(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:
    (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;
    (B) compliance with the material terms of the contract;
    (C) ability to correct instances of contractual non-compliance; and
    (D) other relevant evaluation criteria presented in the online vendor performance tracking system; and
  (2) assign the vendor a letter grade.
(e) State agencies shall independently evaluate the contract performance and use the following grading scale when assigning a letter grade to a vendor:
  (1) A state agency shall assign an "A" when it 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" when it 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" when it 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" when it 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) A state agency shall assign an "F" when it 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.

Source Note: The provisions of this §20.509 adopted to be effective January 24, 2017, 42 TexReg 240; amended to be effective November 30, 2020, 45 TexReg 8526; amended to be effective December 20, 2023, 48 TexReg 7616