BILL ANALYSIS
C.S.H.B. 2769
By: Romo
5-8-95
Committee Report (Substituted)
BACKGROUND
HB 2769 is a result of an interim report as mandated by SB 381 of
the 73rd Legislature. The results of this study indicate that Texas
lacks the most basic information on its own purchasing patterns and
results - what it buys, when and from whom, and whether the goods
and services purchased actually meet agencies' needs. For the state
to take full advantage of its significant buying power, the state
must know what is being bought not only through GSC but also
through delegated and exempt purchases. And, while many
improvements have been made in the area of vendor performance
tracking, substandard vendors still continue to do business with
the state merely by changing their names.
Key elements have been identified that would effectively reengineer
the state's procurement process. These elements encompass areas
such as, expanding the authority and responsibility granted to
state purchasing professionals, redefining the state's relationship
with its vendors, enhancing technology to streamline the state's
purchasing process, and entering into more types of state
contracts. The incorporation of the aforementioned reengineering
processes will provide the state with a financially efficient and
streamlined state purchasing system.
PURPOSE
HB 2769 re-engineers key elements of the state's purchasing
process.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill grant additional
rulemaking authority to the general Services Commission in SECTION
3 (Sec.3.022(h)), SECTION 6 (Sec. 3.062(a))and (Sec. 3.064(a)),
SECTION 8 (Sec. 3.08(b)) and (Sec. 3.08(d)), SECTION 9 (Sec.
3.105(a)), SECTION 18 (Sec. 11.08(e), Sec. 11.10(b), and Sec
11.11(e)(1)) of this bill. It is the committee's opinion that
rulemaking authority is granted to the Comptroller of Public
Accounts in SECTION 22 (Sec. 2251.026) of this bill.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 1.02(5), State Purchasing and General
Services Act (Art. 601b, Vernon's Texas Civil
Statutes)as follows:
Sec. 1.02, (5), Defines "Best Value".
SECTION 2. Amends Article 3, State Purchasing and General Services
Act (Article 601b, Vernon's Texas Civil Statutes) by adding
Section 3.011 as follows:
Sec. 3.011. PROVIDING CERTAIN PURCHASES ON FEE-FOR-SERVICE BASIS. (a) Provides that the commission may
provide open market purchasing services on a fee-for-service basis for state agency purchases and set the
fees in an amount that recovers the commission's costs
in providing the services.
(b) Requires the commission to publish a schedule of its
fees. Outlines what shall be included in the schedule.
SECTION 3. Amends Section 3.022, State Purchasing and General
Services Act (Article 601b, Vernon's Texas Civil
Statutes) as follows:
Sec. 3.022. COMPETITIVE SEALED PROPOSALS. (a) Provides
that the commission may acquire supplies, materials,
services, or equipment by following a procedure using
competitive sealed proposals. Requires the state agency
or institution of higher education to follow the
procedures outlined by this section for the commission.
(b) Requires the commission to consult with appropriate
personnel of a requisitioning agency to develop
specifications for a request for competitive sealed
proposals
under this
section.
(c) Requires the commission to solicit proposals by a
request for proposal.
(d) Requires the commission to open each proposal in a
manner that does not disclose the contents of the
proposal during the process of negotiating with
competing offers.
(e) Requires the commission to provide each offeror with
an equal opportunity for discussion and revision of
proposals.
(f) Requires the commission to invite a requisitioning
agency to participate in discussions conducted under
Subsection (e) of this section.
(g) Requires the commission to make a written award of
a purchase or lease to the offer or whose proposal
offers the best value to the state, considering the
price, past vendor performance, vendor reputation, and
the evaluation factors in the request for proposals,
except that if the commission finds that none of the
offers is acceptable, it shall refuse all offers.
(h) Requires the commission to adopt rules to perform
it duties as outlined in this Act.
SECTION 4. Amends Article 3, State Purchasing and General Services
Act by adding Section 3.045 COOPERATION WITH FEDERAL
GOVERNMENT PURCHASING (a) Provides that agencies of the
federal government may purchase goods/services through
commission contracts.
(b) Provides that to the extent permitted by federal
law, the commission and other state agencies that are
subject to this Act and local governments that are
eligible to participate in the commissions purchasing
program may purchase goods and services through federal
government contracts that are established through
competitive bidding.
SECTION 5. Amends Section 3.061, State Purchasing and General
Services Act (Article 601b, Vernon's Texas Civil
Statutes), (b) Requires the commission to promulgate
rules allowing purchases through group purchasing
programs unless the commission determines within a
reasonable period of time after receiving notification
of a particular purchase that a better value is
available throughout he commission..
SECTION 6. Amends Article 3, State Purchasing and General Services
Act (Article 601b, Vernon;s Texas Civil Statutes) by
adding Sections 3.062-3.064 as follows:
Sec. 3.062. TRAINING AND CERTIFICATION OF STATE AGENCY
PURCHASING PERSONNEL. (a) Requires the commission to
establish and administer a system of training,
continuing education, and certification for state agency
personnel. Provides that the commission may adopt rules
to administer this section.
(b) Requires that all state agency personnel must
receive the training and continuing education to the
extent required by rule of the commission.
(c) Requires the commission to set and collect a fee
form state agencies that employ purchasing personnel who
are trained, educated, or certified under this section.
(d) Provides that the commission may provide training,
continuing education, and certification under this section
to purchasing personnel employed by a political subdivision
or other public entity of the state. Requires the commission to
collect fees described by Subsection (c) for training,
education, or certification under this subsection.
(e) Provides that the commission may provide training
and continuing education under this section using its own
personnel, through contracts with private entities and by
agreement with a public entity.
(f) Requires the commission to provide at least three
levels of training under this section.
(g) Requires the basic training level to include an
introduction to contract purchasing methods and processes
and informal bidding processes, practical instruction in
the use of automated information tools used in the use of automated information
tools
used
in
the
purchasing
process,
instruction in
receipting
and payment
processes
and
requirements
and
instruction in
any
other
processes
and
issues
that
the
commission
considers
appropriate for
introductory
purchasing
training.
(h) Requires the second training level to include
advanced instruction in formal and informal bidding
methods, an introduction to negotiation methods and to when
negotiation is
allowed,
instruction in
writing
specifications,
instruction in
the
criteria
for
determining
which
product or
service
offers the
best
value
for
the
state
and
instruction in
any
other
processes
and
issues
that
the
commission
considers appropriate
for
the
second
level
of
purchasing
training.
(i) Requires the third training level must include
instruction in complex negotiations, instruction in
purchasing through the use of requests for proposals, and
instruction in any other processes and issues that the commission
considers appropriate for advanced purchasing training.
(j) Requires the commission to prescribe the
circumstances under which a state agency may delegate
authority to approve
purchases.
(k) The commission shall provide at least 2 levels of
certification.
(l) Requires the commission to provide at least 24 hours
of continuing education.
(m) Requires the commission's prerequisites for
receiving a level one purchaser certification to include
completion of the second training level, passage of a written
examination, and a minimum number of years of purchasing experience
prescribed by the commission.
(n) Requires the commission's prerequisites for
receiving a level two purchaser certification include
completion of the third training level, passage of a written and an oral examination, and a minimum of three years
of purchasing experience.
Sec. 3.063. PURCHASING PARTNERSHIPS BETWEEN AGENCIES.
(a) Requires that the commission manage a program that
provides for establishing purchasing partnerships
between state agencies under which one agency will make
certain purchases for another agency. An agency is not
required to enter into a purchasing partnership under
this section.
(b) Requires the commission to identify agencies that
are willing to enter into purchasing partnerships with
another agency and attempt to appropriately match agencies for a purchasing partnership based on factors such as
whether an agency employs a certified purchaser, the number
and expertise of an agency, the existence or nature
of an agency's automated
purchasing tools, and the
types of goods and
services typically
purchased by an agency.
Sec. 3.064. BUYING UNDER CONTRACT ESTABLISHED BY AGENCY
OTHER THAN COMMISSION. (a) Requires the commission to
adopt rules specifying the circumstances under which it
is advantageous for the state to allow other agencies
to make purchases under the contract:
(b) Provides that a state agency that is a party to a
contract with a vendor who is able to supply goods or
services to other agencies
under the contract shall, if
commission rules allow other
agencies to make purchases
under the contract:
(1) inform the commission of the term of the
contract and the capabilities of the vendor; and
(2) post notice of the existence and terms of the
contract on the procurement marketplace.
SECTION 7. Amends Section 3.08, State Purchasing and General
Services Act (Article 601b, Vernon's Texas Civil
Statutes) as follows:
(a) Provides that state agencies are delegated authority
to purchase supplies, materials, and equipment if the
purchase does not exceed $25,000.
(b) Provides that the commission by rule delegate to
state agencies the authority to purchase supplies, materials,
or equipment if the purchase exceeds $25,000. In
delegating
this
purchasing
authority,
the
commission
shall
consider
factors
relevant
to a state
agency's
ability to
perform
purchasing
functions.
(c) Requires the commission to monitor the purchasing
practices of state agencies. Provides that eh commission may
revoke for cause all or part of the
purchasing authority that the commission
delegated to a state agency. Requires the
commission to adopt rules to
administer this subsection.
(d) Provides that the commission by rule may delegate
to the comptroller the commission authority under Section
3.15.
(e) Provides that competitive bidding, whether formal
or informal, is not required for a purchase by a state agency
if the purchase does not exceed $2,500, or a greater
amount prescribed by rules of the commission.
(f) Provides for certain supplies and materials that may
not be purchased.
(g) Provides that large purchases may not be divided
into small lot purchase in order to meet the specified
dollar limits.
(h) Requires that agencies making purchases under this
section for which competitive bidding is required must
attempt to obtain at least three competitive bids from
sources which normally offer for sale the merchandise being
purchased and must comply with Section 3.101 of this Article.
SECTION 8. Amends Section 3.101, State Purchasing and General
Services Act (Article 601b, Vernon's Texas Civil
Statutes), by adding Subsections (k) and (l) as follows:
(k) Requires the commission to require information about
an applicant's past history as a vendor with the state in
the uniform registration form.
(l) Requires the commission to include in the uniform
registration forma statement about the applicability of
relevant criminal law, including Section
37.10, Penal Code, to entering
information on the form and to presenting
documentation in connection with the
form.
SECTION 9. Amends Article 3, State Purchasing and General Services
Act (Article 601b, Vernon's Texas Civil Statutes) by
adding Sections 3.103-3.106 as follows:
Sec. 3.103. BEST VALUE STANDARD FOR PURCHASE OF GOODS
OR SERVICES. (a) Requires each state agency including
the commission to purchase goods and services that
provide the best value for the state.
(b) Provides that in determining the best value for the
state, the commission or other state agency making a
purchase is not restricted to considering price alone but
also may consider any other factor relevant to evaluating the value
to the state of a good order service. Provides examples.
Sec. 3.104. REQUIREMENT TO SPECIFY VALUE FACTORS IN
REQUEST FOR BIDS OR PROPOSALS. (a) Requires the commission
or other state agency making the purchase to
specify in the request for bids the factors other
than price, past vendor performance, or vendor
reputation that the commission or agency will
consider in determining which bid offers the best
value for the state.
(b) Provides that for a purchase made through
competitive sealed proposals, the commission or other state
agency making the purchase:
(1) must specify the known factors other than
price, past vendor performance, or vendor reputation in
determining the best value for the state;
(2) may concurrently inform each vendor that make
proposal on the contract of any additional factors
the commission or agency will consider in determining
which proposal offers the best value for the state.
Sec. 3.105. PROTEST PROCEDURES. Requires the commission
to develop and adopt by rule protest procedures for
resolving vendor protests relating to purchases made by
the commission. Requires each state agency to adopt
protest procedures for resolving vendor protests
relating to purchases made by the agency.
Sec. 3.106. BARRING VENDOR FROM PARTICIPATION IN STATE
CONTRACTS. (a) Provides that the commission may bar a
vendor from participating in state contracts that are
subject to this Act, including contract for which
purchasing authority is delegated to a state agency
under this Act. Provides for incidents where such a bar
may take place.
(b) Requires the commission to bar a vendor from
participating in state and sate agency contracts under this
section for a period that is commensurate with the seriousness of the vendor's action and the extent to which the
state's interests were damaged.
(c) Requires the commission to adopt rules to administer
this section.
SECTION 10 Amends Sections 3.11(b), (d), (e), (f), (g), and (h),
State Purchasing and General Services Act
(Article 601b, Vernon's
Texas Civil Statutes).
(a) NOTICE. Provides that
in addition to any
electronic dissemination
of invitations to bid
required or allowed under
law, notice inviting bids
shall be published at
least once in at least
one newspaper of general
circulation in the state
and at least seven days
preceding the last for
the receipt of bids.
(b) CENTRALIZED MASTER BILL LIST. Requires the
commission to maintain a centralized master bidders
list. Provides that the
commission may use the
centralized bidders list for
any purchase.
(d) BID OPENING PROCEDURE. Requires that bids be
submitted to the commission, sealed, and identified as bids
on the envelope, except that when the commission considers
that the electronic information capabilities of the state and of the vendor community are sufficient, the commission
may also allow facsimile or on-line transmission of bids.
(e) AWARD OF CONTRACT. Requires the commission to award
contracts to the bidder offering the best value for the
state while conforming to the specifications
required. Provides that in the commission
shall determine which bidder offers the best
value for the state in accordance with
Sections 3.103 and 3.104 of this Act.
(f) REJECTION OF BIDS. Requires a bid that contains
material failures to comply with specification
requirements, be rejected and the
contract be awarded to the bidder
offering the best value for the
state.
(g) BID RECORD. Provides that a statement of the basis
for placing the order with the successful bidder and the
factors considered in determining
which bidder offered the best value
for the state be prepared by the
purchasing division.
(h) TIE BIDS. Requires that tie bids, the value to the
state being equal, be awarded under rules and regulations
to be adopted by the commission.
SECTION 11 Sections 3.12(b), (c), (e), and (f), State Purchasing
and ?general Services Act (Article 601b, Vernon's Texas
Civil Statutes). (b) MINIMUM NUMBER OF BIDS. Requires
that open market purchases, whenever possible, be based
on at least three competitive bids, and be awarded to
the bidder offering the best value for the state.
(c) NOTICE INVITING BIDS. Adds facsimile, on-line
transmissions, and posting on electronic bulletin boards
to the list of ways for the
commission to solicit bids.
(e) AGENCY REVIEW. Provides that if, after review of the
bids and evaluation of the quality of products offered in
the bids, the state agency determines that the bid
selected by the
commission does
not in its
opinion offer
the best value
for the state,
it may file
with the
commission a
written
recommendation
that the award
be made to the
bidder
determined to
offer the best
value for the
state.
(f) STATEMENT OF AWARD. Requires that a statement of the
basis for placing the order with the successful bidder and
the factors considered in determining the bid offering the
best value for the
state be prepared by
the purchasing
division.
SECTION 12 Amends Section 3.16, State Purchasing and General
Services Act (Article 601b, Vernon's Texas Civil
Statutes) Subsection (a) and adds Subsections (c) and
(d).
(a) Allows the comptroller to issue a single warrant
directly to the vendor when the state owes a vendor for
services/products.
(c) The comptroller may allow an agency to schedule
payments that the comptroller shall make to the vendor.
(d) Allows the comptroller to require the vendors to
provide certain information as allowed under law.
SECTION 13 Amends Section 3.17(a), State Purchasing and General
Services Act by adding that the advisory committee on
procurement and the vendor advisory committee shall
cooperate with the commission when establishing uniform
standards.
SECTION 14 Amends Section 3.20, State Purchasing and General
Services Act, as follows:
Sec. 3.20. PREFERENCE FOR PRODUCTS OF RETARDED OR
HANDICAPPED PERSONS. Requires the commission to test
products of retarded or handicapped persons to the
extent necessary to ensure quality and delivery
performance.
SECTION 15 Amends Section 3.22, State Purchasing and General
Services Act Article 601b, Vernon's Texas Civil
Statutes) by
requiring the
commission to test
products of blind
persons to the
extent necessary to
ensure quality and
delivery
performance.
SECTION 16 Amends Section 3.23, State Purchasing and General
Services Act (Article 601b, Vernon's Texas Civil
Statutes) by requiring the commission to test products
of The Texas Department of Criminal Justice tot he
extent necessary to ensure quality and delivery
performance.
SECTION 17 Amends Article 3, State Purchasing and General Services
Act (Article 601b, Vernon;s Texas Civil Statutes) by
adding Sections 3.34 and 3.35.
Sec. 3.34. ADVISORY COMMITTEE ON PROCUREMENT. (a)
Requires the commission to establish as advisory
committee on procurement.
(b) Requires the committee to be composed of officers
or employees of state agencies, including institutions of
higher education and political subdivisions. Requires the
commission to set staggered terms for the members of the committee.
(c) Provides that the committee may establish its own
rules of operation.
(d) Requires the committee to recommend improvements in
commission or state agency purchasing practices.
Sec. 3.35. VENDOR ADVISORY COMMITTEE. (a) Requires the
commission to establish a vendor advisory committee.
(b) Provides that the committee be composed of vendors
who have done business with the state.
(c) Provides that the committee may establish its own
rule of operation.
SECTION 18 Article 11, State Purchasing and General Services Act
(Article 601b, Vernon's Texas Civil Statutes) is amended
by adding Sections 11.08-11.10 as follows:
Sec. 11.08. ELECTRONIC BULLETIN BOARD POSTING OF NOTICE
FOR PROCUREMENT EXCEEDING $25,000. (a) Provides that
this section applies to each agency making a procurement
that will exceed $25,000 in value and
(1) without regard to the source of funds the agency
will use for the procurement; and
(2) including a procurement that:
(A) is a procurement by a state agency but is
otherwise exempt from the commissions purchasing
authority or the application of this Act;
(B) is made under a delegated purchasing
authority;
(C) is related to a construction project;
(D) is a procurement of professional of
consulting services.
(b) Requires the commission to send to the comptroller
for posting on the comptroller's Windows on State Government
electronic bulletin board information as prescribed by
this section about commission
or other state agency
procurement that will exceed
$25,000 in value.
(c) Requires the commission to include certain
information for each procurement that the commission
or another state agency will
make that is estimated to
exceed $25,000 in value.
(d) Requires each state agency that will award a
procurement contract estimated to exceed $25,000 in
value to send a report to the commission. Outlines
report.
(e) Provides that the commission may adopt rules,
prescribe forms, and require information to administer
this section.
(f) Provides that this section does not affect whether
the commission or other state agency is required to award a
procurement contract through
competitive bidding, competitive
sealed proposals, or another method.
Sec. 11.09 ELECTRONIC PROCUREMENT DATABASE. (a)
Establishes that the commission shall establish and
manage an electronic procurement database. Establishes
guidelines
Sec. 11.10. ELECTRONIC PROCUREMENT MARKETPLACE. (a)
Requires the commission to establish and manage as
electronic procurement marketplace.
(b) Requires the commission to design the procurement
marketplace as an interactive gateway for state procurement.
(c) Provides that the commission may adopt rules
relating tot he design and use of the procurement
marketplace.
(d) Requires the commission to make the procurement
information available to political subdivisions through
the procurement marketplace on a fee-for-service basis.
Sec. 11.11. ELECTRONIC COMMERCE NETWORK USING ELECTRONIC
DATA INTERCHANGE. (a) Requires the commission to base
the network on the standard protocol developed by the
American National Standards Institute known as
electronic data interchange.
(b) Provides that the commission may enter into
contracts with one or more public or private entities to
establish or support various
elements of the network.
(c) Requires the commission to charge fees for network
services.
(d) Provides that he commission may allow political
subdivisions and other public entities to participate in
the electronic commerce network.
(e) Provides that the commission may adopt rules to
administer this section and
require participating state agencies, political
subdivisions, and other public entities to designate a
network coordinator.
SECTION 19 Amends Article 15, State Purchasing and General Services
act (Article 601b, Vernon's Texas Civil Statutes) by
adding Section 15.11.
Sec. 15.11. CONSOLIDATING OR CONTRACTING FOR MATERIALS MANAGEMENT FUNCTIONS. (a) Requires the council to
study the materials management functions of state
agencies.
(1) order two or more state agencies to consolidate
between them warehousing, inventory control, or other
materials management functions; or
(2) order a state agency to obtain under a contract
with another state agency to a private commercial
source the agency's warehousing, inventory control, or other materials management functions.
(b) Requires state agencies to consolidate or contract
for materials management functions in the manner directed
by the council.
SECTION 20 Amends Section 321.013, Government Code, by adding
subsection (k) which provides for the State Auditor to
conduct periodic audits of purchasing practices of state
agencies. Audits must include a compliance report with
applicable Historically Underutilized Business statutes.
SECTION 21 Amends Chapter 2102, Government Code, by adding Section
2102.013 which requires the internal auditor to
frequently audit the purchasing practices of state
agencies.
SECTION 22 Amends Section 2251.026, Government Code, by requiring
the comptroller to compute interest imposed upon the
state agency and make appropriate payments. Provides
that the comptroller may adopt rules to administer this
section if necessary. This section takes effect on
September 1, 1997.
SECTION 23 Amends Section 271.083, Local and Government Code by
providing that a local government may participate in the
purchasing program of the commission, to the extent the
commission deems feasible, and states the
responsibilities of the local government.
SECTION 24 (a) Requires the state auditor and the advisory
committee of procurement established by this Act to
study how classification levels of responsibility and
accountability to state personnel should be revised
under the changes in law made under this Act. Requires
for a report to be made to the 75th Legislature.
SECTION 25 Provides that the commission may conduct pilot studies
for regional contracts and no-stock contracts.
SECTION 26 Requires the Legislative Budget Board and the divisions
of the governor's office that works with budget nd
planning issues to study and consider:
(1) ways to obtain information about planned state
procurement.
(2) ways to use that information to increase the state's
buying power.
SECTION 27 Requires the General Services Commission to gradually
phase in the changes in law made by this Act.
SECTION 28 Repeals Sections 3.0221 and 3.09(d), State Purchasing
and General Services Act
SECTION 29 Repeals Section 2251.041, Government Code.
SECTION 30 Effective date: Except as otherwise provided by this
Act, the effective date shall be September 1, 1995.
SECTION 25 Emergency Clause.
COMPARISON OF ORIGINAL TO SUBSTITUTE
SECTION 4 COOPERATION WITH FEDERAL GOVERNMENT PURCHASING is added
in the substitute.
Expands the list of relevant factors to be considered when making
purchases in Sec. 3.103.
In SECTION 10, subsection (a) is deleted relating to publishing a
notice inviting bids. A centralized Master Bidders List is added in
the new subsection (b).
SECTION 13 is amended by adding consultation with the advisory
committee on procurement and the vendor advisory commission when
determining uniform standards.
SECTION 18 of the substitute is a reorganized version of Section 3
from the original bill.
SECTION 21 relating to auditing of agency purchasing is added in
the substitute.
SECTION 22 relating to payment of intrest by state agencies is
added.
SECTION 23 is added.
SECTIONS 24, 25, 26, 27 are renumbered sections from the original
bill.
SECTION 28 and 29 repealing certain statutes are added.
SUMMARY OF COMMITTEE ACTION
Pursuant to posting of public hearing the House Committee on State
Affairs convened in public hearing on April 24, 1995 to consider HB
2769. The chair laid out HB 2769 and recognized Rep. Romo to
explain the bill. The committee considered a complete substitute
which was not adopted. The following persons testified neutrally
on the bill: Pat Martin representing himself; and Cordell Cameron
representing himself. The Chair recognized Rep. Romo to close.
The Chair left HB 2769 pending. HB 2769 was considered by the
committee in a formal meeting on May 5, 1995. The Chair laid out
HB 2769. The committee considered a complete substitute for the
bill. The substitute was adopted without objection. The bill was
reported favorably as substituted with the recommendation that it
do pass and be printed, which prevailed by a vote of 13 aye, 0 nay,
1 PNV, and 1 absent.