Changes To Transparency In Public Contracting In Texas

What Happened

Governor Abbott recently signed Senate Bill 943 changing the Texas Public Information Act. Importantly for contractors, the bill amended Section 552.104 of the Government Code regarding the exception to disclosure of information relating to competition.

The Law Before S.B. 943

The Texas Supreme Court ruled in Boeing Co. v. Paxton, 466 S.W.3d 831 (Tex. 2015) that pursuant to Section 552.104 third-parties whose interests were at stake could object to the release of their proposal or contract information by filing written arguments to the Office of the Attorney General (OAG).

Boeing also expanded the test for determining release under Section 552.104 to include any information, including core contract data, that may give an advantage to another entity so long as the impacted company could factually demonstrate competitive harm.

Since this ruling, OAG precedent has effectively exempted all information for which a third-party makes a competitive harm objection under Section 552.104.

The Law After S.B. 943

As a result of S.B. 943, the Government Code now requires that only the government may make an objection to release under Section 552.104. And, in order to obtain an exemption to disclosure it must demonstrate that release of the information would harm its interests by providing an advantage to a bidder in an ongoing competitive situation or would harm competition in future procurements.

The Takeaway

The amended Section 552.104 arguably better aligns the taxpayer’s right to know how the government is spending its money and a private company’s right to prevent disclosure of its competitively sensitive information. Although contractors have lost the ability to object on their own behalf regarding the release and impact of such disclosure when it relates to information in a contract, newly added Section 552.1101 (also deriving from S.B. 943) may assuage contractor fears.

Section 552.1101 still provides the confidentiality exception for contractors and potential contractors. However, it is limited to certain proprietary information submitted in a request for bid, proposal, or qualification provided the vendor demonstrates release would give an advantage to a competitor.

Therefore, contractors should be aware that they are now foreclosed from making an objection pursuant Section 552.104, that the governmental entity makes a decision about what is releasable or whether to file an objection when the request is related to information in a contract, and that contractors seeking to protect proposal or bid data should rely on Section 552.1101.

 

Weitz Morgan represents businesses and individuals in civil litigation and government contracts. For more information about the firm, please visit www.weitzmorgan.com