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. (c) Created from existing text. (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. (c) Authorizes the committee to establish its own rules of operation. (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. (c) Authorizes the commission to require information from a state agency for inclusion in the database. (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. (c) Requires the comptroller to pay the interest at the time payment is made on the principal. (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.