HB 1295
HB 1295 Disclosure of Interested Parties TEXAS PUBLIC PURCHASING ASSOCIATION SUMMER CONFERENCE KERRVILLE, TEXAS JUNE 9, 2016
Sarah Langlois, Partner
H.B. 1295, 84th Leg., R.S. (2015) Amended Texas Government Code Added Section 2252.908, Disclosure of Interested Parties NEW disclosure filing requirement for business
entities when entering into certain contracts with a governmental entity.
Applies to contracts subject to Section 2252.908 entered into on or after January 1, 2016
What contracts are subject to Section 2252.908? Disclosure requirement applies when: A
business entity contracts with a governmental entity and The contract: Requires
an action or vote by the governing body before the contract may be signed; OR Has a value of at least $1 million
H.B. 1295 – NEW Disclosure Filing Requirement A governmental entity may not enter into a
contract subject to Section 2252.908 unless the business entity submits a Disclosure of Interested Parties (Form 1295) at the time the business entity submits the signed contract to the governmental entity. TEX. GOV’T CODE § 2252.908(f).
H.B. 1295 – NEW Disclosure Filing Requirement The governmental entity must submit a copy***
of the Disclosure to the Texas Ethics Commission not later than the 30th day after the date the governmental entity receives the required disclosure. TEX. GOV’T CODE § 2252.908(f).
HB 1295 Definitions
Business Entity “Business Entity” means any entity recognized by
law through which business is conducted, including a sole proprietorship, partnership, or corporation. TEX. GOV’T CODE § 2252.908(1).
Includes “an entity through which business is conducted with a governmental entity or state agency, regardless of whether the entity is a for-profit or nonprofit entity. The term does not include a governmental entity or state agency.” TEX. ETHICS COMM. RULE 46.3(b).
Interested Party “Interested Party” means a person: 1) who has a controlling interest in a business entity with
whom a governmental entity contracts; or 2) who actively participates in facilitating the contract or negotiating the terms of the contract, including a broker, intermediary, adviser, or attorney for the business entity. TEX. GOV’T CODE § 2252.908(3).
Interested Party: Controlling Interest an ownership interest or participating interest in a business entity by virtue of units, percentage, shares, stock, or otherwise that exceeds 10 percent; 2) membership on the board of directors or other governing body of a business entity of which the board or other governing body is composed of not more than 10 members; or 3) service as an officer of a business entity that has four or fewer officers, or service as one of the four officers most highly compensated by a business entity that has more than four officers.” 1)
Interested Party: Intermediary
“A person who actively participates in the facilitation of the contract or negotiating the contract, including a broker, adviser, attorney, or representative of or agent for the business entity who: receives compensation from the business entity for the
person’s participation; communicates directly with the governmental entity or state agency on behalf of the business entity regarding the contract; and is not an employee of the business entity.” TEX. ETHICS COMM. RULE 46.3(e)
HB 1295 In Practice
What contracts are subject to HB 1295? Examples of contracts with business entities that
require compliance with HB 1295: Contracts
from procurement solicitations that are awarded by the board; If gov’t entity policy requires board approval of contracts valued at $50,000 or more; and Contract renewals, amendments, and settlement agreements with business entities that require board approval. “Contract”
includes an amended, extended, or renewed contract. TEX. ETHICS COMM. RULE 46.3(a).
Examples Because HB 1295 only applies to contracts with a
“business entity,” the following contracts are not subject to HB 1295: Personnel contracts with individuals, such as employment contracts; and Interlocal contracts
Steps: (1) Business Entity Files Form 1295 A new, mandatory filing application to file Form 1295 is available on the Texas Ethics Commission’s website: https://www.ethics.state.tx.us/whatsnew/elf_info_form1295.htm
Business Entity must file Form 1295 on the Commission’s electronic form and must contain the following information: 1. Name of the business entity filing the form and the city, state, and country of the business entity’s place of business; 2. The name of the governmental entity or state agency that is a party to the contract for which the form is being filed; (cont. next slide)
Steps: (1) Business Entity Files Form 1295 (cont.)
Form 1295 must contain the following information (cont.):
3. The name of each interested party and the city, state, and country of the place of business of each interested party; 4. The identification number used by the governmental entity or state agency to track or identify the contract for which the form is being filed and a short description of the goods or services used by the governmental entity or state agency provided under the contract; and 5. An indication of whether each interested party has a controlling interest in the business entity, is an intermediary in the contract for which the disclosure is being filed, or both.
Steps: (2) Business Entity Submits Certification of Filing The certification of filing and the completed Form 1295 generated by the Commission’s electronic filing application must be: Printed, Signed by an authorized agent of the contracting business entity, and Submitted to the governmental entity. TEX. ETHICS COMM. RULE 46.5(b).
Steps: (3) School District Notifies Commission A governmental entity that receives a
completed Form 1295 and certification of filing must notify the Commission of the receipt of those documents:
In
an electronic format prescribed by the Commission “Not later than the 30th day after the date the contract for which the form was filed binds all parties to the contract.” TEX. ETHICS COMM. RULE 46.5(c).
Steps: (4) Commission Makes Form 1295 Publicly Available The Commission then makes each filed Form 1295
available to the public on the Commission’s web site not later than the seventh business day after the date the Commission receives the required notice from the school district. TEX. ETHICS COMM. RULE 46.5(d)
Form 1295 Best Practices Add the 1295 requirement to your contracting
checklist(s) Assign an employee to be responsible for the 1295 process, including obtaining copies of the forms and timely verifying receipt Include notice in the agenda item back-up that a 1295 has been received Include the Form 1295 requirement in procurement solicitations and require proposers to submit completed 1295 forms with their proposals
Form 1295 Resources More information, including FAQs and How-To
Videos are available on the Commission’s web site at https://www.ethics.state.tx.us/whatsnew/elf_info_for m1295.htm
Thank you for your time and attention! Sarah Langlois 5718 Westheimer Road, Suite 1200 Houston, Texas 77057 Telephone: 713.960.6000 THE FOREGOING PRESENTATION WAS CREATED BY ROGERS, MORRIS & GROVER, LLP. THIS PRESENTATION IS INTENDED TO BE USED SOLELY FOR GENERAL INFORMATION PURPOSES AND IS NOT TO BE REGARDED AS LEGAL ADVICE. IF SPECIFIC LEGAL ADVICE IS SOUGHT, PLEASE CONSULT AN ATTORNEY.
Sarah Langlois, Partner
H.B. 1295, 84th Leg., R.S. (2015) Amended Texas Government Code Added Section 2252.908, Disclosure of Interested Parties NEW disclosure filing requirement for business
entities when entering into certain contracts with a governmental entity.
Applies to contracts subject to Section 2252.908 entered into on or after January 1, 2016
What contracts are subject to Section 2252.908? Disclosure requirement applies when: A
business entity contracts with a governmental entity and The contract: Requires
an action or vote by the governing body before the contract may be signed; OR Has a value of at least $1 million
H.B. 1295 – NEW Disclosure Filing Requirement A governmental entity may not enter into a
contract subject to Section 2252.908 unless the business entity submits a Disclosure of Interested Parties (Form 1295) at the time the business entity submits the signed contract to the governmental entity. TEX. GOV’T CODE § 2252.908(f).
H.B. 1295 – NEW Disclosure Filing Requirement The governmental entity must submit a copy***
of the Disclosure to the Texas Ethics Commission not later than the 30th day after the date the governmental entity receives the required disclosure. TEX. GOV’T CODE § 2252.908(f).
HB 1295 Definitions
Business Entity “Business Entity” means any entity recognized by
law through which business is conducted, including a sole proprietorship, partnership, or corporation. TEX. GOV’T CODE § 2252.908(1).
Includes “an entity through which business is conducted with a governmental entity or state agency, regardless of whether the entity is a for-profit or nonprofit entity. The term does not include a governmental entity or state agency.” TEX. ETHICS COMM. RULE 46.3(b).
Interested Party “Interested Party” means a person: 1) who has a controlling interest in a business entity with
whom a governmental entity contracts; or 2) who actively participates in facilitating the contract or negotiating the terms of the contract, including a broker, intermediary, adviser, or attorney for the business entity. TEX. GOV’T CODE § 2252.908(3).
Interested Party: Controlling Interest an ownership interest or participating interest in a business entity by virtue of units, percentage, shares, stock, or otherwise that exceeds 10 percent; 2) membership on the board of directors or other governing body of a business entity of which the board or other governing body is composed of not more than 10 members; or 3) service as an officer of a business entity that has four or fewer officers, or service as one of the four officers most highly compensated by a business entity that has more than four officers.” 1)
Interested Party: Intermediary
“A person who actively participates in the facilitation of the contract or negotiating the contract, including a broker, adviser, attorney, or representative of or agent for the business entity who: receives compensation from the business entity for the
person’s participation; communicates directly with the governmental entity or state agency on behalf of the business entity regarding the contract; and is not an employee of the business entity.” TEX. ETHICS COMM. RULE 46.3(e)
HB 1295 In Practice
What contracts are subject to HB 1295? Examples of contracts with business entities that
require compliance with HB 1295: Contracts
from procurement solicitations that are awarded by the board; If gov’t entity policy requires board approval of contracts valued at $50,000 or more; and Contract renewals, amendments, and settlement agreements with business entities that require board approval. “Contract”
includes an amended, extended, or renewed contract. TEX. ETHICS COMM. RULE 46.3(a).
Examples Because HB 1295 only applies to contracts with a
“business entity,” the following contracts are not subject to HB 1295: Personnel contracts with individuals, such as employment contracts; and Interlocal contracts
Steps: (1) Business Entity Files Form 1295 A new, mandatory filing application to file Form 1295 is available on the Texas Ethics Commission’s website: https://www.ethics.state.tx.us/whatsnew/elf_info_form1295.htm
Business Entity must file Form 1295 on the Commission’s electronic form and must contain the following information: 1. Name of the business entity filing the form and the city, state, and country of the business entity’s place of business; 2. The name of the governmental entity or state agency that is a party to the contract for which the form is being filed; (cont. next slide)
Steps: (1) Business Entity Files Form 1295 (cont.)
Form 1295 must contain the following information (cont.):
3. The name of each interested party and the city, state, and country of the place of business of each interested party; 4. The identification number used by the governmental entity or state agency to track or identify the contract for which the form is being filed and a short description of the goods or services used by the governmental entity or state agency provided under the contract; and 5. An indication of whether each interested party has a controlling interest in the business entity, is an intermediary in the contract for which the disclosure is being filed, or both.
Steps: (2) Business Entity Submits Certification of Filing The certification of filing and the completed Form 1295 generated by the Commission’s electronic filing application must be: Printed, Signed by an authorized agent of the contracting business entity, and Submitted to the governmental entity. TEX. ETHICS COMM. RULE 46.5(b).
Steps: (3) School District Notifies Commission A governmental entity that receives a
completed Form 1295 and certification of filing must notify the Commission of the receipt of those documents:
In
an electronic format prescribed by the Commission “Not later than the 30th day after the date the contract for which the form was filed binds all parties to the contract.” TEX. ETHICS COMM. RULE 46.5(c).
Steps: (4) Commission Makes Form 1295 Publicly Available The Commission then makes each filed Form 1295
available to the public on the Commission’s web site not later than the seventh business day after the date the Commission receives the required notice from the school district. TEX. ETHICS COMM. RULE 46.5(d)
Form 1295 Best Practices Add the 1295 requirement to your contracting
checklist(s) Assign an employee to be responsible for the 1295 process, including obtaining copies of the forms and timely verifying receipt Include notice in the agenda item back-up that a 1295 has been received Include the Form 1295 requirement in procurement solicitations and require proposers to submit completed 1295 forms with their proposals
Form 1295 Resources More information, including FAQs and How-To
Videos are available on the Commission’s web site at https://www.ethics.state.tx.us/whatsnew/elf_info_for m1295.htm
Thank you for your time and attention! Sarah Langlois 5718 Westheimer Road, Suite 1200 Houston, Texas 77057 Telephone: 713.960.6000 THE FOREGOING PRESENTATION WAS CREATED BY ROGERS, MORRIS & GROVER, LLP. THIS PRESENTATION IS INTENDED TO BE USED SOLELY FOR GENERAL INFORMATION PURPOSES AND IS NOT TO BE REGARDED AS LEGAL ADVICE. IF SPECIFIC LEGAL ADVICE IS SOUGHT, PLEASE CONSULT AN ATTORNEY.
