Rick Perry says law requires state agencies to give preference to goods produced and grown in Texas when purchasing goods

In vetoing House Bill 535, a measure dealing with how state agencies select and buy goods, Gov. Rick Perry said, "Current law already requires state agencies to give preference to goods produced and grown in Texas."

Perry said in a press release May 25, 2013, the day of the veto, that "HB 535 requires state agencies, when purchasing goods, to give preference to goods ‘manufactured’ in Texas. … This bill simply does not change current law."

Soon after, a reader emailed us to ask: "Is this truly in current law"?

The law that the bill would have modified is in Section 2155.444 of the state's Government Code, which says that when "making purchases of goods, including agricultural products," the comptroller and state agencies "shall give preference to those produced or grown in this state or offered by Texas bidders." Next, the law says, goods from elsewhere in the United States must be considered.

State law has contained Texas-first purchasing preferences for more than 50 years. According to a May 4, 1981, state attorney general opinion, the Legislature created "Texas preferences" with a 1957 law which replaced an older statute favoring "bidders who have an established local business." The 1957 law, according to the opinion, "created a preference for products produced in Texas as well as one for products offered by Texas citizens."

HB 535, as filed Jan. 15, 2013, by Rep. Yvonne Davis, D-Dallas, added "manufactured" to "produced or grown" and included a definition: "‘Manufactured’ means, with respect to assembled goods, the final assembly, processing, packaging, testing, or other process that adds value, quality, or reliability." It added a requirement that the state comptroller shall "promote the purchase of" such Texas-grown or otherwise Texas-created goods.

In the legislation’s final version, that definition encompassed items "produced as a result of a manufacturing process that alters the form or function of components" in a way that adds value and transforms the parts into something different from what simply assembling the parts would have produced.

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Both versions also added a requirement that the state comptroller and state agencies "promote the purchase of" Texas goods.

Ed Sills, spokesman for the Texas AFL-CIO labor federation, which supported the vetoed proposal, told us by phone that the combined effect of requiring such promotion, emphasizing manufactured goods and encouraging agencies to "buy Texan, buy American" could have been powerful. "Current law does have preferences. It doesn’t have as robust a preference as it would have if this bill had passed," Sills said.

A spokesman for the state comptroller’s office -- which counsels state agencies on purchasing -- said by email that the state interprets the current law to cover goods manufactured in Texas. R.J. DeSilva said, "Texas agencies have always considered the term ‘produced’ to include manufactured goods. Therefore, the preference for manufactured goods was already being provided."

DeSilva sent us a link to comptroller procurement rules in the Texas Administrative Code stating, "Supplies, materials, and equipment are considered to be produced in Texas if they are manufactured in Texas; ‘manufactured’ does not include the work of packaging or repackaging."

Our ruling

Perry said, "Current law already requires state agencies to give preference to goods produced and grown in Texas."

That holds up. Existing law says that when making purchases of goods, the comptroller and state agencies "shall give preference to those produced or grown in this state or offered by Texas bidders." And the comptroller operates under rules that say items "manufactured" in Texas are considered to be "produced" in Texas.

We rate Perry’s statement as True.