BILL ANALYSIS
C.S.H.B. 2658
By: Hilderbran
04-19-95
Committee Report (Substituted)
BACKGROUND
In the late 1970's, Texas adopted the policy of encouraging
and assisting blind and severely disabled persons to achieve
maximum independence by engaging them in productive employment
activities. To implement this policy, the state created a program
whereby products made and services performed by people with
disabilities would receive special treatment in the purchasing
procedures of state agencies, institutions and political
subdivisions.
A state agency, the Texas Committee for the Purchase of
Products & Services of Blind & Severely Disabled Persons (Texas
Committee), was established to determine the "fair market value" of
the products and services, modeled after a similar program at the
federal level. However, rather than creating a separate
bureaucracy to oversee the operations of this program, the Texas
Committee turned to the state agencies represented on the Texas
Committee to perform routine functions and contracted with a
nonprofit organization to handle the marketing aspects of the
program. As a result, the Texas Committee employs no staff and
receives no appropriations from the legislature.
The nonprofit organization functions as a "broker" between the
rehabilitation or work centers, including community mental health
and mental retardation centers, Lighthouses for the Blind,
Goodwills and other similar centers, and the state agencies and
political subdivisions needing to purchase products and services.
Starting out small, the program has grown to annual sales of $33
million in 1994, with more than 5,100 persons employed. To cover
its expenses, the Texas Committee permitted the nonprofit
organization to retain a commission of between five and seven
percent (5-7%) on each sales contract it procures.
Through this procedure, rehabilitation centers do not bear the
expense of a sales force to market their products and services
statewide; instead, the nonprofit performs that duty, enabling
wider distribution — and increased sales — than might otherwise
occur. The greater the demand for the products and services of
people with disabilities, the more jobs will be available for
people with disabilities.
Members of the Texas Committee currently are represented by
five designated state agencies, as well as three representatives of
work centers and two private citizens. Since appointments are for
terms of only two years, members are at a distinct disadvantage in
understanding the program they oversee and regulate. As a
consequence, they rely heavily on the services of the nonprofit
organization, which has been under contract since 1978.
Recently, members have requested that the nonprofit provide
clerical services and legal counsel. This arrangement creates a
potential conflict of interest, for example, when the committee
desires objective information about the performance of its
contractor, or when the nonprofit's attorney provides legal advice
to the committee.
PURPOSE
H.B. 2658 would provide more objectivity for the governing
body of this employment program, by separating the functions which
are merely routine from those relating to the marketing of products
and services. The bill would redesignate the agency as the Texas
Council on Purchases from People with Disabilities. The bill would
also recreate the governing body, eliminating the slotted positions
to achieve a more balanced slate common to regulatory agencies, and
extend terms of appointment to the usual six years, instead of the
current two years. Longer terms will enable members of the
governing body to gain a better understanding of the program before
rotating off the council.
The routine functions would be assigned to the General
Services Commission, with costs of administering the program
deriving from a percentage of the sales commission of the
nonprofit. The program's marketing functions would continue to be
performed by a nonprofit organization.
RULEMAKING AUTHORITY
It is the Committee's opinion that no new rulemaking authority
has been delegated by H.B. 2658. The rate of the management fee in
Sec. 122.019(e) could be established through the Purchasing
Council's existing rulemaking authority. Rules adopted by the
Council would have to follow procedures set out in the
Administrative Procedures Act and legal counsel would be provided
by the General Services Comm'n.
SECTION BY SECTION ANALYSIS
SECTION 1: Amends Chapter 122, Human Resources Code, by renaming
the Texas Committee to shorten and better describe its functions,
becoming the "TEXAS COUNCIL ON PURCHASING FROM PEOPLE WITH
DISABILITIES" (hereinafter called "Purchasing Council"); amending
other sections and adding new sections as follows:
Sec. 122.001. PURPOSE. Amended to update terminology to
accommodate the new phrase, "people with disabilities," and add the
word "employment" to reflect the program's scope.
Sec. 122.002. DEFINITIONS. Inserts definitions in the statute for
the first time which are used throughout the chapter, including the
terms:
(1) "central nonprofit agency" means an agency under
contract with the Purchasing Council and so designated;
(2) "Commission" means General Services Commission;
(3) "Community rehabilitation program" means a
government or nonprofit private program operated under
criteria established by the Council for blind or severely
disabled persons to work for compensation;
(4) "Council" means the Purchasing Council.
(5) "Disability" means a mental or physical impairment,
including blindness, that impedes a person who is
seeking, entering, or maintaining gainful employment.
These terms replace the terminology formerly used in Chapter 122.
Sec. 122.003. Changes title to TEXAS COUNCIL ON PURCHASING FROM
PEOPLE WITH DISABILITIES and changes composition of Council's
membership, inserting new subsections, as follows:
(a) Directs the Governor to make appointments to the newly renamed
Purchasing Council, with the advice and consent of the Senate, to
three (3) types of positions:
(1) Three private citizens knowledgeable about the
employment needs of people with disabilities, including
blindness, and with current experience in pricing and
marketing goods and services;
(2) Three representatives of community rehabilitation
centers representing different disability groups,
including blindness, that provide products or services;
and
(3) Three representatives of state agencies or political
subdivisions who purchase a significant amount of
products or services through this program.
This section would eliminate the slotted positions previously set
out in statute.
(b) Expands terms for Purchasing Council membership from two years
to six years, staggered terms with three expiring on January 31 of
each odd-numbered year, similar to other state regulatory bodies.
Continues members' reimbursement for actual and necessary expenses,
but deletes the requirement that the agencies who had been
represented on the Council pay these costs. Provision requiring
TRC, MHMR, and TCB to share member's travel costs is deleted, as is
requirement that TCB prepare travel vouchers.
(c) Requires Governor to select the presiding officer of the
Purchasing Council.
(d) Adds new conflict of interest provisions, barring from
appointment for the private citizen slot in (1)(a) above persons
who are employed by or manage, own or control more than 10%
interest in, or use or receive a substantial amount of goods,
services or funds from the council, a central nonprofit agency,
community rehabilitation center, or other organization with
business ties to the Purchasing Council. Strikes provision
permitting a member to select designee to attend meetings in the
member's place.
(e) New subsection, prohibiting a registered lobbyist from
appointment.
(f) Amends qualifications for appointment to include disability
and age in the list of considerations that should be disregarded.
(g) Amends provision on grounds for removal for appointees, by
adding violations of (d) & (e) above, illness or disability, or
unexcused absence from more than half the meetings.
(h) Amends provision relating to validity of agency actions, by
replacing "committee" with the new term "council."
(i) Inserts new subsection to update agency provisions requiring
the executive director of the General Services Commission (GSC) to
report grounds for removal to the Purchasing Council's presiding
officer, if potential grounds exist; the presiding officer in turn
must notify the governor and attorney general; if the presiding
officer has a conflict, then the next highest officer would be
informed by GSC.
(j) New subsection, permitting the Council to establish criteria
for recognition and approval of community rehabilitation programs.
Sec. 122.004. INFORMATION RELATING TO STANDARDS OF CONDUCT.
Inserts a new section, requiring the presiding officer of the
Purchasing Council to provide appointed members with information
regarding qualifications necessary to remain in office and the
responsibilities of office.
Sec. 122.005. MEMBER TRAINING. Inserts new Sec. 122.005,
requiring appointees, before assuming the duties of office, to
complete at least one course of training on the agency, its
programs and functions, its budget, audit results, the requirements
of the Open Meetings Act, Open Records Act and Administrative
Procedure Act, conflict of interest provisions and ethics policies.
Sec. 122.006. SUNSET PROVISION. Renumbered from former Sec.
122.003 and updated to reflect the name change. The Purchasing
Council would come up for review in 1999, at the same time as the
other agencies in the health & human services agencies.
Sec. 122.007. FAIR MARKET PRICE; PURCHASING PROCEDURES.
Renumbered from former Sec. 122.004, and amended as follows:
(a) Updates changed agency name and terminology. Deletes
requirement that community rehabilitation programs be recognized by
the TX Comm'n for the Blind and TX Rehabilitation Comm'n and
qualified work centers to participate in the program. Strikes
provision relating to recognition of work centers.
(b) Changes name of committee to "council."
(c) Changes name of committee to "council."
(d) Requires Purchasing Council to contract with a nonprofit
agency to manage and operate the marketing aspects of the program.
Requires the council to publish notice of a proposed contract in
the Texas Register at least 60 days before renewing or adopting a
contract. Strikes provision authorizing the council by rule to
designate a nonprofit agency.
(e) Updates changed name of General Services Comm'n.
Sec. 122.008. PROCUREMENT AT DETERMINED PRICE. Renumbered from
former Sec. 122.005, with updated terminology.
Sec. 122.009. RECORDS. Renumbered from former Sec. 122.006.
(a) Updated terminology and provides that state purchasing
documents are available under the Open Records Act.
(b) Designates GSC as the agency records keeper, in place of TCB.
(c) Subjects the Purchasing Council to the Open Records Act,
Chapter 552, Govt. Code.
Sec. 122.010. COOPERATION WITH DEPT. OF CORRECTIONS. Renumbered
from former Sec. 122.007, updates terminology.
Sec. 122.011. CORRELATION WITH RELATED FEDERAL PROGRAMS.
Renumbered from former Sec. 122.008, updates terminology.
Sec. 122.012. DUTIES OF COMMISSION; INTERAGENCY COOPERATION.
Renumbered from former Sec. 122.009.
(a) New subsection requiring General Services Comm'n (GSC) to
provide legal, clerical, administrative and other necessary support
to the Purchasing Council, in accordance with legislative
appropriation.
(b) Amended to update terminology.
(c) Amended to prohibit GSC or other state agency from performing
the marketing aspects of the program; updates terminology.
Sec. 122.013. RULES. Renumbered from former Sec. 122.010.
(a) New subsection requiring the Purchasing Council to adopt rules
in accordance with the Administrative Procedures Act.
(b) New provision requiring GSC to provide legal support to the
council's rulemaking authority. Strikes provision requiring
approval of rules by TCB and TRC.
Sec. 122.014. PRODUCT SPECIFICATIONS. Renumbered from former Sec.
122.011, updates name of GSC.
Sec. 122.015. DETERMINATIONS OF FAIR MARKET VALUE. Renumbered
from former Sec. 122.012.
(a) Amended to update terminology. (Subsections (1) to (3)
unchanged.)
(4) Amended to direct the Purchasing Council to exclude
the cost of rehabilitation services in factors to
consider when setting fair market price.
(b) New subsection, declaring that the actual cost of
manufacturing a product or performing a service consists of the
direct costs, including labor and raw materials, but not costs
associated with preparing an individual to perform a work activity.
(c) Relettered, but no change.
Sec. 122.016. EXCEPTIONS. Renumbered from former Sec. 122.013 and
making conforming changes; also updates terminology.
Sec. 122.017. PROCUREMENT FOR POLITICAL SUBDIVISIONS. Renumbered
from former Sec. 122.014 and updating terminology.
Sec. 122.018. POLITICAL SUBDIVISIONS EXCLUDED. Renumbered from
former Sec. 122.015, excludes from mandatory participation in the
program political subdivisions that are not covered by Title V of
the Federal Rehabilitation Act (1973). Adds clarifying provision
that this statute does not ban a political subdivision from acting
as a willing buyer outside the bid system. Strikes unnecessary
provision.
Sec. 122.019. CENTRAL NONPROFIT AGENCY. Renumbered from former
Sec. 122.016, striking provision relating to the nonprofit agency's
budget request. Inserts new subsections (a) -(f) describing the
duties which may be performed by a contracting nonprofit agency, as
follows:
(a) Permits Purchasing Council to contract with a central
nonprofit agency for the following purposes:
(1) Recruit and assist CRPs in developing suitable
products & services and submitting applications for
selection by the Purchasing Council;
(2) Facilitate distribution of orders among CRPs;
(3) Manage routine operations of program, overseeing
contracts with CRPs;
(4) Promote supported employment opportunities.
Strikes provision relating to submission of annual budget to
committee.
(b) Permits a central nonprofit agency to perform marketing
services including:
(1) Assistance to CRPs relating to soliciting and
negotiating contracts;
(2) Direct marketing to customers;
(3) Research & development of products & services;
(4) Public relations promoting program;
(5) Customer relations;
(6) Education & training;
(7) Accounting services relating to purchase orders,
invoices and payments to CRPs;
(8) Other duties as assigned by Purchasing Council.
(c) Requires Purchasing Council to review the services provided by
the nonprofit agency and funding necessary to achieve the program's
objectives. Requires request for comment on services of nonprofit
and work centers to be published in the Texas Register at least 60
days before such review. Strikes provision requiring a nonprofit
agency to develop its budget request in conjunction with the CRPs.
(d) Requires Purchasing Council to review and negotiate the
contract with a central nonprofit agency at least once every two
years, and requires publication of the intent to contract in the
Texas Register. Deletes provision directing the agency to review
budget requests.
(e) Permits a management fee to be charged by a central nonprofit
agency, computed as a percentage of contracts for goods and
services, which must be included in the contract price and paid at
the time of sale. Requires the Purchasing Council to approve the
management fee rate.
(f) Requires a percentage of the nonprofit agency's management fee
to be set by and paid to the Purchasing Council in order to defray
the expenses of the General Services Commission in administering
their duties in the program.
Sec. 122.020. CONSUMER INFORMATION; COMPLAINTS. Renumbered from
Sec. 122.017, contains updated terminology.
Sec. 122.021. PUBLIC TESTIMONY AND ACCESS. Adds new section
requiring Purchasing Council to develop and implement policies that
allow public input on program issues; also requires the Council to
comply with federal and state laws (ADA) relating to program and
facility accessibility and access for non-English speakers.
Sec. 122.022. REPORTS. Renumbered from former Sec. 122.018,
updates terminology and requires Council's annual report to meet
financial reporting requirements set out in the General
Appropriations Act.
Sec. 122.023. COUNCIL FUNDS. Adds new section creating an account
in the state treasury for funds paid to the council for the
reimbursement of GSC; subjects the account to funds consolidation
provision in Government Code.
Sec. 122.024. STRATEGIC PLAN; FINAL OPERATING PLAN. Adds new
section requiring the Purchasing Council to prepare an agency
strategic plan and operating plan, as required of other state
agencies. This will allow the governing body to understand its
mission and role in state government.
Sec. 122.025. OPEN MEETINGS; ADMINISTRATIVE PROCEDURE. Renumbered
from former Sec. 122.019, updates changed name of council, new
statutory citations for Open Meetings Act and Administrative
Procedures Act.
SECTION 2: Declares name of agency to be changed and clarifies
that any reference to the old agency name now means the Texas
Council on Purchasing from People with Disabilities.
SECTION 3: (a) Instructs the Purchasing Council to use existing
supplies of stationery etc. printed with the old agency name before
purchasing new supplies.
(b) Permits appropriations made to the agency under the old name
to apply to the new council.
SECTION 4: Instructs the Governor to make appointments commencing
February 1, 1995, as follows:
Three (3) members terms to expire January 31, 1997;
Three (3) members terms to expire January 31, 1999;
Three (3) members terms to expire January 31, 2001.
SECTION 5: Directs the TX Comm'n for the Blind to transfer to the
General Services Comm'n any records maintained by TCB on behalf of
the council.
SECTION 6: Permits an existing agreement between the previous
Texas Committee and a central nonprofit agency to be extended until
new appointments are made by the Governor and the agreement is
terminated or renegotiated.
SECTION 7: Emergency clause; effective date 90 days after passage
of the bill.
COMPARISON OF ORIGINAL TO SUBSTITUTE
The substitute version adds the definition of "disabilities"
to clarify who may participate in the work program; other
clarifying words were inserted in the definition of "community
rehabilitation program," and the words "including blindness" were
also added in several places to clarify that the program serves
people who have severe visual impairments.
The substitute version permits the Council to select criteria
which must be met by work centers to participate in the purchasing
program. The provision relating to the fair market value of
products and services was amended to provide that the value should
not include the cost of preparing a person for a work activity.
The provision regarding the contract between the Council and
the nonprofit was moved from one section to a more appropriate
location later in the Chapter. Also, greater accountability for
the Council in following up on the contractor's performance and
providing notice in the Texas Register was included.
SUMMARY OF COMMITTEE ACTION
The Human Services Committee convened in a public hearing on
April 10, 1995, and the Chairman laid out H.B. 2658 by Rep.
Hilderbran. Chairman Hilderbran offered a committee substitute.
The following witnesses testified for H.B. 2658: Terry McFarlane,
Austin; Melodie Clemons, representing herself and Fairweather
Associates, and Phoenix House; and Joyce Kendrick, Dallas. The
following witness testified as neutral on H.B. 2658: Wayne
Sanders, Austin. The following witnesses testified against H.B.
2658: Terry McFarlane, Austin; Sue Evans, Round Rock; Bob
Lindholm, representing himself and On Our Own Services; Gibson M.
DuTerroil, Houston; and Leticia M. Turner, Houston. The Chairman
closed on the bill and withdrew the substitute and H.B. 2658 was
left pending.
On April 19, the committee took up H.B. 2658 which had been
pending. The chairman offered a committee substitute and explained
the differences. Rep. Krusee moved to adopt the committee
substitute and hearing no objection, the substitute was adopted.
The Chairman recognized Rep. Krusee who moved to report H.B. 2658
favorably as substituted, and the motion prevailed by a record vote
of 9 Ayes, 0 Nays, 0 PNV and 0 Absent.