Last Updated January 24, 2002

Government Code - CHAPTER 2251[Go To Best Hit]

SUBTITLE F. STATE AND LOCAL CONTRACTS AND FUND MANAGEMENT
CHAPTER 2251. PAYMENT FOR GOODS AND SERVICES
SUBCHAPTER A. GENERAL PROVISIONS
§ 2251.001. Definitions
In this chapter:
(1) "Goods" includes supplies, materials, or equipment.
(2) "Governmental entity" means a state agency or political subdivision of 
this state.
(3) "Payment" means money owed to a vendor.
(4) "Political subdivision" means:
(A) a county;
(B) a municipality;
(C) a public school district; or
(D) a special-purpose district or authority.
(5) "Service" includes gas and water utility service.
(6) "State agency" means:
(A) a board, commission, department, office, or other agency in the 
executive branch of state government that is created by the constitution or a 
statute of this state, including a river authority and an institution of higher 
education as defined by Section 61.003, Education Code;
(B) the legislature or a legislative agency; or
(C) the Supreme Court of Texas, the Court of Criminal Appeals of Texas, a 
court of appeals, a state judicial agency, or the State Bar of Texas.
(7) "Subcontractor" means a person who contracts with a vendor to work or 
contribute toward completing work for a governmental entity.
(8) "Vendor" means a person who supplies goods or services to a 
governmental entity. The term includes Texas Correctional Industries.
Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Amended by Acts 
1995, 74th Leg., ch. 76, § 5.40(a), eff. Sept. 1, 1995; Acts 1999, 76th Leg., 
ch. 1188, § 1.41, eff. Sept. 1, 1999.
§ 2251.002. Exceptions
(a) This chapter does not apply to a payment made by a governmental entity, 
vendor, or subcontractor if:
(1) there is a bona fide dispute between the political subdivision and a 
vendor, contractor, subcontractor, or supplier about the goods delivered or the 
services performed that causes the payment to be late;
(2) there is a bona fide dispute between a vendor and a subcontractor or 
between a subcontractor and its supplier about the goods delivered or the 
services performed that causes the payment to be late;
(3) the terms of a federal contract, grant, regulation, or statute prevent 
the governmental entity from making a timely payment with federal funds; or
(4) the invoice is not mailed to the person to whom it is addressed in 
strict accordance with any instruction on the purchase order relating to the 
payment.
(b) This chapter does not affect Chapter 2253.
(c) Notwithstanding Subsection (a), this chapter applies to a payment made 
by a state agency for gas or water utility service regardless of any contractual 
provision.
Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Amended by Acts 
1995, 74th Leg., ch. 76, § 5.41(a), eff. Sept. 1, 1995.
§ 2251.003. Rules
The General Services Commission shall adopt rules to implement this 
chapter.
Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993.
SUBCHAPTER B. PAYMENTS AND INTEREST
§ 2251.021. Time for Payment by Governmental Entity
(a) Except as provided by Subsection (b), a payment by a governmental 
entity under a contract executed on or after September 1, 1987, is overdue on 
the 31st day after the later of:
(1) the date the governmental entity receives the goods under the contract;
(2) the date the performance of the service under the contract is 
completed; or
(3) the date the governmental entity receives an invoice for the goods or 
services.
(b) A payment under a contract executed on or after September 1, 1993, owed 
by a political subdivision whose governing body meets only once a month or less 
frequently is overdue on the 46th day after the later event described by 
Subsections (a)(1) through (3).
(c) For a contract executed on or after July 1, 1986, and before September 
1, 1987, a payment by a governmental entity under that contract is overdue on 
the 46th day after the later event described by Subsections (a)(1) through (3).
Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Amended by Acts 
1995, 74th Leg., ch. 76, § 5.42(a), eff. Sept. 1, 1995.
§ 2251.022. Time for Payment by Vendor
(a) A vendor who receives a payment from a governmental entity shall pay a 
subcontractor the appropriate share of the payment not later than the 10th day 
after the date the vendor receives the payment.
(b) The appropriate share is overdue on the 11th day after the date the 
vendor receives the payment.
Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993.
§ 2251.023. Time for Payment by Subcontractor
(a) A subcontractor who receives a payment from a vendor shall pay a person 
who supplies goods or a service for which the payment is made the appropriate 
share of the payment not later than the 10th day after the date the 
subcontractor receives the payment.
(b) The appropriate share is overdue on the 11th day after the date the 
subcontractor receives the payment.
Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993.
§ 2251.024. Mailing of Payment
A payment is considered to be mailed on the date the payment is postmarked.
Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993.
§ 2251.025. Interest on Overdue Payment
(a) A payment begins to accrue interest on the date the payment is overdue.
(b) An overdue payment bears interest at the rate of one percent each 
month.
(c) Interest on an overdue payment stops accruing on the date the 
governmental entity or vendor mails or electronically transmits the payment.
Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993.
§ 2251.026. Payment of Interest by State Agency
Text of section effective until September 1, 1999
If the warrant for a payment the originating state agency owes is not 
mailed or electronically transmitted before the payment is overdue, the agency 
is liable for an interest payment that accrues under this chapter.
Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993.
For text of section effective September 1, 1999, see § 2251.026, post
§ 2251.026. Payment of Interest by State Agency
Text of section effective September 1, 1999
(a) If the warrant for a payment the originating state agency owes is not 
mailed or electronically transmitted before the payment is overdue, the agency 
is liable for an interest payment that accrues under this chapter.
(b) The comptroller shall compute interest imposed on the state agency 
under this chapter.
(c) The comptroller shall pay the interest at the time payment is made on 
the principal.
(d) The comptroller shall submit the interest payment with the net amount 
due for goods and services.
(e) The comptroller and the state agency may not require a vendor to 
petition, bill, or wait an additional day to receive the interest due.
(f) The comptroller may require necessary and timely information and adopt 
rules to administer this section.
Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Amended by Acts 
1997, 75th Leg., ch. 634, § 3(a), eff. Sept. 1, 1999.
For text of section effective until September 1, 1999, see § 2251.026, ante
§ 2251.027. Payment of Interest by Political Subdivision
(a) A political subdivision shall compute interest imposed on the political 
subdivision under this chapter.
(b) The political subdivision shall pay the interest at the time payment is 
made on the principal.
(c) The political subdivision shall submit the interest payment with the 
net amount due for goods and services.
(d) The political subdivision may not require a vendor to petition, bill, 
or wait an additional day to receive the interest due.
(e) The political subdivision may not require a vendor or subcontractor to 
agree to waive the vendor's or subcontractor's right to interest under this 
chapter as a condition of the contract between the parties.
Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Amended by Acts 
1997, 75th Leg., ch. 1254, § 1, eff. Sept. 1, 1997.
§ 2251.028. Payment of Interest by Vendor or Subcontractor
A vendor or subcontractor shall pay interest as a payment is overdue.
Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993.
§ 2251.029. Partial Payment
(a) The unpaid balance of a partial payment made within the period provided 
by this chapter accrues interest as provided by Section 2251.025 unless the 
balance is in dispute.
(b) Section 2251.042 applies to a disputed balance.
Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993.
§ 2251.030. Prompt Or Early Payment Discount
(a) The Intent of the Legislature is That a Governmental Entity Should Take 
Advantage of an Offer for an Early Payment Discount. A state agency shall when 
possible negotiate a prompt payment discount with a vendor.
(b) A governmental entity may not take an early payment discount a vendor 
offers unless the governmental entity makes a full payment within the discount 
period.
(c) If a governmental entity takes an early payment discount later, the 
unpaid balance accrues interest beginning on the date the discount offer 
expires.
(d) A state agency, when paying for goods and services purchased under an 
agreement that includes a prompt or early payment discount, shall submit the 
necessary payment documents or information to the comptroller sufficiently in 
advance of the prompt or early payment deadline to allow the comptroller or the 
agency to pay the vendor in time to obtain the discount.
Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Amended by Acts 
1999, 76th Leg., ch. 1499, § 1.35, eff. Sept. 1, 1999.
SUBCHAPTER C. CLAIMS AND DISPUTES
§ 2251.042. Disputed Payment
(a) A governmental entity shall notify a vendor of an error in an invoice 
submitted for payment by the vendor not later than the 21st day after the date 
the entity receives the invoice.
(b) If a dispute is resolved in favor of the vendor, the vendor is entitled 
to receive interest on the unpaid balance of the invoice submitted by the vendor 
beginning on the date under Section 2251.021 that the payment for the invoice is 
overdue.
(c) If a dispute is resolved in favor of the governmental entity, the 
vendor shall submit a corrected invoice that must be paid in accordance with 
Section 2251.021. The unpaid balance accrues interest as provided by this 
chapter if the corrected invoice is not paid by the appropriate date.
Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993.
§ 2251.043. Attorney Fees
In a formal administrative or judicial action to collect an invoice payment 
or interest due under this chapter, the opposing party, which may be the 
governmental entity or the vendor, shall pay the reasonable attorney fees of the 
prevailing party.
Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993.