74(R) SB 1321 Senate Committee Report

BILL ANALYSIS

C.S.S.B. 1321
By: Armbrister
State Affairs
5-3-95
Committee Report (Substituted)
BACKGROUND

S.B. 1321 is a result of the Joint Procurement Reengineering
Project Team's study as mandated by S.B. 381, 73rd Legislature,
Regular Session. The Comptroller of Public Accounts and the General
Services Commission were asked to evaluate the "cost, feasibility,
and advisability of a central automated purchasing system," as well
as "other advisable changes that concern the state's method of
acquiring goods and services that would become feasible if the
state implemented the central automated purchasing system."

PURPOSE

As proposed, C.S.S.B. 1321 provides for the purchase of goods and
services by the state and to purchasing services provided by the
state to local governments.

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is granted
to the General Services Commission under SECTION 4 (Section
3.045(a) and (b), Article 601b, V.T.C.S.), SECTION 6 (Sec. 3.062,
and Sec. 3.064(a) and (b), Article 601b, V.T.C.S.), SECTION 7 (Sec.
3.08(c), Article 601b, V.T.C.S.), SECTION 18 (Sec. 11.08(e),
11.10(c), and 11.11(e), Article 601b, V.T.C.S.), and SECTION 21
(Sec. 2251.026(f), Government Code), to the Advisory Committee on
Procurement under SECTION 17 (Sec. 3.34(c), Article 601b,
V.T.C.S.), and to the Vendor Advisory Committee under (Sec.
3.35(c), Article 601b, V.T.C.S.) of this bill.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 1.02(5), Article 601b, V.T.C.S. (State
Purchasing and General Services Act) to redefine "best value."

SECTION 2. Amends Article 3, Article 601b, V.T.C.S., by adding
Section 3.011, as follows:

Sec. 3.011. PROVIDING CERTAIN PURCHASING SERVICES ON FEE-FOR-SERVICE BASIS. (a) Authorizes the General Services
Commission (commission) to provide open market purchasing
services on a fee-for-service basis for state agency purchases
that are delegated to an agency under Section 3.06 or 3.08 of
this Act. Requires the commission to set the fees in an
amount that recovers the commission's cost in providing the
services.
(b) Requires the commission to publish a schedule of its
fees for services that are subject to this section.
Requires the schedule to include the commission's fees for
certain services.

SECTION 3. Amends Section 3.022, Article 601b, V.T.C.S., as
follows:

Sec. 3.022. COMPETITIVE SEALED PROPOSALS. (a) Authorizes
the commission to acquire supplies, materials, services, or
equipment by following a procedure using competitive sealed
proposals. Requires the commission, a state agency, or
institution of higher education if the agency or institution
is making the acquisition under Section 3.06 or 3.08 of this
article, to first determine that competitive sealed bidding
or informal competitive bidding is not practical or is
disadvantageous to the state. Deletes the authority of the
commission to acquire certain devices or services and the
authority to make its own determination that competitive
sealed bidding or informal competitive bidding is not
practical. Makes conforming changes.

(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.

(d) Requires the commission to file each proposal in a
register of proposals which is to be open for public
inspection unless the register contains information that
is excepted from disclosure under Chapter 552C, Government
Code, rather than Section 3, Article 6252-17a, V.T.C.S.

(e)-(f) Redesignated from existing Subsections (d) and
(e). Make conforming changes.

(g) Requires the commission to make a written award of a
purchase or lease to the offeror whose proposal offers the
best value to the state considering, among other criteria,
past vendor performance, and vendor reputation. Makes
conforming changes. Deletes certain considerations from
being applicable when determining which proposal offers
the best value.

(h) Created from existing Subsection (g). Deletes
existing Subsection (h).

(i) Authorizes a medical or dental unit as that term is
defined in Section 61.003, Education Code, to purchase
certain types of medical equipment by the use of
competitive sealed proposals if it follows commission
rules and procedures provided by this section regarding
the use of such proposals and submits to the commission a
written finding that competitive sealed bidding or
informal competitive bidding is not practical or is
disadvantageous to the state for the proposed acquisition.

SECTION 4. Amends Article 3, Article 601b, V.T.C.S., as follows:

Sec. 3.045. COOPERATION WITH FEDERAL GOVERNMENT PURCHASING.
(a) Authorizes agencies of the federal government, in
accordance with procedures prescribed by rules of the
commission, to purchase goods and services through commission
contracts that are established under Section 3.11 of this Act.

(b) Authorizes the commission and other state agencies that
are subject to this Act and local governments that are
eligible to participate in the commissioner's purchasing
program under Chapter 271D, Local Government Code, to
purchase goods and services through federal supply schedules
of the General Services Administration to the extent
permitted by federal law and in the case of state agencies,
approved by the commission.

SECTION 5. Amends Section 3.061(b), Article 601b, V.T.C.S., to make
a conforming change.

SECTION 6. Amends Article 3, Article 601b, V.T.C.S., by adding
Sections 3.062-3.064, as follows:

Sec. 3.062. TRAINING AND CERTIFICATION OF STATE AGENCY
PURCHASING PERSONNEL. Requires the commission, in
collaboration with the Advisory Committee on Procurement, to
establish and administer a program of training, continuing
education, and certification for state agency purchasing
personnel. Requires the program to address training on
purchasing methods and procedures acceptable within the State
of Texas including value based purchasing, to ensure a total
quality purchasing system for the state. Authorizes the
commission to adopt rules to administer this section.
Sec. 3.063. PURCHASING PARTNERSHIPS BETWEEN AGENCIES. (a)
Requires the commission to manage a program that provides for
establishing purchasing partnerships between state agencies
under which one agency will make certain purchases for another
agency. Provides that 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's certified purchasers, the
strategic mission 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 an agency to purchase goods or services
under a contract made by another agency other than the
commission.
(b) Sets forth requirements for 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, if
commission rules allow other agencies to make purchases
under the contract.
SECTION 7. Amends Section 3.08, Article 601b, V.T.C.S., as follows:

Sec. 3.08. PURCHASES LESS THAN A SPECIFIED MONETARY AMOUNT.
(a) Authorizes state agencies to purchase supplies, materials,
and equipment if the purchase does not exceed $25,000, rather
than $5,000. Deletes the authorization of an agency to
continue to use the commission's services for those purchases.

(b) Requires the commission, in delegating purchasing
authority under this subsection or Section 3.06(b) of this
Act, to consider certain factors relevant to a state
agency's ability to perform purchasing functions. Makes
nonsubstantive and conforming changes.

(c) Requires the commission to monitor the purchasing
practices of state agencies that are making delegated
purchases under Subsection (b) of this section or Section
3.06(b) of this article. Authorizes the commission to
revoke for cause all or part of the purchasing authority
that the commission delegated to a state agency. Requires
the commission in collaboration with the Advisory Committee
on Procurement to adopt rules to administer this subsection.

(d)-(h) Redesignate existing Subsections (b)-(f).

SECTION 8. Amends Section 3.101, Article 601b, V.T.C.S., 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
commission's uniform registration form, including information
about the persons who own or control the applicant and
information about any vendor history the applicant or the
persons who own or control the applicant may have from doing
business with the state under other names.

(l) Requires the commission to include in the commission's
uniform registration form a statement about the applicability
of relevant criminal law, including Section 37.10, Penal Code,
related to entering information on the form and to presenting
documentation in connection with the form. Requires the
commission to refer any suspected violations of relevant
criminal law related to entering information on the form or
presenting documentation in connection with the form to the
appropriate legal authorities for investigation or
prosecution.
SECTION 9. Amends Article 3, Article 601b, V.T.C.S., by adding
Sections 3.103 and 3.104, 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 state agency making a purchase is not restricted
to considering the purchase price alone, but subject to
Section 3.104 of this Act may also consider certain other
factors relevant to evaluating the value to the state of a
good or service.
Sec. 3.104. REQUIREMENT TO SPECIFY VALUE FACTORS IN REQUEST
FOR BIDS OR PROPOSALS. (a) Requires the state agency making
a purchase through competitive bidding to specify in the
request for bids the factors other than price, past vendor
performance, or vendor reputation that the agency will
consider in determining which bid offers the best value for
the state.

(b) Sets forth provisions for the state agency making a
purchase made through competitive sealed proposals.
SECTION 10. Amends Sections 3.11(b), (d)-(h), Article 601b,
V.T.C.S., as follows:

(b) Requires the commission to maintain a centralized master
bidders list and to add or delete names from the list in
accordance with Section 3.101 of this Act, rather than by the
application and utilization of applicable standards set forth
in Subsection (e). Makes a conforming change.

(d) Requires bids to 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) Requires the commission to determine which bidder offers
the best value for the state in accordance with Sections 3.103
and 3.104 of this Act. Deletes existing considerations for
the commission in determining who is the lowest and best
bidder. Makes nonsubstantive and conforming changes.

(f)-(h) Make conforming changes.

SECTION 11. Amends Sections 3.12(b), (c), (e), and (f), Article
601b, V.T.C.S., as follows:

(b) Adds facsimile transmission, on-line electronic
transmission, or posting on an electronic bulletin board, to
the provisions by which the commission shall solicit bids.
Makes a conforming change.

(e)-(f) Make nonsubstantive and conforming changes.

SECTION 12. Amends Section 3.16, Article 601b, V.T.C.S., by
amending Subsection (a) and adding Subsections (c) and (d), as
follows:

(a) Authorizes the comptroller to issue the warrant directly
to the vendor. Authorizes the comptroller to combine into a
single warrant payments that the state owes to a vendor under
more than one invoice, including payments to the vendor made
on behalf of more than one state agency.

(c) Authorizes the comptroller to allow a state agency to
schedule payments that the comptroller will make to a vendor.
Requires the comptroller to prescribe the circumstances under
which advance scheduling of payments is appropriate.

(d) Authorizes the comptroller to require vendors to provide
payment addresses, vendor identification numbers, social
security numbers to the extent allowed by federal law, federal
identification numbers, and other account information directly
to the comptroller.

SECTION 13. Amends Section 3.17(a), Article 601b, V.T.C.S., to
require the commission to enlist the cooperation of other state
agencies, the advisory committee on procurement, and the vendor
advisory committee in the establishment, maintenance, and revision
of uniform standards.

SECTION 14. Amends Section 3.20, Article 601b, V.T.C.S., to add
delivery to the state specifications that must be met in order for
certain products to be given preference. Requires the commission
to test the products in accordance with Section 3.17 of this Act to
the extent necessary to ensure quality. Requires the commission to
consider product quality and delivery performance in agreeing to
the price for products purchased under this section.

SECTION 15. Amends Section 3.22, Article 601b, V.T.C.S., to
require the commission to test the goods or services in accordance
with Section 3.17 of this Act to the extent necessary to ensure
quality. Requires the commission to consider product or service
quality and delivery performance in agreeing to the price for goods
or services purchased under this section. Makes
conforming changes.

SECTION 16. Amends Section 3.23, Article 601b, V.T.C.S., to
require the commission to test the supplies, equipment, services,
and materials in accordance with Section 3.17 of this Act to the
extent necessary to ensure quality. Requires the commission to
consider product or service quality and delivery performance in
agreeing to the price for supplies, equipment, services, and
materials purchased under this section.

SECTION 17. Amends Article 3, Article 601b, V.T.C.S., by adding
Sections 3.34 and 3.35, as follows:

Sec. 3.34. ADVISORY COMMITTEE ON PROCUREMENT. (a) Requires
the commission to establish an advisory committee on
procurement. Provides that the purpose of the committee is to
represent before the commission the state agency purchasing
community and the political subdivisions that use the
commission's purchasing services.

(b) Provides that the committee is composed of officers or
employees of state agencies, including institutions of
higher education, and political subdivisions who are invited
by the commission to serve on the committee. Requires the
commission to invite officers and employees who are
experienced in public purchasing, in public finance, or who
possess other appropriate expertise to serve on the
committee. Provides that service on the committee is an
additional duty of the member's public office or employment.
Requires a member's employer to pay the member's travel
expenses incurred because of the member's service on the
committee. Provides that Article 6252-33, V.T.C.S., does
not apply to the size or composition of the committee.
Requires the commission to set staggered terms for the
members of the committee.

(d) Requires the committee to recommend improvements in
commission or state agency purchasing practices to the
commission. Requires the committee to review and comment on
findings and recommendations related to purchasing that are
made by state agency internal auditors or by the state
auditor.

Sec. 3.35. VENDOR ADVISORY COMMITTEE. (a) Requires the
commission to establish a vendor advisory committee. Provides
that the purpose of the committee is to represent before the
commission the vendor community, to provide information to
vendors, and to obtain vendor input on state procurement
practices.

(b) Provides that the committee is composed of vendors who
have done business with the state who are invited by the
commission to serve on the committee. Requires the
commission to invite a cross-section of the vendor community
to serve on the committee, inviting both large and small
businesses, both historically underutilized businesses and
businesses that are not historically underutilized
businesses, and vendors who provide a variety of different
goods and services to the state. Provides that Article
6252-33, V.T.C.S., does not apply to the size or composition
of the committee. Requires the commission to set staggered
terms for the members of the committee.

(c) Authorizes the committee to establish its own rules of
operation, but shall post notice of and hold its meetings in
accordance with the open meetings law, Chapter 551,
Government Code.

SECTION 18. Amends Article 11, Article 601b, V.T.C.S., by adding
Sections 11.08-11.11, as follows:

Sec. 11.08. ELECTRONIC BULLETIN BOARD POSTING OF NOTICE FOR
PROCUREMENTS EXCEEDING $25,000. (a) Sets forth provisions
under which this section applies to each state agency seeking
bids, proposals, or professional service contracts that will
exceed $25,000 in value.

(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 the commission or other state agency
procurements that will exceed $25,000 in value. Authorizes
the commission to also send to the comptroller for posting
on the electronic bulletin board other information relating
to the business activity of the state that the commission
considers to be of interest to the public. Requires the
commission to send the information in a format agreed to by
the comptroller.

(c) Provides that, for each procurement that a state agency
will make that is estimated to exceed $25,000, the
commission is required to provide certain additional
information to the comptroller, to the extent it is feasible
and cost-effective.

(d) Requires each state agency that will award a
procurement contract estimated to exceed $25,000 in value to
send to the commission the information the commission
requires for posting on the comptroller's electronic
bulletin board under this section.

(e) Authorizes the commission to adopt rules, prescribe
forms, and require information to administer this section.
Requires the commission's rules, forms, and requirements to
be consistent with the comptroller's requirements relating
to the comptroller's electronic bulletin board.

Sec. 11.09. ELECTRONIC PROCUREMENT DATABASE. (a) Requires
the commission to establishment and manage an electronic
procurement database. Authorizes the commission to enter into
contracts with private or public entities to establish or
maintain all or part of the database. Requires the commission
to base its decision to enter into a contract under this
subsection on an analysis that uses the State Council on
Competitive Government's cost methodology.

(b) Authorizes the commission to maintain in the database
information related to state procurement that the commission
considers to be useful. Sets forth information the database
must include.

(d) Requires the commission to make the database available
to state agencies and political subdivisions through the
procurement marketplace.

Sec. 11.10. ELECTRONIC PROCUREMENT MARKETPLACE. (a)
Requires the commission to establish and manage an electronic
procurement marketplace through which the commission and state
agencies may:

(1) communicate information relevant to the state's
procurement of goods and services; and

(2) conduct elements of purchasing transactions within
state government electronically to the extent that it is
feasible and cost-effective to do so.
(b) Requires the commission to design the procurement
marketplace as an interactive gateway between all state
databases that relate to procurement, including databases
that contain information about the availability of surplus
property. Requires the commission to define standards,
including keyword and product code standards, for the
procurement marketplace.

(c) Authorizes the commission to adopt rules relating to
the design and use of the procurement marketplace, including
rules that require state agencies to provide information for
or receive information from the procurement marketplace.

(d) Requires the commission to make state procurement
information available to political subdivisions through the
procurement marketplace on a fee-for-service basis.
Requires the commission to set the fees in an amount that
recovers the state's costs in providing the access to a
political subdivision.

Sec. 11.11. ELECTRONIC COMMERCE NETWORK USING ELECTRONIC DATA
INTERCHANGE. (a) Requires the commission to establish and
manage an electronic commerce network under which the state's
purchasing transactions with vendors can be accomplished
electronically by means of facsimile transmissions and on-line
transmission of necessary information. Requires the
commission to base the network on the standard data protocol
developed by the American National Standards Institute known
as electronic data interchange. Provides that the commission
is the electronic data interchange coordinator for state
government.

(b) Authorizes the commission to enter into contract with
one or more public or private entities to establish or
support various elements of the network. Authorizes the
commission to provide for a gateway between the procurement
marketplace and the electronic commerce network so that the
elements of a procurement transaction that are within state
government and the elements of a procurement transaction
that involve communication with a vendor may all be
accomplished electronically.

(c) Requires each state agency that is capable of
participating in the electronic commerce network to
participate in the network and participate in contracts
entered into by the commission for the establishment or
support of the network. Requires the commission to charge
an agency a fee for network services provided to the agency
by the commission and require an agency to pay a fee to a
contractor for network services provided to the agency by
the contractor, so that the cost of providing network
services to an agency is paid by the agency.

(d) Authorizes the commission to allow political
subdivisions and other public entities to participate in the
electronic commerce network. Requires the commission to
provide that a participating political subdivision is
charged fees for network services provided to the political
subdivision in the same manner that participating state
agencies are charged fees under Subsection (c) of this
section.

(e) Authorizes the commission to adopt rules to administer
this section; promote and enhance the use of electronic
commerce; and require participating state agencies,
political subdivisions, and other public entities to
designate a network coordinator.

SECTION 19. Amends Article 15, Article 601b, V.T.C.S., by adding
Section 15.11, as follows:

Sec. 15.11. CONSOLIDATING OR CONTRACTING FOR MATERIALS
MANAGEMENT FUNCTIONS. (a) Requires the council to study the
materials management functions of state agencies and examine
opportunities to consolidate materials management functions.
Sets forth authorizations for the council, when the council
determines a course of action that will more effectively or
efficiently accomplish an agency's materials management
functions.

(b) Requires state agencies to consolidate or contract for
materials management functions, or both consolidate and
contract for materials management functions, in the manner
directed by the council.

SECTION 20. Amends Chapter 2102, Government Code, by adding
Section 2102.013, as follows:

Sec. 2102.013. AUDITING OF AGENCY PURCHASING PRACTICES. (a)
Requires the internal auditor to include the audit of the
purchasing practices of a state agency in audits required
under this chapter.
SECTION 21. (a) Amends Section 2251.026, Government Code, as
follows:

Sec. 2251.026. PAYMENT OF INTEREST BY STATE AGENCY. (a)
Makes no change.

(b) Requires the comptroller to compute interest imposed
on the state agency under this chapter.

(d) Requires the comptroller to submit the interest
payment with the net amount due for goods and services.

(e) Prohibits the comptroller and the state agency from
requiring a vendor to petition, bill, or wait an
additional day to receive the interest due.

(f) Authorizes the comptroller to require necessary and
timely information and adopt rules to administer this
section.

(g) Requires any system changes that are necessary for
the comptroller's implementation of this section to be
compatible with the uniform statewide accounting system.
(b) Effective date of this section: September 1, 1997.
Makes application of this section prospective.

SECTION 22. Amends Section 271.083(a), Local Government Code, to
set forth the required contents of a resolution which authorizes a
local government to participate in the purchasing program of the
commission.

SECTION 23. (a) Requires the state auditor and the advisory
committee on procurement established by this Act to study how the
classification levels of state agency purchasing personnel should
be revised to reflect the increased levels of responsibility and
accountability given to state agency purchasing personnel under the
changes in law made by this Act. Provides that the state auditor
and the committee should consider how best to provide purchasing
personnel with a pay scale and a career path, including goals,
incentives, and initiatives, commensurate with the purchaser's
knowledge, authority, and responsibility.

(b) Requires the state auditor and the committee to present
their written recommendations and the results of their study
to the legislature no later than November 1, 1996.

SECTION 24. Authorizes the commission to conduct pilot studies
of regional contracts and no-stock contracts.

SECTION 25. Sets forth provisions the Legislative Budget Board
and the division of the governor's office that works with budget
and planning issues shall study and consider.

SECTION 26. Requires the commission to gradually phase in the
changes in law made by this Act that requires the establishment of
electronic or automated marketplaces, networks, or databases.

SECTION 27. Repealer: Sections 3.0221 (Competitive Sealed
Proposals; Acquisition of Certain Supplies, Materials, Equipment,
and Routine Services) and 3.09(d) (relating to the requirement of
the commission, if it takes exception to certain justifications, to
purchase supplies, materials, services, or equipment and to report
the reasons for its exceptions to certain entities), Article 601b,
V.T.C.S.

SECTION 28. (a) Repealer: Section 2251.041, Government Code
(Claim for Interest Imposed Against State Agency).

(b) Effective date of this section: September 1, 1997.
Makes application of this Act prospective.

SECTION 29. Effective date: September 1, 1995.

SECTION 30. Emergency clause.