Authority/Reference(s) Texas Government Code §2252.903, §403.055, & §403.0551
Revision Date November 1, 2021


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.

Contracts and Indebtedness to the State

Contracts that include the clause to offset state debt do not require a Texas Identification System (TINS) or a vendor hold search, 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 TINS search no earlier than 90 days before the effective date of the contract. The legally approved contract terms and conditions contain the state indebtedness clause.

Procurement Cards and Indebtedness to the State

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 due to indebtedness with the State. A vendor hold search must be completed before making a purchase with a procurement card for purchases greater than $500, unless the payment meets the criteria for an emergency purchase under state procurement laws and rules.

If a vendor hold search results in a possible match, then a TINS search, which provides more detailed information needs to be done.

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 for a person 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 directly by 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.