BILL ANALYSIS


                                                         S.B. 894
                                                        By: Ellis
                                      Intergovernmental Relations
                                                         03-30-95
                                       Committee Report (Amended)
BACKGROUND

Cities in Texas are currently required to use the formal
competitive sealed bid process when purchasing various insurance
coverages.  Experience with the required sealed bid process leads
to the conclusion that cities can better serve the interests of the
taxpayers in procuring the best available insurance coverage at the
cheapest rates by using sealed competitive proposals.  Risk
management and insurance consultants have advised that it is very
difficult to develop specifications for the various coverages that
adequately contemplate the ever-changing insurance markets.  With
the ability to negotiate the fine points of items such as coverage
limits, deductibles, and exclusions, cities could acquire the best
coverage at the best price.  Current state law authorizes Texas
counties to use sealed competitive proposals to acquire insurance
coverage.

PURPOSE

As proposed, S.B. 894 authorizes municipalities to use the
competitive sealed proposal procedure for the purchase of
insurance.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 252.021, Local Government Code, as
follows:

     Sec. 252.021.  COMPETITIVE BIDDING AND COMPETITIVE PROPOSAL
     REQUIREMENTS.  (a)  Makes no change.
     
     (b)  Requires a municipality with a population of 500,000 to
       comply with the procedure prescribed by this chapter for
       competitive sealed bidding or competitive sealed proposals
       before the municipality may enter into a contract for
       insurance that requires an expenditure of more than $5,000
       from one or more municipal funds.
     (c)  Authorizes a municipality to use the competitive sealed
       proposal procedure only for high technology procurements or,
       in a municipality with a population in excess of 500,000,
       the purchase of insurance.
       
     SECTION 2.     Amends the heading of Sec. 252.042, Local Government
Code, as follows:

     Sec. 252.042.  REQUESTS FOR PROPOSALS FOR CERTAIN
     PROCUREMENTS.
SECTION 3. Emergency clause.
           Effective date: upon passage.