Office of House Bill AnalysisS.B. 221
By: Staples
State Affairs


Reverse auctions are a form of competitive bidding whereby the buyer
announces the product it wants to buy and prospective sellers bid against
each other for the lowest offering price.  The Internet makes  real time
reverse auctions possible, allowing prospective sellers to enter continuous
bids over a period of several hours until the lowest bid is reached.
However, in December 2000, the attorney general issued an opinion stating
that the General Services Commission (GSC) may not purchase goods and
services through reverse auctions without specific statutory authority to
do so.  Senate Bill 221 authorizes GSC and certain local governmental units
to purchase goods and services using this method. 


It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 


Senate Bill 221 amends the Government, Local Government, and Education
codes relating to reverse auctions.  The bill includes the reverse auction
procedure as an option that the General Services Commission (GSC) may use
when purchasing goods or services.  The bill also authorizes local
governments to participate in GSC purchases that use the reverse auction
procedure.  The bill provides that all competitive bids or competitive
proposals must be sealed.  The bill authorizes a local government to use
the reverse auction procedure in purchasing goods and services in place of
any other method that would otherwise apply to the purchase.  A local
government that uses the reverse auction procedure must include in the
procedure a notice provision and other provisions necessary to produce a
method of purchasing that is advantageous to the local government and fair
to the vendors.  The bill authorizes certain school district and county
contracts to be entered into through the use of a reverse auction. 


On passage, or if the Act does not receive the necessary vote, the Act
takes effect September 1, 2001.