Beware of the Change Order!
It is spooky season, and we are here to inform you about another recent legislative change effective September 1, 2025, that might just come back to haunt you. In July, we told you all about Senate Bill 1173, whereby the legislature doubled the competitive bidding threshold for local governmental entities in Texas Local Government Code Section 252.021. The former threshold was set at $50,000, and it was increased to $100,000, allowing local governmental entities to make purchases up to the $100,000 limit without having to competitively bid the purchase or project. For more information, you can find that blog article here: SB1173 Legislature Doubles Competitive Bidding Threshold.
Although the increase to the competitive bidding threshold has been a welcome change for most governmental entities, allowing for more governmental efficiency without wasting time and money on competitive bidding for more routine purchases, it should be strongly noted that the threshold for the delegation of authority on change orders under Texas Government Code Chapter 252.048 remains at $50,000 or less for smaller governmental entities. For public works contracts in a city with a population of 240,000 or more, $100,000 remains the limit, so this warning does not apply to you. BOO!
What does Texas Local Government Code Chapter 252.048 provide? It states that if there are changes to a contract that will increase or decrease the cost by $50,000 or less, then the governing body of a municipality can approve those change orders. Additionally, a city council can grant the authority to approve such changes to an administrative official of the municipality. It goes on to state that the original contract price cannot be increased by more than 25%. Any decrease in contract price by more than 25% must be consented to by the contractor.
So, what does this mean for impacted municipalities? How best to prevent change order skeletons from popping out of the proverbial closet? How best to comply without ghoulish consequences? You have a couple of options. The first is to keep your spending authority without competitive bidding to the prior threshold of $50,000 or less. The second is to amend your code of ordinances to allow for the increase in spending authority to $100,000 for non-change order items, but to keep change order items limited to $50,000. The third is to make no changes at all if they are not needed at this time.
Of course, the needs of each jurisdiction are nuanced, and there is no one-size-fits-all costume. Our firm is happy to provide guidance on the specific legal needs of your entity to ensure that you get all the treats and no tricks this Halloween season.
Please do not rely on this article as legal advice. We can tell you what the law is, but until we know the facts of your given situation, we cannot provide legal guidance. This website is for informational purposes and not for the purposes of providing legal advice.
