Recent Bills of Interest in the
77^th Texas Legislature (2001)

There were 8,847 pieces of legislation filed in the 77^th Texas Legislative session. Of that number 1,518 actually became law. Many of those laws will impact the Texas construction industry. The links below take you to the full text of these bills. This report was originally prepared by SureTec Information Systems President, Steve Nelson, for delivery to the Annual Convention of the Associated General Contractor’s Texas Building Branch.

SB 510, by Armbrister/Walker – “Alternative Delivery and Procurement”

This bill was actively supported by Associated General Contractors, the Texas Society of Architects, the Consulting Engineers Council of Texas, and the Texas Municipal League. This new law authorizes cities, counties, and river authorities to utilize the same procurement systems that are currently available to school districts and universities.

This law also amended the Education Code and provided new requirements to cities and counties to disclose the weight that will be given to each factor that will be used by a procuring agency in selecting a contractor or construction manager.

SB 311, by Zaffirini/Gallegos - “GSC Sunset Legislation”

This bill was the “sunset legislation” for the General Services Commission. There were some 23 amendments placed on this bill on the house floor. Almost all of these amendments impacted the construction industry. Although the various construction trade associations were successful in eliminating many of the amendments that did not serve the best interests of the construction industry, they were not able to remove all of them. This piece of legislation became a source of much debate during the session, and contractors performing work for the State GSC will soon find many changes in that agency. The legislation breaks up GSC and distributes its responsibilities to new agencies. A new Texas Building Procurement Commission was created for construction. This bill also gives the commission the authority to use new procurement methods for their construction projects. These methods are similar to those used by schools and which will be used by cities and counties.

The Associated General Contractors and the Texas Construction Association worked with State Representative Tommy Merritt to add language that restricts the use of "broad form" indemnity clauses in the construction or repair of state public work. The new language would allow the use of "broad form" indemnity clauses for parties to the contract only for a personal injury claim by an employee of a contractor or subcontractor. All other "broad form" indemnity clauses would be void and unenforceable. For many years, contractor and subcontractor groups have wrestled with a fair way to share the risks of personal injury and property damage on construction projects. Those efforts, including an effort by the Construction Industry Legislative Alliance earlier in the session had always been thwarted by an inability to include owner groups in the equation. A unique set of circumstances made it possible to have this legislation apply to state public projects. This bill marked an unprecedented amount of cooperation between general contractor and subcontractor groups to work on a common goal.

There were several bills that found their way into SB 311. These included the mentor-protégé language from HB 1542 and SB 464, by Shapleigh, which amends a prevailing wage law for state projects in border counties and adjacent counties. The language as it went to a conference committee included the entire State of Texas.

SB 484 by Duncan – “Architectural Barriers”

This bill provides for the certification of private entities that may contract to perform review and inspection functions relating to architectural barriers to the disabled. It also requires all private owners for projects of $50,000 or more to be responsible for obtaining the necessary inspections.

SB 874 by Lindsay – “Mandatory Pre-Bids OK in Houston”

Allows counties with a population of 2.8 million or more to require the attendance of a principal officer or an employee of each respective bidder at a mandatory pre bid conference. This bill was in response to an Attorney General’s opinion to the effect that bidders may not be excluded from bidding public works if they have failed to attend “mandatory” pre-bid meetings.

SB 1268 by Madla – “Directed Surety”

This bill amends the Government Code to prohibit the General Services Commission from requiring a contractor or subcontractor to obtain a surety bond from a specific surety company, agent or broker. The bill does not prohibit governmental entities from establishing surety programs, so long as the sureties in the program are qualified to issue bonds and the governmental entities do not require contractors or subcontractors to us a particular surety or agent/broker. The bill also allows special surety programs on public works to support technical services programs for disadvantaged contractors. This bill was initiated by the National Association of Surety Bond Producers and actively supported by AGC and SureTec Insurance Company.

HB 197, by Solomons – “Threshold for Competitive Bidding”

This legislation raised the threshold for requiring competitive bidding or other competitive selection on local government projects from $15,000 to $25,000.

HB 409, by Shields – “Surety’s Name on Bond”

This new law requires those signing construction bonds to "prominently display" on the bond, or on an attachment to the bond, the name and mailing address of the surety or the toll free telephone number of The Texas Department of Insurance (for purposes of obtaining the address of the surety).

HB 548, by Keffer – “Surety Bad Faith Bill”

This bill was introduced last session in a response to an issue that some surety companies have been less than responsive to claims. This issue is likewise far more complicated than it would seem at first blush. Any effort that prompts a surety to pay a claim must be balanced against the right of the principal on its bond to dispute or defend such a claim. A compromise was reached with all interested trade groups including the AGC, the Texas Construction Association, the American Insurance Association, the Surety Association of America, and the National Association of Surety Bond Producers. The compromise would direct the insurance commissioner to promulgate rules to regulate sureties, and take appropriate action when sureties do not respond to an appropriately handled payment bond claim. The law applies to payment bonds only, and does not create any new cause of action for claimants. This bill was supported by SureTec Insurance Company.

HB 1927, by Geren – “Asbestos in Public Buildings”

This new law prohibits persons from installing or reinstalling building materials or replacement parts that contain more than 1% of asbestos in a public building unless there is not an alternative material or replacement part available.

HB 1981, by Farabee – “Electronic Bid Submission”

This bill allows cities and counties to have bids submitted electronically. Prior to accepting such bids, the governmental entity must adopt rules to ensure the identification, security, and confidentiality of such bids or proposals.

HB 2312, by Bosse – “Claims Against the State”

This legislation was introduced to correct a problem created by the Texas Supreme Court. The bill makes it clear that the legislature’s powers to grant permission to sue are not limited. This bill was vetoed, however the most important parts of it survived in Senate Bill 311.

HB 2863, by Farabee – “Bid Threshold on CountyProjects”

Raised the threshold for requiring competitive bidding on county projects from $15,000 to $25,000.

HB 658, by Junell/Ellis - “FundingColleges and Universities”

This legislation allows many public colleges and universities to issue revenue bonds to fund construction projects. The legislation specifies 50 projects throughout the state with bond estimates from $1.8 million to $79 million.

HB 3309, by Hochberg/Ellis – “Biotech Enterprises”

This legislation establishes the Southeast Texas Biotechnological Park Coalition. The coalition is composed of public and private health related institutions. This legislation is the seed to support the growth and development of new biotechnological enterprises in the area.

SB 925, by Brown/Moreno – “Alernative Procurement for Navigation Districts”

Gives navigation districts the same procurement authority as school districts and universities.

Constitutional Amendments – on the November 6, 2001 state ballot there will be 19 proposed amendments to the state constitution. Of these 19 amendments, two are of major interest to contractors:

Proposal 8, HJR 97, by Junell/Ellis

Authorizes the issuance of up to $850 million in bonds for construction and repair projects, and for the purchase of needed equipment.

Proposal 15, SJR 16, by Shapiro/Brimer

This proposed constitutional amendment would create the Texas Mobility Fund and authorize grants and loans of money and issuance of obligations for financing the construction, reconstruction, acquisition, operation, and expansion of state highways, turnpikes, toll roads, toll bridges, and other mobility projects.