By Farrar H.B. No. 3103 74R8035 PAM-F A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to procurement of public improvements at the least cost; 1-3 providing penalties. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. (a) This Act creates a least cost review program 1-6 to assist governmental entities in determining the least cost of 1-7 public improvements performed by a governmental entity within the 1-8 state. 1-9 (b) This subchapter is adopted to ensure that public 1-10 improvements are procured at the least cost. 1-11 SECTION 2. Chapter 271, Local Government Code, is amended by 1-12 adding Subchapter F to read as follows: 1-13 SUBCHAPTER F. LEAST COST REVIEW PROGRAM 1-14 Sec. 271.101. DEFINITIONS. In this subchapter: 1-15 (1) "Component purchases" means purchases of the 1-16 component parts of an item that in normal purchasing practices 1-17 would be purchased in one purchase. 1-18 (2) "Cost comparison statement" means a statement by a 1-19 governmental entity that compares the cost of purchasing a public 1-20 improvement with the cost of providing the improvement by the 1-21 governmental entity. 1-22 (3) "Governmental entity" means: 1-23 (A) a county with a population of 50,000 or 1-24 more; 2-1 (B) a municipality; 2-2 (C) a common or independent school district; 2-3 (D) a hospital district or authority; 2-4 (E) a housing authority; 2-5 (F) a water district or authority; 2-6 (G) a utility district or authority; 2-7 (H) a road utility district; or 2-8 (I) an agency or instrumentality of a 2-9 governmental entity described by this subdivision. 2-10 (4) "In-house cost estimate" means a report by a 2-11 governmental entity that contains the computations of probable cost 2-12 to the governmental entity of providing a public improvement using 2-13 the personnel, equipment, or facilities of the governmental entity. 2-14 (5) "Public improvement" means the construction, 2-15 alteration, repair, or renovation, including the materials, 2-16 machinery, fixtures, tools, or labor incorporated into or consumed 2-17 in the prosecution of the work, of a facility, including a 2-18 building, structure, site improvement, road, street, highway, 2-19 bridge, drainage structure, storm sewer, sanitary sewer, wastewater 2-20 treatment or pumping facility, water main, and water storage 2-21 facility, owned and operated by a governmental entity. 2-22 (6) "Separate purchases" means purchases, made 2-23 separately, of items that in normal purchasing practices would be 2-24 purchased in one purchase. 2-25 (7) "Sequential purchases" means periodic purchases of 2-26 items that in normal purchasing practices would be purchased in one 2-27 purchase. 3-1 Sec. 271.102. LEAST COST REVIEW REQUIRED. A governmental 3-2 entity that performs public improvements subject to this subchapter 3-3 shall participate in a least cost review program and shall apply 3-4 the policies and requirements established under this subchapter. 3-5 Sec. 271.103. EXEMPT PURCHASES. This subchapter does not 3-6 apply to a purchase by a governmental entity, if the purchase is: 3-7 (1) exempt from competitive bidding under Subchapter 3-8 A, Chapter 2254, Government Code; 3-9 (2) for an amount less than $10,000 including all 3-10 other component purchases, separate purchases, and sequential 3-11 purchases by the governmental entity; 3-12 (3) for a public improvement necessitated by public 3-13 calamity in which the use of personnel, equipment, or facilities of 3-14 the governmental entity will more expediently relieve the needs or 3-15 preserve the property of its citizens; or 3-16 (4) a public improvement purchased under the 3-17 competitive bidding requirements of Subchapter B. 3-18 Sec. 271.104. LEAST COST REVIEW. (a) If a governmental 3-19 entity proposes to construct nonexempt public improvements by use 3-20 of personnel, equipment, or facilities of the governmental entity, 3-21 the governmental entity shall submit, before the 30th day before 3-22 the date of the adoption of its annual budget, a least cost review 3-23 for consideration and approval at a public meeting of the governing 3-24 body of the governmental entity. 3-25 (b) Before the 14th day before the public meeting, the 3-26 governmental entity shall furnish to any citizen in the 3-27 jurisdictional limits of the governmental entity a copy of the 4-1 least cost review if the citizen pays a reasonable fee to reimburse 4-2 the governmental entity for copying costs. 4-3 (c) The least cost review shall contain the following 4-4 elements: 4-5 (1) a list of every nonexempt public improvement to be 4-6 provided during the budget year by the use of the personnel, 4-7 equipment, or facilities of the governmental entity; 4-8 (2) an estimate of the quantities for each 4-9 classification of the work in each nonexempt public improvement, 4-10 according to the classifications normally used on competitively bid 4-11 public improvements; 4-12 (3) a cost estimate of probable costs for providing 4-13 each nonexempt public improvement by competitive bid, as determined 4-14 by multiplying the quantities of each classification of the work by 4-15 unit costs established by comparable bid data in the locale of the 4-16 governmental entity; 4-17 (4) an in-house cost estimate of probable costs of 4-18 providing each nonexempt public improvement using the personnel, 4-19 equipment, or facilities of the governmental entity, including all 4-20 direct and indirect costs of labor, materials, administration, 4-21 investment, and maintenance of equipment, under the cost accounting 4-22 procedures and instructions relating to in-house cost estimates as 4-23 provided by the State Council on Competitive Government under 4-24 Article 15, State Purchasing and General Services Act (Article 4-25 601b, Vernon's Texas Civil Statutes); 4-26 (5) a cost comparison statement for each nonexempt 4-27 public improvement listed in the least cost review; and 5-1 (6) a determination as to whether the standard of 5-2 quality of the public improvement using personnel, equipment, or 5-3 facilities of the governmental entity will be the same as if the 5-4 public improvement were purchased pursuant to competitive bidding 5-5 requirements of Subchapter B. 5-6 Sec. 271.105. REDUCTION OF COSTS. (a) Except as provided 5-7 by Subsection (b), a governmental entity shall purchase a public 5-8 improvement by competitive bid if the least cost review for the 5-9 public improvement by the governmental entity indicates that the 5-10 least cost to the entity would be by purchase under the competitive 5-11 bidding requirements of Subchapter B. 5-12 (b) A governmental entity may purchase a public improvement 5-13 without complying with the competitive bid requirements of 5-14 Subchapter B if: 5-15 (1) the additional cost is less than 10 percent; and 5-16 (2) the governing body of the governmental entity 5-17 passes a resolution specifically describing: 5-18 (A) the non-cost advantages of providing the 5-19 public improvement using personnel, equipment, or facilities of the 5-20 governmental entity; and 5-21 (B) a proposal for reducing costs of the 5-22 personnel, equipment, or facilities used in the public improvement 5-23 so that the total costs are reduced to the costs of a competitively 5-24 bid public improvement. 5-25 Sec. 271.106. MAINTENANCE OF COST RECORDS. For each public 5-26 improvement purchased using the personnel, equipment, or facilities 5-27 of a governmental entity, the governmental entity shall maintain 6-1 and preserve as a public record a true and accurate account of all 6-2 direct and indirect actual costs of labor, materials, 6-3 administration, investment, and maintenance of equipment under the 6-4 accounting procedures and instructions as provided by the State 6-5 Council on Competitive Government under Article 15, State 6-6 Purchasing and General Services Act (Article 601b, Vernon's Texas 6-7 Civil Statutes). 6-8 Sec. 271.107. CRIMINAL PENALTIES. (a) An officer or 6-9 employee of a governmental entity commits an offense if the officer 6-10 or employee intentionally or knowingly: 6-11 (1) makes or authorizes separate, sequential, or 6-12 component purchases to avoid requirements of a least cost review 6-13 described by Section 271.104; or 6-14 (2) violates the least cost review requirements of 6-15 Section 271.104. 6-16 (b) An offense under Subsection (a) is a Class B 6-17 misdemeanor. 6-18 (c) An officer or employee of a governmental entity who 6-19 intentionally or knowingly violates this subchapter, other than by 6-20 conduct described in Subsection (a) or (b) commits an offense that 6-21 is a Class C misdemeanor. 6-22 Sec. 271.108. REMOVAL; INELIGIBILITY. (a) The final 6-23 conviction of an officer or employee of a governmental entity for 6-24 an offense under Section 271.107(a) results in the immediate 6-25 removal from office or employment of that person. 6-26 (b) For four years after the date of the final conviction, 6-27 the removed officer or employee is ineligible: 7-1 (1) to be a candidate for or to be appointed or 7-2 elected to a public office in this state; 7-3 (2) to be employed by the governmental entity the 7-4 person served when the offense occurred; and 7-5 (3) to receive any compensation through a contract 7-6 with that governmental entity. 7-7 (c) This section does not prohibit the payment of retirement 7-8 or workers' compensation benefits to the removed officer or 7-9 employee. 7-10 Sec. 271.109. INJUNCTIVE RELIEF. A citizen in the 7-11 jurisdictional limits of a governmental entity may enjoin the 7-12 governmental entity from acting in violation of this subchapter. 7-13 SECTION 3. The importance of this legislation and the 7-14 crowded condition of the calendars in both houses create an 7-15 emergency and an imperative public necessity that the 7-16 constitutional rule requiring bills to be read on three several 7-17 days in each house be suspended, and this rule is hereby suspended.