subsection (b), removes language providing that a state agency shall, for contracts in excess of $5 million, submit a vendor performance report and grade within 30 days of completion of a key milestone identified in the contract and at least once each year during the term of the contract. The subsection now states only that the submission is mandatory. The time for submitting a vendor performance report is addressed in relettered subsection (c).

The amendment of former subsection (d), now subsection (c), adds language requiring submission of a vendor performance report and grade within 30 days of completion or termination of a purchase order or contract and, for a contract with a value that exceeds $5 million, the completion of a key milestone identified in the contract. The 30-day requirement has been relocated to amended subsection (c) to clarify that a state agency's obligation to submit the vendor performance report and grade is separate from the requirement to submit within 30 days, and that a failure to submit within the 30-day period does not invalidate the report or grade. The amendment also corrects a grammatical error.

The amendment of former subsection (e), now subsection (d), corrects a grammatical error.

Subsection (f) is now subsection (e), and the text of this subsection is unchanged.

The amendment of former subsection (g), now subsection (f), excludes certain purchases from the requirement to report and grade a vendor's performance. Because paragraph (1) now states that the section does not apply to contracts described in Government Code, §2155.089(c), it no longer reproduces the operative language from the Government Code.

Subsection (f), formerly subsection (g), also excludes certain small purchases from the requirement to report and grade a vendor's performance. Paragraph (2) excludes spot purchases of $10,000 or less, for which competitive bidding is not required under §20.82(b)(1) of this title. Paragraph (3) excludes purchase orders resulting from informal bids under §20.82(d)(1)(A), which applies to purchases of goods and services not exceeding $25,000.

There is no requirement in statute to report vendor performance for spot purchases. Spot purchases are not "contracts" within the meaning of Government Code, Title 10, Subtitle D. Spot purchases are carved out by Government Code, §2155.132(e), which distinguishes a purchase "made under a written contract" from the broader category of purchases. Therefore, not every purchase is a "contract," and smaller purchases are not subject to all formal contracting requirements. Because Government Code, §2155.089 applies to contracts, spot purchases are outside its scope.

Likewise, there is no requirement in statute to report vendor performance for purchases resulting from informal bids. Purchases resulting from informal bids are not "contracts" within the meaning of Government Code, Title 10, Subtitle D. The informal bidding method of procurement is described in Government Code, Chapter 2156, Subchapter B. That method of procurement is expressly distinguished in Chapter 2156 from the "Contract Purchase Procedure" in Subchapter A and the formal bidding procedure in Subchapter C. While Subchapters A and C each reference the awarding of a "contract" (§2156.007 and §2156.125, respectively), Subchapter B does not mention that term. Because Government Code, §2155.089 applies to contracts, purchases resulting from informal bids are outside its scope.

Prudent procurement policy does not require vendor performance reporting for spot purchases and purchases resulting from informal bids. Government Code, §2155.002, instructs the comptroller to focus resources on purchases "that involve relatively large amounts of money." Reporting and grading performance on every small purchase would consume significant amounts of agency staff time. By allowing, rather than requiring, agencies to report vendor performance on small purchases, the rule will allow agencies to focus on the most remarkable vendor performance, good and bad. Thus, the most useful reports may still appear in the comptroller's vendor performance tracking system.

Brad Reynolds, Chief Revenue Estimator, has determined that during the first five years that the proposed amended rule is in effect, the rule: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rule's applicability; and will not positively or adversely affect this state's economy.

Mr. Reynolds also has determined that the proposed amended rule would have no significant fiscal impact on the state government, units of local government, or individuals. The proposed amended rule would benefit the public by updating the rule to reflect or clarify the current practice. There would be no significant anticipated economic cost to the public. The proposed amended rule would have no significant fiscal impact on small businesses or rural communities.

A public hearing will be held to receive comments on the proposed amendment. There is no physical location for this meeting. The meeting will be held at 10:00 a.m. on November 9, 2023. To access the online public meeting by web browser, please enter the following URL into your browser: https://txcpa.webex.com/txcpa/j.php?MTID=mfae8f91b93c70a92028543c39a652d1d To join the meeting by computer or cell phone using the Webex app, use the access code 2495 042 9928. Persons interested in providing comments at the public hearing may contact Mr. Gerard MacCrossan, Comptroller of Public Accounts, at Gerard.MacCrossan@cpa.texas.gov or by calling (512) 463-4468 by November 8, 2023.

Comments on the proposal may be submitted to Ms. Tosca M. McCormick, Comptroller of Public Accounts, P.O. Box 13186, Austin, Texas 78701-3186 or to the email address: Tosca.McCormick@cpa.texas.gov. The comptroller must receive your comments no later than 30 days from the date of publication of the proposal in the Texas Register.

These amendments are proposed under Government Code, §2155.0012, which authorizes the comptroller to adopt rules to efficiently and effectively administer Government Code, Chapter 2155.

The amendments implement Government Code, §2155.089.

§20.509.Vendor Performance Reporting.

~~[(a) A purchasing state agency shall review a vendor's performance of a purchase order or contract as provided in this section.]~~

(a) [~~(b)~~] A [~~No later than 30 days after the completion or termination of a purchase order or contract, a~~] state agency shall submit a report and grade of [on] a vendor's performance to the vendor performance tracking system as stated in §20.115 of this title (relating to Vendor Performance Tracking System) for [~~any purchase of goods or services~~]:

(1) each purchase exceeding[of] $25,000 [~~or more~~] from contracts administered by the comptroller or the Department of Information Resources; and

(2) each agency contract, except as provided by subsection (f) of this section [~~made through an agency's delegated authority as described in §20.82 of this title (relating to Delegated Purchases);~~]

~~[(3) made pursuant to the authority in Government Code, Title 10, Subtitle D; or]~~

~~[(4) for which a state agency is required to use the best value standard].~~

(b) [~~(c)~~] In addition, if the value of a contract exceeds $5 million, a state agency must submit a [~~performance~~] report and grade of [on] a vendor's performance to the vendor performance tracking system as stated in §20.115 of this title upon [~~within 30 days of~~] the completion of a key milestone identified in the contract and at least once each year during the term of the contract.

(c) [~~(d)~~] If a state agency does not submit a vendor performance report and grade within 30 days of the completion or termination of a purchase order or contract and, for a contract with a value that exceeds $5 million, the completion of a key milestone identified in the contract [~~in accordance with subsection (b) or (c) of this section~~], it shall document the reason in its contract [~~procurement~~] file.

(d) [~~(e)~~] A state agency shall:

(1) evaluate the vendor's performance based on:

(A) information prepared by the state agency in planning the procurement that assessed the need for the purchase together with the specifications for the good or service and the criteria to evaluate the responses resulting in an award and contract;

(B) compliance with the material terms of the contract;

(D) other relevant evaluation criteria presented in the online [~~on-line~~] vendor performance tracking system; and

(2) [~~for the purchase order or contract which is the basis for the report,~~] assign the vendor a letter grade.

(e) [~~(f)~~] State agencies shall independently evaluate the contract performance and use the following grading scale when assigning a letter grade to a vendor:

(1) A state agency shall assign an "A" when it determines that the vendor significantly exceeded the requirements of the purchase order or contract to the state's benefit, that any problems with the purchase order or contract were minor, and that corrective actions taken by the vendor to address such problems were highly effective. If the best value standard was used to award the purchase order or contract, an "A" means that the vendor satisfied that standard.

(2) A state agency shall assign a "B" when it determines that the vendor exceeded some requirements of the purchase order or contract to the state's benefit, that any problems with the purchase order or contract were minor, and that corrective actions taken by the vendor to address such problems were effective. If the best value standard was used to award the purchase order or contract, a "B" means that the vendor satisfied that standard.

(3) A state agency shall assign a "C" when it determines that the vendor met the requirements of the purchase order or contract and that corrective actions taken by the vendor to address minor problems were satisfactory. If the best value standard was used to award the purchase order or contract, a "C" means that the vendor satisfied that standard but that the vendor's performance did not merit an "A" or "B."

(4) A state agency shall assign a "D" when it determines that the vendor did not meet some of the requirements of the purchase order or contract, that problems with the purchase order or contract were serious, and that corrective actions taken by the vendor to address such problems were only marginally effective or not fully implemented. If the best value standard was used to award the purchase order or contract, a "D" means that the vendor did not satisfy that standard.

(5) A state agency shall assign an "F" when it determines that the vendor did not meet the requirements of the purchase order or contract, that problems with the purchase order or contract were serious, and that corrective actions taken by the vendor to address such problems were ineffective. If the best value standard was used to award the purchase order or contract, an "F" means that the vendor did not satisfy that standard.

(f) [~~(g)~~] A state agency is not required to report or grade vendor performance for [~~This section does not apply to~~]:

(1) contracts exempt from vendor reporting under Government Code, §2155.089(c) or another statutory provision [~~an enrollment contract described by 1 TAC §391.205(b)(5)~~];

(2) purchases for which competitive bidding is not required under §20.82(b)(1) of this title [a contract of the Employees Retirement System of Texas except for a contract with a nongovernmental entity for claims administration of a group health benefit plan under Insurance Code, Title 8, Subtitle H]; or

(3) purchases procured through informal bids under §20.82(d)(1)(A) of this title [~~a contract entered into by:~~]

~~[(A) the comptroller under Government Code, §2155.061; or]~~

~~[(B) the Department of Information Resources under Government Code, §2157.068].~~

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 28, 2023.

TRD-202303584

Victoria North

General Counsel, Fiscal and Agency Affairs Legal Services

Comptroller of Public Accounts

Earliest possible date of adoption: November 12, 2023

For further information, please call: (512) 475-2220