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Contract Expenditures
Consulting Services

The requirements in this section apply to state agencies regardless of the source of funds used to purchase consulting services.

These requirements do not apply to consulting services by:

  • A provider of a professional service.
  • A private legal counsel.
  • An investment counselor.
  • An actuary.
  • A medical or dental service provider.
  • Other consultants whose services are determined by the governing board of a retirement system trust fund to be necessary for the governing board to perform its constitutional fiduciary duties.

Note: The Comptroller and the governor may jointly decide to require a state agency to comply with the general purchasing rules and procedures contained in Texas Government Code Chapters 2155–2158 instead of the procedures described in this section, if they determine using those procedures would be more advantageous to the state.

Sources [+]

Texas Government Code, Sections 2254.002(2), 2254.023, 2254.024(a)(1)–(6), (b), Opinion of the Texas Attorney General NOS. JM-940 (1988), H-1173 (1978).

Requirements Before Entering into Any Consulting Services Contract

Prior to entering into any consulting services contract, a state agency must:

  1. Determine the necessity for consulting services.
    A state agency may only contract with a consultant if:
  2. Select a consultant.
    When selecting a consultant, a state agency must:
    • Base its choice on demonstrated competence, knowledge and qualifications, and on the reasonableness of the proposed fee for the services.
      – and –
    • If other considerations are equal, give preference to a consultant whose primary place of business is in the state or who will manage the consulting contract from an office in the state.

Note: A state agency may not accept a bid or award a contract that would benefit a person who was paid by the agency to prepare the specifications on which the bid or contract is based.

Requirements Before Entering into a Major Consulting Services Contract

Prior to entering into a major consulting services contract, a state agency must:

  1. Submit a notice of intent to employ a consultant.
    • Notify the Legislative Budget Board and the Governor’s Budget and Planning Office that the agency intends to contract with a consultant and provide information showing the agency has complied with the requirements listed above.
      – and –
    • Obtain confirmation from the Governor’s Budget and Planning Office that consulting services are necessary. Note: An institution of higher education is not required to obtain this confirmation if the chief executive officer of the institution includes an explanation of why the consulting services are necessary in the notice published under Section 2254.029.
  2. Publish a notice in the Electronic State Business Daily (ESBD).
    Not less than 30 days before entering into a major consulting services contract, a state agency must post in the state business daily under Section 2155.083:
    • An invitation for consultants to provide offers of consulting services.
    • The name of the individual who should be contacted by a consultant who intends to make an offer.
    • The closing date for the receipt of offers.
      – and –
    • The procedure by which the state agency will award the contract.

If the consulting services sought by a state agency relate to services previously provided by a consultant, or if the agency intends to award the contract to a consultant that previously provided the services, unless a better offer is received, the agency must disclose this in the invitation for offers.

Sources [+]

Texas Government Code, Section 2155.004(a), 2254.026, 2254.027, 2254.028(a),(c), 2254.029

Requirements After Entering into a Consulting Services Contract Exceeding $50,000

A state agency must provide written notice to the Legislative Budget Board (LBB) of a contract for consulting services if the amount of the contract, including an amendment, modification, renewal or extension of the contract, exceeds $50,000. Instructions for this process can be found on the LBB website. See Major Contract ReportingPDF on the LBB website for instructions on this process.

Renewals, Extensions or Amendments of Consulting Services Contracts

Renewal, extension or amendment of a major consulting services contract

If the contract renewal, extension or amendment is a major consulting services contract, the agency must comply with Sections 2254.028 and 2254.029.

Renewal, extension or amendment of a non-major consulting services contract

A state agency that intends to renew, extend or amend a contract that is not a major consulting services contract must comply with Sections 2254.028 and 2254.029, if the value of the original contract and the contract renewal, extension, or amendment is expected to be greater than $15,000 for a state agency, or $25,000 for an institution of higher education (except a public junior college).

Note: A state agency may not divide a consulting services contract or a renewal, amendment or extension of a consulting services contract into more than one contract to avoid the requirements described in this section.

Source [+]

Texas Government Code, Section 2254.031, 2254.035.

Special Considerations

Consulting Services Provided by Former State Employees

Time restrictions on contracting with former or retired employees

A state agency may not enter into a consulting services contract with a former or retired agency employee within one year after the employee left the agency. A state agency may enter into a professional services contract with a company that employs a former or retired employee of the agency within one year so long as the employee does not perform services on projects for the company the employee worked on while employed by the agency.

Example:

Adam Smith is a financial systems programmer for the Texas Department of Finance (TDF). Mr. Smith leaves the agency on July 31, 2024, and forms his own consulting company, Smith Consulting, Inc. Smith Consulting, Inc. gets a contract with the Texas Commission on Budget Resources (TCBR) beginning on October 1, 2024, to advise on a financial systems program similar to one Mr. Smith had developed at TDF. In this example, TCBR can enter into a consulting services contract with Smith Consulting, Inc. as it is not the same agency that Mr. Smith worked for when he developed the financial systems program. Note: TDF would not be able to enter into a consulting services contract with Mr. Smith before July 31, 2025.

Disclosure of previous state employment

An individual employed by a state agency at any time during the two years prior to offering consulting services to the agency must disclose:

  • The nature of the previous employment with the agency or another state agency.
  • The date employment was terminated.
    – and –
  • The annual rate of compensation for the employment at the time of termination.

A state agency that enters into a consulting services contract with an individual who was employed by the agency within the previous two years must publish a notice in the Texas Register that includes a statement about the nature of the individual’s employment with the agency.

Source [+]

Texas Government Code, Section 2252.901(a), (d), 2254.033(a–b).

Requirement to report a financial interest

An officer or employee of a state agency who has a financial interest, or is related to an individual who has a financial interest, in a consultant that submits an offer to provide consulting services must report this interest or relationship to the chief executive of the agency no later than the 10th day after the consultant submits the offer. This requirement applies to all consulting services contracts and renewals, amendments and extensions of those contracts.

Source [+]

Texas Government Code Section 573.002, 2254.032.

Archiving and reporting requirements

A state agency must file a copy with the Texas State Library of all materials produced by a consultant. If requested, a state agency must supply the Legislative Budget Board (LBB) and the Governor’s Budget and Planning Office with a copy of all materials produced by the consultant under the contract. A state agency must report to the LBB and the Governor’s Budget and Planning Office any actions taken by the agency in response to recommendations by a consultant during the previous two-year period.

Source [+]

Texas Government Code, Section 2254.036(a)–(b), 2254.037.

Emergency procurement of consulting services

A state agency that has an immediate need for consulting services due to an unforeseen emergency must comply with the governor’s rules regarding emergency waivers of these requirements.

Source [+]

Texas Government Code, Section 2254.025.

Mixed contracts

When a contract involves both consulting services and other services, the requirements described in this section apply if the primary objective of the contract is to acquire consulting services.

Source [+]

Texas Government Code, Section 2254.038.

Procurement of consulting services by the Comptroller’s office

At the request of a state agency, the Statewide Procurement Division (SPD) of the Comptroller’s office may procure consulting services for the agency. The agency may be required to reimburse SPD for the costs incurred in procuring the services.

Sources [+]

Texas Government Code, Section 2254.040. See Texas Government Code Section 2151.003.

Consequences of non-compliance

If a state agency fails to comply with the rules on contracting for consulting services, the contract or any renewal, extension or amendment of the contract is void. If the contract is void, the Comptroller's office may not:

  • Draw a warrant or transmit money to satisfy an obligation under the contract, renewal, amendment or extension.
    – or –
  • Reimburse a state agency for a payment made under the contract, renewal, amendment or extension.

When a contract, renewal, amendment or extension is void, a state agency may not make any payments under the contract from any state or federal funds held in or outside the State Treasury.

Source [+]

Texas Government Code, Section 2254.034.

See also: Professional services; Contracting with former or retired state employees; Contracting with former employees of regulatory agencies.

Definitions

Consultant
A person that provides or proposes to provide a consulting service.
Consulting service
A study conducted for a state agency or advice provided to a state agency under a contract that does not involve the traditional relationship of employer and employee. The term does not include a routine service necessary to the functioning of a state agency’s programs.
Major consulting services contract
A consulting services contract for which it is reasonably foreseeable the value of the contract will exceed:
  • $15,000, if the contracting state agency is not an institution of higher education.
    – or –
  • $25,000, if the contracting state agency is an institution of higher education.
Person
Includes an individual, a corporation, an organization, a government or governmental subdivision or agency, a business trust, an estate, a trust, a partnership, an association and any other legal entity.
Professional services
  • Services within the scope of the practice, as defined by state law, of:
    • Accounting
    • Architecture
    • Landscape architecture
    • Land surveying
    • Medicine
    • Optometry
    • Professional engineering
    • Real estate appraising
    • Professional nursing
    • Forensic science
  • Services provided in connection with the professional employment or practice of a person who is licensed or registered as:
    • A certified public accountant
    • An architect
    • A landscape architect
    • A land surveyor
    • A physician, including a surgeon
    • An optometrist
    • A professional engineer
    • A state certified or state licensed real estate appraiser
    • A registered nurse
      – or –
    • A forensic analyst or forensic science expert
  • Services provided by a person lawfully engaged in interior design, regardless of whether the person is registered as an interior designer under Chapter 1053, Occupations Code.
Retired agency employee
A person:
  • Whose last state service before retirement was for the state agency with which the retiree contracts to perform services.
    – and –
  • Who is a retiree of:
    • The employee class of membership of the Employees Retirement System of Texas.
      – or –
    • The Teacher Retirement System of Texas, the majority of whose service was credited in that system in a position with a state agency.
State agency
  • A department, commission, board, office or other agency in the executive branch of state government created by the state constitution or a state statute.
  • The Supreme Court, the Court of Criminal Appeals, a court of appeals or the Texas Judicial Council.
  • A university system or an institution of higher education as defined by Texas Education Code Section 61.003, except a public junior college.
State governmental entity
A state department, commission, board, office, institution, facility or other agency the jurisdiction of which is not limited to a geographical portion of the state. The term includes a university system and an institution of higher education, other than a public junior college, as defined by Texas Education Code Section 61.003. The term does not include a political subdivision.
Unforeseen emergency
A situation that suddenly and unexpectedly causes a state agency to need the services of a consultant. The term includes:
  • The issuance of a court order.
  • An actual or imminent natural disaster.
  • New state or federal legislation.

An emergency is not unforeseen if a state agency was negligent in foreseeing the occurrence of the emergency.

Sources for definitions [+]

State Purchasing and General Services Act, Texas Government Code, Section 2151.002(2); Texas Government Code Section 2254.021; Code Construction Act, Texas Government Code Section 311.005(2); Texas Administrative Code Title 34, Pt 1, Ch. 5(E) Section 5.54(a)(2)-(3) (2004).

Documentation Requirements [+]

Purchase vouchers for consulting services payments must contain the following information in the descriptive legal text screen and be supported by the following documentation for each contract and any contract renewal, extension, or amendment:

  1. The reasonably foreseeable value of the contract.
  2. The cumulative total of prior payments made under the contract.
  3. A copy of the contract.

In addition to the above requirements, purchase vouchers must also include the following information depending on type of contract:

  1. Non-major consulting services contracts
    1. A statement that the payment complies with the requirements described in Necessity, Selection and Former Employees.

      Comptroller object 7240 must be used.
  2. Major consulting services contracts
    1. The ESBD posting in which the requirements described in Notification, Major Contracts and, if applicable, Agency Notice were fulfilled.
    2. A copy of the governor’s finding of fact that the consulting services are necessary.
    3. A statement that the payment complies with the requirements described in Necessity, Selection and Former Employees.

      Comptroller object 7239 must be used.
  3. Original contract is a major consulting services contract, but the renewal contract is not a major consulting services contract These requirements apply to a purchase voucher if: (1) the voucher requests a payment under a consulting services contract that was originally a major consulting services contract, and (2) the contract has been renewed, and (3) the renewal contract itself is not a major consulting services contract.
    1. The ESBD solicitation ID in which the requirements described in Notification, Major Contracts and, if applicable, Agency Notice were fulfilled when the original contract was entered into.
    2. The ESBD solicitation ID in which the requirements described in Major Contracts were fulfilled when the renewal contract was entered into.
    3. A copy of the governor’s finding of fact that the consulting services under the original contract are necessary.
    4. A statement that the payment complies with the requirements described in Necessity, Selection and Former Employees.

      Comptroller object 7239 must be used.
  4. Original contract was a major consulting services contract, and the renewal contract is also a major consulting services contract These requirements apply to a purchase voucher if: (1) the voucher requests a payment under a consulting services contract that was originally a major consulting services contract, and (2) the contract has been renewed, and (3) the renewal contract itself is a major consulting services contract.
    1. The ESBD solicitation ID in which the requirements described in Notification, Major Contracts and, if applicable, Agency Notice were fulfilled when the original contract was entered into.
    2. The ESBD solicitation ID in which the requirements of Notification were fulfilled when the renewal contract was entered into.
    3. A copy of the governor’s finding of fact that the consulting services under the original contract are necessary.
    4. A copy of the governor’s finding of fact that the consulting services under the renewal contract are necessary.
    5. A statement that the payment complies with the requirements described in Necessity, Selection and Former Employees.

      Comptroller object 7239 must be used.
  5. Original contract was not a major consulting services contract, and the original contract and the renewal contract have a reasonably foreseeable value totaling more than $15,000, or $25,000 for an institution of higher education, other than a public junior college These requirements apply to a purchase voucher if: (1) the voucher requests a payment under a consulting services contract that was originally not a major consulting services contract, and (2) the contract has been renewed, and (3) the original contract and the renewal contract have a reasonably foreseeable value totaling more than $15,000.
    1. The ESBD solicitation ID in which the requirements described in Notification were fulfilled when the renewal contract was entered into.
    2. A copy of the governor’s finding of fact that the consulting services under the renewal contract are necessary.
    3. A statement that the payment complies with the requirements described in Necessity, Selection and Former Employees.

      Comptroller object 7239 must be used.
  6. Original contract was not a major consulting services contract, and the original contract and the renewal contract have a reasonably foreseeable value totaling $15,000 or less, ($25,000 or less for an institution of higher education, other than a public junior college) These requirements apply to a purchase voucher if: (1) the voucher requests a payment under a consulting services contract that was originally not a major consulting services contract, and (2) the contract has been renewed, and (3) the original contract and the renewal contract have a reasonably foreseeable value totaling $15,000 or less ($25,000 or less for an institution or higher education, other than a public junior college).
    1. A statement that the payment complies with the requirements described in Necessity, Selection and Former Employees.

      Comptroller object 7240 must be used.
  7. Original contract was a major consulting services contract and is still a major consulting services contract after being extended or amended These requirements apply to a purchase voucher if: (1) the voucher requests a payment under a consulting services contract that was originally a major consulting services contract, and (2) the contract has been extended or amended, and (3) the contract after the extension or amendment is still a major consulting services contract.
    1. The ESBD solicitation ID in which the requirements described in Notification, Major Contracts and, if applicable, Agency Notice were fulfilled when the original contract was entered into.
    2. The ESBD solicitation ID in which the requirements described in Notification were fulfilled when the extension or amendment was entered into.
    3. A copy of the governor’s finding of fact that the consulting services under the original contract are necessary.
    4. A copy of the governor’s finding of fact that the consulting services under the contract after the extension or amendment are necessary.
    5. A statement that the payment complies with the requirements described in Necessity, Selection and Former Employees.

      Comptroller object 7239 must be used.
  8. Original contract was a major consulting services contract but is no longer a major consulting services contract after being extended or amended These requirements apply to a purchase voucher if: (1) the voucher requests a payment under a consulting services contract that was originally a major consulting services contract, and (2) the contract has been extended or amended, and (3) the contract after the extension or amendment is no longer a major consulting services contract.
    1. The ESBD solicitation ID in which the requirements described in Notification, Major Contracts and, if applicable, Agency Notice were fulfilled when the original contract was entered into.
    2. The ESBD solicitation ID in which the requirements described in Major Contracts were fulfilled when the extension or amendment was entered into.
    3. A copy of the governor’s finding of fact that the consulting services under the original contract are necessary.
    4. A statement that the payment complies with the requirements described Necessity, Selection and Former Employees.

      Comptroller object 7240 must be used.
  9. Original contract is not a major consulting services contract, and the original contract and the extension or amendment have a reasonably foreseeable value totaling more than $15,000, or $25,000 for an institution of higher education other than a public junior college These requirements apply to a purchase voucher if: (1) the voucher requests a payment under a consulting services contract that was originally not a major consulting services contract, and (2) the contract has been extended or amended, and (3) the original contract and the extension or amendment have a reasonably foreseeable value totaling more than $15,000, or $25,000 for an institution of higher education other than a public junior college.
    1. The ESBD solicitation ID in which the requirements described in Notification were fulfilled when the extension or amendment was entered into.
    2. A copy of the governor’s finding of fact that the consulting services under the extension or amendment are necessary.
    3. A statement that the payment complies with the requirements described in Necessity, Selection and Former Employees.

      Comptroller object 7239 must be used.
  10. Original contract is not a major consulting services contract, and the original contract and the extension or amendment have a reasonably foreseeable value totaling $15,000 or less ($25,000 or less for an institution of higher education other than a public junior college). These requirements apply to a purchase voucher if: (1) the voucher requests a payment under a consulting services contract that was originally not a major consulting services contract, and (2) the contract has been extended or amended, and (3) the original contract and the extension or amendment have a reasonably foreseeable value totaling $15,000 or less ($25,000 or less for an institution of higher education other than a public junior college).
    1. A statement that the payment complies with the requirements described in Necessity, Selection and Former Employees.

      Comptroller object 7240 must be used.
  11. Emergency waiver from the governor A state agency that has received the governor’s emergency waiver of the requirements described in this section must submit a copy of the emergency waiver with each purchase voucher submitted to the Comptroller’s office to request a payment under the consulting services contract covered by the waiver.