TITLE 34. PUBLIC FINANCE

PART 1. COMPTROLLER OF PUBLIC ACCOUNTS

CHAPTER 15. ELECTRONIC TRANSFER OF CERTAIN PAYMENTS TO STATE AGENCIES

SUBCHAPTER A. APPLICABILITY, DEFINITIONS AND PAYMENT CATEGORIES

34 TAC §§15.1, 15.4, 15.6

The Comptroller of Public Accounts proposes amendments to §15.1, concerning applicability and additional information; §15.4, concerning applicable payment categories and voluntary payments; and §15.6, concerning payment category: taxes.

The comptroller proposes the amendments to remove and replace outdated information. The proposed amendments are the result of the comptroller's statutory quadrennial rule review of Texas Administrative Code, Title 34, Part 1 Chapter 15, concerning Electronic Transfer of Certain Payments to State Agencies. No legislation was enacted within the last four years that provides the statutory authority for this section.

The amendment to §15.1(e) replaces the outdated URL for TexNet Instructions with the current web address.

The amendment to §15.4(c) replaces the outdated URL for TexNet Instructions with the current web address.

The amendments to §15.6 update the list of payment categories in subsection (a) by removing the fireworks sales tax and sulphur tax and replace the outdated URL for TexNet Instructions in subsection (c) with the current web address.

Brad Reynolds, Chief Revenue Estimator, has determined that during the first five years that the proposed amendments are in effect, the amended rules: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rules' applicability; and will not positively or adversely affect this state's economy. This proposal amends existing rules.

Mr. Reynolds also has determined that the proposed amended rules would have no fiscal impact on the state government, units of local government, or individuals. The proposed amendments would benefit the public by providing an up-to-date web address for TexNet payment instructions and removing repealed taxes from the list of payment categories, improving accessibility and compliance. There would be no anticipated economic cost to the public. The proposed amendments would have no fiscal impact on small businesses or rural communities.

You may submit comments on the proposal or information related to the cost, benefit, or effect of the proposal, including any applicable data, research or analysis, to Macy Douglas, Director, Treasury Operations Division, P.O. Box 13528 Austin, Texas 78711 or to the email address: Macy.Douglas@cpa.texas.gov. The comptroller must receive your comments or other information no later than 30 days from the date of publication of the proposal in the Texas Register.

These amendments are proposed under Government Code, §404.095(e) which authorizes the comptroller to adopt rules specifying approved means of electronic funds transfer and specifying the types of taxes constituting separate categories.

The proposed amendments implement Government Code, §404.095 (Electronic Transfer of Certain Payments).

§15.1. Applicability and Additional Information.

(a) Any and all payments subject to Government Code, §404.095, must be made in accordance with this chapter.

(b) Pursuant to Government Code, §404.095, a person must electronically transfer certain payments to a state agency by one of the means of EFT approved by the comptroller if the following apply:

(1) the payment is to a state agency that collected or received more than $50 million in payments during the preceding state fiscal year in fees, fines, penalties, taxes, charges, gifts, grants, donations, and other funds, excluding federal grants and interest and dividend income; and

(2) the person paid the state agency a total of $500,000 or more in the preceding state fiscal year in a category of payment listed in §15.4 of this title (relating to Applicable Payment Categories and Voluntary Payments), and the state agency reasonably anticipates that during the current state fiscal year the person will pay the agency $500,000 or more in the same category of payment.

(c) The state agencies that typically collect or receive more than $50 million in payments in a state fiscal year are:

(1) Comptroller of Public Accounts;

(2) Employees Retirement System;

(3) General Land Office;

(4) Teacher Retirement System;

(5) Texas Alcoholic Beverage Commission;

(6) Health and Human Services Commission;

(7) Texas Department of Motor Vehicles;

(8) Texas Department of Public Safety;

(9) Texas Department of Transportation;

(10) Texas Workforce Commission;

(11) Texas Commission on Environmental Quality;

(12) Texas Parks and Wildlife Department; and

(13) University of Texas System.

(d) Pursuant to Government Code, §404.095, a state agency may adopt rules under this chapter that require a person to make payments by EFT using TexNet. The rules under this chapter also apply to all persons who are subject to such adopted state agency rules.

(e) For additional information regarding the EFT of certain payments to state agencies under Government Code, §404.095, consult the comptroller's website at https://comptroller.texas.gov/programs/systems/texnet.php [http://www.window.state.tx.us/treasops/texnet/].

§15.4. Applicable Payment Categories and Voluntary Payments.

(a) Each of the following is a separate category of payments to a state agency:

(1) fees, with each type of fee listed in §15.5 of this title (relating to Payment Category: Fees) considered a separate category of payment;

(2) fines;

(3) civil penalties;

(4) taxes, with each type of tax listed in §15.6 of this title (relating to Payment Category: Taxes) being considered a separate category; and

(5) other payments to a state agency excluding extraordinary payments such as gifts, grants, donations, interest, and dividend income, and one-time surcharges; and listed in §15.7 of this title (relating to Payment Category: Other Payments).

(b) A person making payments to a state agency in a particular category of payment who is not required to electronically transfer payments may do so voluntarily, as described in §15.8 of this title (relating to Voluntary Payments by Electronic Funds Transfer).

(c) For additional information regarding payment categories and voluntary payments under Government Code, §404.095, consult the state agency and the comptroller's website at https://comptroller.texas.gov/programs/systems/texnet.php [http://www.window.state.tx.us/treasops/texnet/].

§15.6. Payment Category: Taxes.

(a) For purposes of making payments to a state agency by EFT under Government Code, §404.095 and this chapter, each of the following taxes shall be considered a separate category of payment. Subject to amendment, the categories of taxes include, but are not limited to:

(1) automobile theft prevention authority assessment tax;

(2) bank tax;

(3) beer reporting system tax;

(4) Bexar county sports venue project tax;

(5) boat and boat motor sales tax;

(6) cement production tax;

(7) cigarette tax;

(8) crude oil production tax;

(9) diesel fuel tax;

(10) direct pay sales tax;

(11) Euless city sports venue tax;

[(12) fireworks sales tax;]

(12) [(13) ]] franchise tax;

(13) [(14)] gasoline tax;

(14) [(15)] gross receipts tax;

(15) [(16)] hotel occupancy tax;

(16) [(17)] insurance maintenance, assessment, and retaliatory tax;

(17) [(18)] insurance premium tax;

(18) [(19)] interest earned on sales tax;

(19) [(20)] international fuel tax agreement (IFTA);

(20) [(21)] interstate trucker fuel tax--diesel/gasoline/liquefied gas;

(21) [(22)] liquefied gas tax;

(22) [(23)] liquor reporting system tax;

(23) [(24)] malt liquor reporting system tax;

(24) [(25)] manufactured housing sales and use tax;

(25) [(26)] mixed beverage gross receipts tax;

(26) [(27)] motor vehicle rental tax;

(27) [(28)] motor vehicle sales tax;

(28) [(29)] natural gas production tax;

(29) [(30)] oil and gas well servicing tax;

(30) [(31)] public utilities gross receipts assessment tax;

(31) [(32)] sales and use tax;

(32)[(33)] seller financed motor vehicle sales tax;

(33) [(34)] sports venue tax;

[(35) sulphur tax;]

(34) [(36)] tobacco products tax;

(35) [(37)] unemployment compensation tax; and

(36) [(38)] volunteer fire department insurance tax.

(b) A state agency may not require a person to electronically transfer a protested tax payment. However, a person may voluntarily submit a protested tax payment by EFT. For more information on voluntary protest tax payments consult §3.9 of this title (relating to Electronic Filing of Returns and Reports; Electronic Transfer of Certain Payments by Certain Taxpayers).

(c) For more information regarding the procedures to pay taxes by EFT, consult the applicable state agency, §3.9 of this title, and the comptroller's website https://comptroller.texas.gov/programs/systems/texnet.php [http://www.window.state.tx.us/treasops/texnet/].

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 6, 2026.

TRD-202600553

Victoria North

General Counsel for Fiscal and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: March 22, 2026

For further information, please call: (512) 475-2220

SUBCHAPTER B. STATE AGENCY PRACTICE AND PROCEDURES

34 TAC §15.21

The Comptroller of Public Accounts proposes amendment to §15.21, concerning state agency rules requirements.

The comptroller proposes the amendment to remove and replace outdated information. The proposed amendment is the result of the comptroller's statutory quadrennial rule review of Texas Administrative Code, Title 34, Part 1 Chapter 15, concerning Electronic Transfer of Certain Payments to State Agencies. No legislation was enacted within the last four years that provides the statutory authority for this section.

The amendment to §15.21(d) replaces the outdated URL for TexNet Instructions with the current web address.

Brad Reynolds, Chief Revenue Estimator, has determined that during the first five years that the proposed amendment is in effect, the amended rule: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rule's applicability; and will not positively or adversely affect this state's economy. This proposal amends an existing rule.

Mr. Reynolds also has determined that the proposed rule amendment would have no fiscal impact on the state government, units of local government, or individuals. The proposed amendment would benefit the public by providing an up-to-date web address for EFT payment instructions, improving accessibility and compliance. There would be no anticipated economic cost to the public. The proposed amendment would have no fiscal impact on small businesses or rural communities.

You may submit comments on the proposal or information related to the cost, benefit, or effect of the proposal, including any applicable data, research or analysis, to Macy Douglas, Director, Treasury Operations Division, P.O. Box 13528 Austin, Texas 78711 or to the email address: Macy.Douglas@cpa.texas.gov. The comptroller must receive your comments or other information no later than 30 days from the date of publication of the proposal in the Texas Register.

This amendment is proposed under Government Code, §404.095(e) which authorizes the comptroller to adopt rules specifying approved means of electronic funds transfer and specifying the types of taxes constituting separate categories.

The amendment implements Government Code, §404.095 (Electronic Transfer of Certain Payments).

§15.21. State Agency Rules Requirements.

(a) A state agency which has adopted rules requiring EFT payments pursuant to Government Code, §404.095(c) and §15.1(d) of this title (relating to Applicability and Additional Information) shall notify each person to whom the rules apply. The notice shall include the information set out in §15.22(b) of this title (relating to State Agency Applicability Determination and Notification Procedures) and shall be provided at least 60 days before the first payment is due, but not later than November 1 of each year.

(b) All persons to whom state agency rules apply shall be required to electronically transfer payments to the state agency beginning on the date set forth in the notification and thereafter until said person is no longer subject to the state agency's rules.

(c) A state agency may not require a person to electronically transfer a protested tax payment, however, a person may choose to pay such payments voluntarily as set out in §15.8 of this title (relating to Voluntary Payments by Electronic Funds Transfer).

(d) For additional information on state agency rules and payment instructions, consult the state agency in question and the comptroller's website at: https://comptroller.texas.gov/programs/systems/texnet.php [http://www.window.state.tx.us/treasops/texnet/].

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 6, 2026.

TRD-202600554

Victoria North

General Counsel for Fiscal and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: March 22, 2026

For further information, please call: (512) 475-2220

SUBCHAPTER C. TEXNET: GENERAL PAYMENT PROCEDURES

34 TAC §15.32, §15.35

The Comptroller of Public Accounts proposes amendments to §15.32, concerning transmission of TexNet payment information, and §15.35, concerning notification to the comptroller.

The comptroller proposes the amendments to remove and replace outdated information. The proposed amendments are the result of the comptroller's statutory quadrennial rule review of Texas Administrative Code, Title 34, Part 1, Chapter 15, concerning Electronic Transfer of Certain Payments to State Agencies. No legislation was enacted within the last four years that provides the statutory authority for this section.

The amendment to §15.32 replaces the outdated URL for TexNet Instructions in §15.32(b)(1)(D)(3) with the current web address.

The amendment to §15.35 removes the reference to facsimile and fax number to reflect the comptroller's current communication standards.

Brad Reynolds, Chief Revenue Estimator, has determined that during the first five years that the proposed amendments are in effect, the amended rules: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rules' applicability; and will not positively or adversely affect this state's economy. This proposal amends existing rules.

Mr. Reynolds also has determined that the proposed amended rules would have no fiscal impact on the state government, units of local government, or individuals. The proposed amendments would benefit the public by providing up-to-date web address for TexNet payment instructions and notification methods to the Comptroller, improving accessibility and compliance. There would be no anticipated economic cost to the public. The proposed amendments would have no fiscal impact on small businesses or rural communities.

You may submit comments on the proposal or information related to the cost, benefit, or effect of the proposal, including any applicable data, research or analysis, to Macy Douglas, Director, Treasury Operations Division, P.O. Box 13528 Austin, Texas 78711 or to the email address: Macy.Douglas@cpa.texas.gov. The comptroller must receive your comments or other information no later than 30 days from the date of publication of the proposal in the Texas Register.

This amendment is proposed under Government Code, §404.095(e) which authorizes the comptroller to adopt rules specifying approved means of electronic funds transfer and specifying the types of taxes constituting separate categories.

The amendment implements Government Code, §404.095, concerning electronic transfer of certain payments.

§15.32. Transmission of TexNet Payment Information.

(a) A person must transmit accurate payment information to ensure proper credit of the payment to the state agency receiving payment.

(b) A person's chosen TexNet payment option for EFT (see §15.2(b) of this title (relating to Approved Means of Electronic Funds Transfer)) will determine the method of transmitting payment information.

(1) Persons choosing ACH debit/direct entry as the TexNet payment option for EFT shall:

(A) enter payment information directly into the TexNet data collection system using either the Internet or a touch-tone telephone in accordance with the instructions established by the state agency and approved by the comptroller;

(B) record the trace number provided by the TexNet data collection system once all payment information has been entered by the person;

(C) enter any change, correction, or cancellation in the payment information to the TexNet data collection system in accordance with the instructions established by the state agency and approved by the comptroller; and

(D) contact the comptroller at the telephone number listed in §15.35 of this title (relating to Notification to the Comptroller) if the person experiences difficulty entering information into the TexNet data collection system.

(2) Persons choosing ACH debit/indirect entry as the TexNet payment option for EFT shall enter payment information in the manner and by the deadline established by the state agency to which payment is due and approved by the comptroller.

(3) Persons choosing ACH credit with addenda record(s) as the TexNet payment option for EFT shall transmit payment information in the addenda record(s) of the ACH credit in the approved State of Texas addenda record format, as set out in the TexNet instruction booklet for the state agency, which is posted at https://comptroller.texas.gov/programs/systems/texnet.php [http://www.window.state.tx.us/treasops/texnet/]. A person who does not have access to the Internet may consult with the state agency for further information and TexNet payment instructions.

§15.35. Notification to the Comptroller.

Any notification to the comptroller regarding EFT payments by mail or[,] telephone[, or fax] must be directed to: Comptroller of Public Accounts, Treasury Operations, P.O. Box 12608, Austin, Texas 78711, phone number (800) 531-5441, extension 3-3010 [and fax (512) 463-1364].

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 6, 2026.

TRD-202600555

Victoria North

General Counsel for Fiscal and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: March 22, 2026

For further information, please call: (512) 475-2220

CHAPTER 20. STATEWIDE PROCUREMENT AND SUPPORT SERVICES

SUBCHAPTER B. PUBLIC PROCUREMENT AUTHORITY AND ORGANIZATION

DIVISION 2. PUBLICIZING PROCUREMENT: CMBL, ESBD, AND VPTS

34 TAC §20.115

The Comptroller of Public Accounts proposes amendments to §20.115, concerning the vendor performance tracking system. The amendments eliminate the potential for discrepancies between letter grades submitted by state agencies by calculating report grades based on the agency-selected performance factors rather than agency's assigning grades independently of the performance factor selections. The amendments establish a more objective vendor performance grading system.

No legislation was enacted within the last four years that provides the statutory authority for the amendments.

These amendments remove language providing that vendor grades in the tracking system are submitted by state agencies. Section 20.115 now provides for vendor grades to be assigned based on vendor performance reports and is consistent with a concurrently proposed amendment of §20.509, concerning vendor performance reporting. The amendments revise subsections (a), (b), (d) and (e) to delete the requirement for state agencies to assign a grade to the tracking system and remove corresponding references. The amendments further revise subsection (d) to indicate the overall vendor performance letter grade for each vendor will be assigned based on performance evaluations provided by state agencies using the numerical value system provided. The amendments revise (2) to remove a description of how letter grades were calculated before February 5, 2001, which no longer serves a purpose.

Brad Reynolds, Chief Revenue Estimator, has determined that during the first five years that the proposed amendments are in effect, the amended rule: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rule's applicability; and will not positively or adversely affect this state's economy. This proposal amends an existing rule.

Mr. Reynolds also has determined that the proposed rule amendments would have no significant fiscal impact on the state government, units of local government, or individuals. The proposed amendments would benefit the public by eliminating discrepancies in vendor grades submitted by state agencies and establishing a more objective and efficient vendor performance grading system. There would be no anticipated economic cost to the public. The proposed amendments would have no fiscal impact on small businesses or rural communities.

You may submit comments on the proposal or information related to the cost, benefit, or effect of the proposal, including any applicable data, research or analysis, to Gerard MacCrossan P.O. Box 13528 Austin, Texas 78711 or to the email address: Gerard.MacCrossan@cpa.texas.gov. The comptroller must receive your comments or other information no later than 30 days from the date of publication of the proposal in the Texas Register.

A public hearing will also be held to receive comments on the proposed amendment. There is no physical location for this meeting. The meeting will be held at 10:00 a.m. on Tuesday, March 10, 2026. To access the online public meeting by web browser, please enter the following URL into your browser: https://txcpa.webex.com/txcpa/j.php?MTID=mb15a05f061e005057f4bac500d564849. To join the meeting by computer or cell phone using the Webex app, use the access code 24925800148 and password SPDRules. Persons interested in providing comments at the public hearing may contact Mr. Gerard MacCrossan, Comptroller of Public Accounts, at Gerard.MacCrossan@cpa.texas.gov or by calling (512) 463-4468 by March 9, 2026.

These amendments are proposed under Government Code, §2155.0012, which authorizes the comptroller to adopt rules to efficiently and effectively administer Government Code, Chapter 2155; §2156.0012, which authorizes the comptroller to adopt rules to efficiently and effectively administer Government Code, Chapter 2156; and §2262.056, which authorizes the comptroller to adopt rules to efficiently and effectively administer a vendor performance tracking system.

The amendments implement Government Code, §2155.089 and §2262.055.

§20.115. Vendor Performance Tracking System.

(a) The comptroller's statewide procurement division shall maintain a vendor performance tracking system on the comptroller's web page on which vendor performance reports and vendor grades [submitted by state agencies] are published. Vendor performance reports [and vendor grades] shall be submitted to the vendor performance tracking system as stated in §20.509 of this title (relating to Vendor Performance Reporting).

(b) The comptroller shall provide a copy of a state agency's vendor performance report and grade to the vendor identified in the report. When [a state agency assigns] a grade lower than "C" is calculated by the vendor performance tracking system, ["C,"] the vendor may provide to the comptroller a response to the performance report and grade. When a response is received by the comptroller within 30 days of the comptroller providing a copy of the performance report and grade to the vendor, the comptroller:

(1) shall provide the state agency a copy of the vendor response; and

(2) shall review the performance report and grade, response, and any other relevant information available to the comptroller about the purchase order or contract that is the subject of the performance report and grade.

(c) Based upon the review provided for in subsection (b) of this section, the comptroller may revise the performance report or grade.

(d) Using vendor performance evaluations [grades] provided by state agencies, the vendor performance tracking system will calculate and assign [generate] one overall vendor performance letter grade for each vendor in the following manner:

(1) Each vendor grade [assigned by a state agency] will be designated a numerical value based on the following scale: A=4, B=3, C=2, D=1, F=0.

(2) The [On or before February 4, 2021, the system numerical score for the vendor is the sum of all numerical values for each letter grade assigned to a vendor after February 4, 2017. After February 5, 2021, the] system numerical score for a vendor will be the sum of all numerical values for each letter grade assigned to a vendor for the most recent 48 months.

(3) The system numerical average score for the vendor is the system numerical score determined in paragraph (2) of this subsection divided by the number of letter grades included in the calculation of the system numerical score. The system numerical average score is rounded to the nearest tenth.

(4) Using the system numerical average score determined under paragraph (3) of this subsection, the system will assign a single system numerical average score letter grade for the contractor based on the following scale: A=3.5-4.0; B=2.5-3.4; C=1.5-2.4; D=0.5-1.4; and F=0.4 or below.

(e) Except for a grade that was revised in the vendor's favor under subsection (c) of this section, the executive head of a state agency may, within 48 months of submission of a vendor performance report [and grade], request to revise the report [and grade] for a particular purchase order or contract by submitting a written justification for the grade revision to the comptroller. The written justification for the grade revision must contain the following information:

(1) contract number or purchase order number;

(2) vendor name;

(3) date the assigned grade was [state agency] entered into the vendor performance tracking system [the grade] that the state agency is requesting to revise; and

(4) a revised vendor performance report, including the reason for the grade revision request.

(f) Upon receiving a request under subsection (e) of this section, the comptroller shall publish the grade revision and revised performance report in the vendor performance tracking system maintained on the comptroller's website unless the requested grade revision will result in a grade lower than "C," in which case subsection (b) of this section will apply. The comptroller shall recalculate the system numerical score and system numerical average score using the revised grade.

(g) A vendor that receives a grade lower than a "C" [from a state agency] may file a protest to the grade according to the protest procedures in §20.534 of this title (relating to Protests).

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 4, 2026.

TRD-202600522

Don Neal

General Counsel, Operations and Support Legal Services

Comptroller of Public Accounts

Earliest possible date of adoption: March 22, 2026

For further information, please call: (512) 475-2220

SUBCHAPTER F. CONTRACT MANAGEMENT

DIVISION 2. REPORTS AND AUDITS

34 TAC §20.509

The Comptroller of Public Accounts proposes amendments to §20.509, concerning vendor performance reporting. The amendments eliminate the potential for discrepancies between letter grades submitted by state agencies by calculating report grades based on the agency-selected performance factors rather than agency's assigning grades independently of the performance factor selections. The amendments establish a more objective vendor performance grading system.

No legislation was enacted within the last four years that provides the statutory authority for the amendments.

These amendments remove language providing that a state agency shall submit a vendor performance report and grade to the tracking system, and these amendments are consistent with concurrently proposed amendments of §20.115, concerning the vendor performance tracking system. Section 20.509 now requires a state agency to submit only a vendor performance report, and a grade will be calculated by the tracking system and published by the comptroller. These amendments revise subsections (a) through (e) to delete the requirement for a state agency to submit a grade to the tracking system. The amendments reorganize subsection (d) into paragraphs and further revise subsection (e) to require the grade assigned to a vendor to be based on a state agency's evaluation of the contract performance.

Brad Reynolds, Chief Revenue Estimator, has determined that during the first five years that the proposed amendments are in effect, the amended rule: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rule's applicability; and will not positively or adversely affect this state's economy. This proposal amends an existing rule.

Mr. Reynolds also has determined that the proposed rule amendments would have no significant fiscal impact on the state government, units of local government, or individuals. The proposed amendments would benefit the public by eliminating discrepancies in vendor grades submitted by state agencies and establishing a more objective and efficient vendor performance grading system. There would be no anticipated economic cost to the public. The proposed amendments would have no fiscal impact on small businesses or rural communities.

You may submit comments on the proposal or information related to the cost, benefit, or effect of the proposal, including any applicable data, research or analysis, to Gerard MacCrossan P.O. Box 13528 Austin, Texas 78711 or to the email address: Gerard.MacCrossan@cpa.texas.gov. The comptroller must receive your comments or other information no later than 30 days from the date of publication of the proposal in the Texas Register.

A public hearing will also be held to receive comments on the proposed amendment. There is no physical location for this meeting. The meeting will be held at 10:00 a.m. on Tuesday, March 10, 2026. To access the online public meeting by web browser, please enter the following URL into your browser: https://txcpa.webex.com/txcpa/j.php?MTID=mb15a05f061e005057f4bac500d564849. To join the meeting by computer or cell phone using the Webex app, use the access code 24925800148 and password SPDRules. Persons interested in providing comments at the public hearing may contact Mr. Gerard MacCrossan, Comptroller of Public Accounts, at Gerard.MacCrossan@cpa.texas.gov or by calling (512) 463-4468 by March 9, 2026.

These amendments are proposed under Government Code, §2155.0012, which authorizes the comptroller to adopt rules to efficiently and effectively administer Government Code, Chapter 2155; §2156.0012, which authorizes the comptroller to adopt rules to efficiently and effectively administer Government Code, Chapter 2156; and §2262.056, which authorizes the comptroller to adopt rules to efficiently and effectively administer a vendor performance tracking system.

The amendments implement Government Code, §2155.089 and §2262.055.

§20.509. Vendor Performance Reporting.

(a) A state agency shall submit a report [and grade] of a vendor's performance to the vendor performance tracking system as stated in §20.115 of this title (relating to Vendor Performance Tracking System) for:

(1) each purchase exceeding $25,000 from contracts administered by the comptroller or the Department of Information Resources; and

(2) each agency contract, except as provided by subsection (f) of this section.

(b) In addition, if the value of a contract exceeds $5 million, a state agency must submit a report [and grade] of a vendor's performance to the vendor performance tracking system as stated in §20.115 of this title upon the completion of a key milestone identified in the contract and at least once each year during the term of the contract.

(c) If a state agency does not submit a vendor performance report [and grade] within 30 days of the completion or termination of a purchase order or contract and, for a contract with a value that exceeds $5 million, the completion of a key milestone identified in the contract, it shall document the reason in its contract file.

(d) A state agency shall[:]

[(1)] evaluate the vendor's performance based on:

(1) [(A)] information prepared by the state agency in planning the procurement that assessed the need for the purchase together with the specifications for the good or service and the criteria to evaluate the responses resulting in an award and contract;

(2) [(B)] compliance with the material terms of the contract;

(3) [(C)] ability to correct instances of contractual non-compliance; and

(4) [(D)] other relevant evaluation criteria presented in the online vendor performance tracking system[; and]

[(2) assign the vendor a letter grade.]

(e) A letter grade shall be assigned to a vendor based on a state agency's evaluation of the contract performance. The following grading scale shall be used to evaluate vendor contract performance: [State agencies shall independently evaluate the contract performance and use the following grading scale when assigning a letter grade to a vendor:]

(1) An [A state agency shall assign an] "A" is assigned when it is determined [determines] that the vendor significantly exceeded the requirements of the purchase order or contract to the state's benefit, that any problems with the purchase order or contract were minor, and that corrective actions taken by the vendor to address such problems were highly effective. If the best value standard was used to award the purchase order or contract, an "A" means that the vendor satisfied that standard.

(2) A [state agency shall assign a] "B" is assigned when it is determined [determines] that the vendor exceeded some requirements of the purchase order or contract to the state's benefit, that any problems with the purchase order or contract were minor, and that corrective actions taken by the vendor to address such problems were effective. If the best value standard was used to award the purchase order or contract, a "B" means that the vendor satisfied that standard.

(3) A [state agency shall assign a] "C" is assigned when it is determined [determines] that the vendor met the requirements of the purchase order or contract and that corrective actions taken by the vendor to address minor problems were satisfactory. If the best value standard was used to award the purchase order or contract, a "C" means that the vendor satisfied that standard but that the vendor's performance did not merit an "A" or "B."

(4) A [state agency shall assign a] "D" is assigned when it is determined [determines] that the vendor did not meet some of the requirements of the purchase order or contract, that problems with the purchase order or contract were serious, and that corrective actions taken by the vendor to address such problems were only marginally effective or not fully implemented. If the best value standard was used to award the purchase order or contract, a "D" means that the vendor did not satisfy that standard.

(5) An [A state agency shall assign an] "F" is assigned when it is determined [determines] that the vendor did not meet the requirements of the purchase order or contract, that problems with the purchase order or contract were serious, and that corrective actions taken by the vendor to address such problems were ineffective. If the best value standard was used to award the purchase order or contract, an "F" means that the vendor did not satisfy that standard.

(f) A state agency is not required to report or grade vendor performance for:

(1) contracts exempt from vendor reporting under Government Code, §2155.089(c) or another statutory provision;

(2) purchases for which competitive bidding is not required under §20.82(b)(1) of this title; or

(3) purchases procured through informal bids under §20.82(d)(1)(A) of this title.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 4, 2026.

TRD-202600523

Don Neal

General Counsel, Operations and Support Legal Services

Comptroller of Public Accounts

Earliest possible date of adoption: March 22, 2026

For further information, please call: (512) 475-2220