|Revision Date||July 1, 2014|
Texas statutes prohibit state agencies from issuing a payment or entering into a contract with an entity that has a state debt unless arrangements are made to pay off the debt.
State debt includes tax delinquency, child support delinquency, student loan default, and any other indebtedness to the State.
The process to check for vendor hold varies depending on whether the check is for a contract that does not have a vendor hold clause incorporated or for a procurement card purchase of $500 or greater.
Contracts that include the clause to offset state debt do not require a vendor hold check, as the contractor agrees to the payment offset clause upon signature, and all payments are made through Comptroller’s Office. Staff must ensure the contract incorporates the stated clause, unless the contract is with a governmental entity.
If the clause is not incorporated into the contract, then contract staff must complete a vendor hold check prior to the execution of a contract.
Because there are no terms and conditions with procurement card purchases, DFPS staff are required to verify that an entity has not been placed on a vendor hold. The check must be done before making a purchase with a procurement card for purchases above $500, unless the payment meets the criteria for an emergency purchase under state procurement laws and rules.
The vendor hold check is required for procurement card purchases because the credit card company is purchasing the services on behalf of the state. In other words, these purchases are third party purchases made on behalf of the state.
For example, Chase Bank authorizes the payment to purchase a prescription through a local pharmacy. Although Chase Bank is recognized as being in good standing, the purchase may be from a local pharmacy that is on a vendor hold. The local pharmacy will be paid by Chase Bank, not through the Comptroller’s Office. The payment system used by DFPS will not recognize that the pharmacy is on a vendor hold because DFPS is not paying the local pharmacy, but is paying Chase Bank.