Restricted Expenditures — Contracts and Bids
Contract Awards to Nonresident Bidders

Texas law requires that bids submitted by nonresident bidders who reside in states that grant resident bidder preferences for that state’s purchases be evaluated in the same manner that a Texas resident bidder would be evaluated in the out-of-state bidder’s home state.

For example, state X grants its in-state bidders a 10 percent preference when bidding on agricultural products. By granting a 10 percent preference to in-state bidders, state X essentially penalizes Texas bidders 10 percent for not being residents. To evaluate a bid from state X in the same manner, a Texas agency would apply a 10 percent penalty to a bid submitted by the bidder from state X.

To assist governmental entities in evaluating bids from out-of-state vendors, the Comptroller’s office publishes a list of the states with resident bidder preferences.

Note: Resident bidder preferences do not apply in the evaluation of bids involving the use of federal funds.

See the State of Texas Procurement and Contract Management Guide PDF for more information.

Definitions

Governmental contract

A contract awarded by a governmental entity for general construction, an improvement, a service or a public works project, or for a purchase of supplies, materials or equipment. (Texas Government Code Section 2252.001(1)

Governmental entity

• The state.
• A board, commission, department, office or other agency in the executive branch of state government, including an institution of higher education as defined by Texas Education Code Section 61.003.
• The Legislature or a legislative agency.
• The Supreme Court, the Court of Criminal Appeals, a court of appeals, the State Bar of Texas or another judicial agency having statewide jurisdiction. (Texas Government Code Section 2252.001(2))

Nonresident bidder

A person whose principal place of business is not in Texas. (Texas Government Code Section 2252.001(3))

Resident bidder

A person whose principal place of business is in Texas, including a contractor whose ultimate parent company or majority owner has its principal place of business in this state. (Texas Government Code Section 2252.001(4))

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