1. PROFESSIONAL SERVICES

2. I AM NOT A LAWYER
Government Code 2254 Subchapter A Professional Services Procurement Act Municipal LGC (a) County LGC (a) Schools EC 44 & 130
I am not a lawyer
But as far as I can tell all state agencies and political subdivisions of this state are subject to Government Code 2254 Subchapter A. Professional Services. Only the state procurement is subject to Subchapter B, Consulting Services. We will not be talking about Subchapter B today.
(a) (4) a procurement for personal, professional, or planning services;
(a) (4) personal or professional service
Education codes 44 and 130 – no exemptions but is subject to 2254.
Throughout my career I have found more confusion about just what are professional services or personal services and how you procure them than just about any other law we have to follow.

3. GC 2254
A governmental entity may not select a provider of professional services……on the basis of competitive bids.
Definition of professional services according to LGC 252, 262, 44, or 130
Sec SELECTION OF PROVIDER; FEES. (a) A governmental entity may not select a provider of professional services or a group or association of providers or award a contract for the services on the basis of competitive bids submitted for the contract or for the services,
And it specifically names a few….period. But none of the codes, 252, 262 or 44 defines professional services or personal services.
252 no 262 say “professional services as described in GC Therein lays the confusion of the use of the term and how to procure what.
Who knows the definition of professional services as described in 2254?
Does not define – just lists

4. DEFINITION Professional Service
Mental, Intellectual, Special Knowledge, High Order of Learning
Supreme Court of West Virginia – 1976
A member of a discipline with widely accepted standards of required study or specified attainments in special knowledge as distinguished from mere skill
Professional services have been described as those services which are mainly mental or intellectual rather than physical or manual.
Professional services are those disciplines requiring special knowledge or attainment and a high order of learning, skill, and intelligence.
JM 1038 April Black's Law Dictionary (5th ed.1979) (definition of 'profession'). Not just a Texas selection process – most widely used in U.S.
Services, which require a formal certification by a professional body, such as legal, medical, accounting, etc. are called professional services
MW 344 May The most useful standard for judging the scope of 'profession' was furnished by the Supreme Court of West Virginia in Wooddell v. Dailey, 230 S.E. 2d 466 (W.Va. 1976) In that case, the court, while holding that the activities of an interior decorator were not 'professional services,' acknowledged that the term included more than 'theology, law or medicine.' Neither was the term limited to the pursuit of occupations specifically recognized as professions by statute. 230 S.E. 2d at But a 'profession' must be established as such. While 'most occupations, trades, business or callings require a diversity of knowledge and skill,' it is only the 'professional' who: is a member of [a] discipline with widely accepted standards of required study or specified attainments in special knowledge as distinguished from mere skill.
Blacks free on-line

5. DEFINITION
Personal Services Only those services which are performed personally by the individual who contracted to perform them (Texas Supreme Court) LGC 252 and 262 Exemption
Exemption in 252 need to know what personal services means.
Further, for a contract to qualify as a contract for personal services, the compensation in the contract should mainly pay for the labor of the individual providing the service, not for such things as insurance or materials.

6. DEFINITION
“Other” Professional Services Such services are generally acquired to obtain information, advice, training, or direct assistance. (NIGP). Not listed in Government Code 2254

7. JUST FOR FUN Interior Decorator = Professional Service Yes No
No – The status of professional does not include persons who, while working in fields related to recognized professions, have not yet achieved that recognition themselves.
who prepared pictorial representations of proposed buildings from plans submitted by professional architects and builders, did not perform 'professional services': The status of a professional does not include persons who, while working in fields related to recognized professions, have not yet achieved that recognition themselves

8. JUST FOR FUN Construction Manager = Professional Service Yes No
Yes – We know this from the requirements of GC Could also be a personal service.

9. JUST FOR FUN Auditor = Professional Service Yes No
Yes – C.P.A. firm meets all the criteria of a professional service. Can also be a personal service

10. JUST FOR FUN Auctioneering = Professional Service Yes No
No – Attorney General Opinion DM 106
Texas Supreme Court concurred

11. JUST FOR FUN Janitorial Services = Professional Service Yes No
No – But can be a personal service if a “specific named individual” is performing the service and the majority of the contract is for labor.

12. JUST FOR FUN Electrical or Mechanical Engineer = Professional Service
Yes No
YES – but - What if the expenditure is under $8,000?
See Texas Occupation Code 1001
If PUBLIC WORK less than $8,000 for completed project a licensed P.E. is not required

13. JUST FOR FUN
Can Advertising in a Newspaper considered a Personal Service?
Yes No
No – Van Zant vs. Forth Worth Press – 1962
This service is still subject to bidding

14. JUST FOR FUN Food Service = Professional Service Yes No
No – Not professional or personal service under state laws

15. 2254 PROFESSIONAL SERVICES
(A) Within the scope of practice
Accounting
Architecture
Landscape Architecture
Land surveying
Medicine
Optometry
Professional engineering; or
Real estate appraising; or
Professional nursing
Professional Service means – NOTE exempts legal services

16. 2254 PROFESSIONAL SERVICES
(B) Provided in connection with …or practice of
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,; or
A registered nurse

17. COMPETITIVE BIDS SHALL make selection and award
On basis of demonstrated competence and qualifications
A fair and reasonable price
The professional fees under the contract may not exceed any maximum provided by law
May not been award on the basis of bids. Must be on basis of demonstrated competence and qualifications – RFQ
State of Arizona, City of Houston, NIGP could help

18. VOID2254.005 SHALL SPECIAL THREE Architect, Engineer or Land Surveyor
Select most highly qualified
Attempt to negotiate fair and reasonable price with most highly qualified
VOID
SHALL BE - very specific about these 3 professions
(1)Select most highly qualified
(2) Attempt to negotiate fair and reasonable price
Specific steps detailed in for architects, engineers and surveyor
(b) If a satisfactory contract cannot be negotiated with the most highly qualified provider of architectural, engineering, or land surveying services, the entity shall:
(1) formally end negotiations with that provider;
(2) select the next most highly qualified provider; and
(3) attempt to negotiate a contract with that provider at a fair and reasonable price.
(c) The entity shall continue the process described in Subsection (b) to select and negotiate with providers until a contract is entered into.
WORD OF CAUTION – violate the statute and the contract is VOID – something you might want to emphasize to your end users

19. REQUEST FOR QUALIFICATIONS RFQ
MOST HIGHLY QUALIFIED
REQUEST FOR QUALIFICATIONS RFQ
the rest of the list requirements are laid out in the statute. Should be simple right? But maybe not so much especially when it comes to the fine print for your end users.
The special 3 - Architect, Engineer, Land Surveying – how do you acquire their services?
SHALL most highly qualified provider of those services on the basis of demonstrated competence and qualifications.
How do you do that?. Nowhere in the statute does it say you have to go through a RFQ process.
For purchasing people that is the only fair, open and transparent way to select the most qualified.

20. RFQ MINIMUM REQUIREMENTS
Scope of Work
Pre-Proposal conference if applicable
Deliverables
Time frame
Necessary qualifications
Evaluation criteria – ranked
Advertise?
CANNOT ask for pricing
if one of the special three
What needs – at a minimum –to be in the RFQ – whether it is formal (50,000) or not for cities as long as over $3000 (HUB) other entities may decentralize under 50,000.
No money is mentioned in 2254
Necessary qualifications – licenses, references, previous successful like projects
Evaluation criteria with rank – must be applicable to this specific project
Legally does not have to be advertised – but fair, open transparent. I always advertised for at least the minimum 14 days.

21. OPENING Opened and documented by purchasing
Only names of respondents announced
Contents confidential during negotiations
Purchasing leads evaluation team
Interview/oral presentation/demo - one or more
Rank and negotiate with #1
Available for public inspection after contract is awarded
Confidential and proprietary
• Opened and Documented by purchasing – some entities do not open publicly
• Purchasing should lead evaluation using ONLY specified evaluation factors detailed in the RFQ – tabulate individual evaluations, schedule initial and any follow-up meetings
• Interview one or more for clarification, or require presentations
• Rank and begin negotiations with #1for fair and reasonable price – must be very clear in the RFQ that this is a possibility – on their dime
• Available to public inspection only after contract is awarded (lawyer define “awarded”).
• Exceptions is anything marked confidential or proprietary

22. TRY, TRY AGAIN If satisfactory contract cannot be negotiated
the entity SHALL:
(1) formally end negotiations with that provider;
(2) select the next most highly qualified provider; and
(3) attempt to negotiate a contract with that provider at a fair and reasonable price.
(c) The entity shall continue the process described in to select and negotiate with providers until a contract is entered into.
READ

23. COMPETITIVE BIDS
Accounting, optometrist, landscape architect, physician including surgeon, real estate appraiser or registered nurse;
SHALL make selection and award
On basis of demonstrated competence and qualifications
A fair and reasonable price
The professional fees under the contract may not exceed any maximum provided by law
RFQ – RFP
Cannot select by competitive bid but SHALL make selection on;
(1) basis of demonstrated competence and qualifications to perform the services; and
(2) for a fair and reasonable price.
(b) The professional fees under the contract may not exceed any maximum provided by law.
Have never figured out how to know the answer to this one – do you? State of Arizona, City of Houston, NIGP could help
Does not have the formal end of negotiations with most qualified for these

24. TWO-STEP PROCESS Separate sealed envelope with pricing
Select by qualification, competence
Then add pricing and re-rank
BAFO – don’t neglect this step
so do everything you did above but can ask for pricing. I prefer the two-step process of having the pricing in a separate sealed envelope that is not opened until the qualifications and competence rankings are completed. Then add the pricing at the weight indicated in the RFP or RFQ and re-rank.
This is negotiable too so don’t forget about asking for a BAFO what is that?
Although there are different schools of thought about this; this section of the statute does not specify negotiation with only one at a time. That is specifically under section for architects, engineers and land surveyors. Be sure with your lawyer and use the process lawyer will support in a court of law.

25. BAFO Purchasing makes request Due at specific time, date, location
Firms must be allowed to:
Modify the initial offer
Update based on negotiations
Include further information
Evaluate and rank again
If you do ask for a BAFO be sure all firms you negotiated with AND HAVE A RESONNABLE EXPECTIATION OF AWARD has the opportunity for revision of responses and submittal of a BAFO.
Purchasing will make this request
• BAFO’s will include their own evaluation ( criteria is put in the request for BFAO) and ranking process again led by Purchasing.

26. Benefits of RFQ More accurate project pricing /fewer cost over-runs
Lower procurement costs
Reduced procurement time
Innovative, value-added project results
Higher end-user satisfaction
Reduced operating and life-cycle costs
Objective, defensible, and credible identification of the most qualified vendors
Collaborative instead of adversarial vendor relationships

27. “OTHER” PROFESSIONAL SERVICES
NIGP definition; generally acquired to obtain information, advice, training, or direct assistance
Not specifically listed in 2254 (PSPA)
Examples: computer programmers, lawyers, consultants, facilitator
Request for Proposal or Request for Services
Newspaper advertisement required
Use BAFO
Now about those “other“ professional services –
such services are generally acquired to obtain information, advice, training, or direct assistance. (NIGP). Commonly referred to as “professional” services but not specifically listed in the PSPA.
We have already talked about some of the various Attorney General and court opinions.
Generally described as requiring technical skill and expertise; labor and skill which is predominantly mental or intellectual, rather than physical or manual; of, a special skill and experience. Examples include computer programmers, lawyers, consultants, and facilitator.
Again – for cities over $3000 – others may decentralize under $50,000
Could use really any process but recommend a RFP or RFS to ensure the services of the most qualified person or professional. As a practical matter can still follow the above described processes and either include price in the main document or use the two-step procedure of a separate sealed envelope.
Don’t forget the useful tool of BAFO

28. Professional Services
The following have been held to be professional services in Texas cases or Attorney General Opinions:
Abstractors
Investigation
Property Tax Consultants
Appraisers
Financial Services Advisors
Prostitutes1
Artists
Fiscal Agents
Scientists
Attorneys
Law Enforcement Consultants
Teachers
Auditors
Map Makers
Third Party Administrators
Consultants
Models
Plat Book Preparers
Coordinators of Criminal Investigation
Private Consultants
Yet can be solicited like a “other” - unless your lawyer differs. Not statute
1Tisdale v Texas, 640 S. W. 2d 409

29. Not Professional Services
The following services have been held NOT to be professional services in Texas Attorney General Opinions:
Insurance...DM-418
Auctioneer...DM-106
Microfilm Services...JM-890

30. END WITH A CONTRACT
With all the attending legal and risk mitigation language, forms
Never, Never sign the vendors contract
Never sign it first
Always examine for changes
Always end with a contract (PO’s are contracts but must include all the legal and risk mitigation language). Never, Never sign the vendor’s contract. Use your own contract boiler plate prepared by your lawyer and attach all necessary documents as exhibits or Appendix or addenda. Never sign it first. Have the successful vendor sign and return to you. Examine for any changes before you execute the document.

31. VENDOR POOLS Pre-qualify a “pool” of professionals
Generic RFQ – divide by areas of expertise
Scope of work and time frame
Special 3 – rotate – negotiate one at a time
RFQ VERY clear
Other 6 – could negotiate simultaneously
Set time frame for expiration of pool
Pre-qualify a “pool” of professional services and enter into Master Agreements with them. The pool list could be divided up per expertise. Once the pool is in place those pre-qualified in the specific area of expertise needed is sent a scope of work and a time frame asking if that firm can devote the time needed to develop the project within the time frame. For Architects, Engineers and Land Surveyors they would then be rotated according to specific expertise as projects come up to negotiate a fair and reasonable fee. However, the professions covered by 2254 are very protective of the Act and how it requires procurement of their services. Therefore, I recommend making it very clear in the RFQ that this would be your intention, so that the vendors know, going in, how they will receive work under the contract
For the other professional services listed in 2254, the pre-qualified firms/person would be negotiated simultaneously as the specific types of projects they were pre-qualified for come up.
There would need to be a set time-frame for expiration of the pool and issuing a new RFQ for the same purposes. This allows for new qualified professionals to enter the Qualified Pool. Or leave open-ended and accept anytime but hard to manage and remain fair to those already qualified.

32. I AM NOT A LAWYER
So – now do we have a clear understanding of personal, professional and “other” professional services? Or at least some reference material to help your customers and your lawyer figure this out.

33. RESOURCES
Questions? Comments? Examples of what has gone right or wrong?

34. THANK YOU
Carol Cooper, C.P.M., CPPO, CPSM Narita Holmes, MBA, C.P.A., CIA