1-1        By:  Armbrister                                 S.B. No. 1321
    1-2        (In the Senate - Filed March 10, 1995; March 20, 1995, read
    1-3  first time and referred to Committee on State Affairs; May 2, 1995,
    1-4  reported adversely, with favorable Committee Substitute by the
    1-5  following vote:  Yeas 8, Nays 0; May 2, 1995, sent to printer.)
    1-6  COMMITTEE SUBSTITUTE FOR S.B. No. 1321              By:  Armbrister
    1-7                         A BILL TO BE ENTITLED
    1-8                                AN ACT
    1-9  relating to the purchase of goods and services by the state and to
   1-10  purchasing services provided by the state to local governments.
   1-11        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
   1-12        SECTION 1.  Subdivision (5), Section 1.02, State Purchasing
   1-13  and General Services Act (Article 601b, Vernon's Texas Civil
   1-14  Statutes), is amended to read as follows:
   1-15              (5)  "Best value" for purposes of Section 3.081 of this
   1-16  Act means lowest overall cost of information systems based on the
   1-17  following factors, including, but not limited to:
   1-18                    (A)  purchase price;
   1-19                    (B)  compatibility to facilitate exchange of
   1-20  existing data;
   1-21                    (C)  capacity for expansion and upgrading to more
   1-22  advanced levels of technology;
   1-23                    (D)  quantitative reliability factors;
   1-24                    (E)  the level of training required to bring
   1-25  end-users to a stated level of proficiency;
   1-26                    (F)  the technical support requirements for
   1-27  maintenance of data across a network platform and management of the
   1-28  network's hardware and software; and
   1-29                    (G)  compliance with applicable statewide
   1-30  standards adopted by the Department of Information Resources or a
   1-31  subsequent entity as validated by criteria established by the
   1-32  department or a subsequent entity in administrative rule.
   1-33        SECTION 2.  Article 3, State Purchasing and General Services
   1-34  Act (Article 601b, Vernon's Texas Civil Statutes), is amended by
   1-35  adding Section 3.011 to read as follows:
   1-36        Sec. 3.011.  PROVIDING CERTAIN PURCHASING SERVICES ON
   1-37  FEE-FOR-SERVICE BASIS.  (a)  The commission may provide open market
   1-38  purchasing services on a fee-for-service basis for state agency
   1-39  purchases that are delegated to an agency under Section 3.06 or
   1-40  3.08 of this Act.  The commission shall set the fees in an amount
   1-41  that recovers the commission's costs in providing the services.
   1-42        (b)  The commission shall publish a schedule of its fees for
   1-43  services that are subject to this section.  The schedule must
   1-44  include the commission's fees for:
   1-45              (1)  reviewing bid and contract documents for clarity,
   1-46  completeness, and compliance with laws and rules;
   1-47              (2)  developing and transmitting invitations to bid;
   1-48              (3)  receiving and tabulating bids;
   1-49              (4)  determining which bidder offers the best value to
   1-50  the state and awarding the contract to that bidder; and
   1-51              (5)  creating and transmitting purchase orders.
   1-52        SECTION 3.  Section 3.022, State Purchasing and General
   1-53  Services Act (Article 601b, Vernon's Texas Civil Statutes), is
   1-54  amended to read as follows:
   1-55        Sec. 3.022.  COMPETITIVE SEALED PROPOSALS.  (a)  The
   1-56  commission may acquire supplies, materials, services, or equipment
   1-57  <telecommunications devices, systems, or services or any automated
   1-58  information systems, the computers on which they are automated, or
   1-59  a service related to the automation of information systems or the
   1-60  computers on which they are automated, including computer
   1-61  software,> by following a procedure using competitive sealed
   1-62  proposals <if the commission determines by rule that competitive
   1-63  sealed bidding or informal competitive bidding is not practical or
   1-64  is disadvantageous to the state.  Items to be purchased from higher
   1-65  education research funds may be acquired by following a procedure
   1-66  using competitive sealed proposals>.  The commission, or a state
   1-67  agency or <an> institution of higher education if the agency or
   1-68  institution is making the acquisition <if research purchasing
    2-1  authority has been delegated to that institution> under Section
    2-2  3.06 or 3.08 of this article, must first determine that competitive
    2-3  sealed bidding or informal competitive bidding is not practical or
    2-4  is disadvantageous to the state.  If the competitive sealed
    2-5  proposal procedure is to be handled by the state agency or
    2-6  institution of higher education, the agency or institution shall
    2-7  follow the procedures outlined by this section for the commission.
    2-8        (b)  The commission shall consult with appropriate personnel
    2-9  of a requisitioning agency to develop specifications for a request
   2-10  for competitive sealed proposals under this section.
   2-11        (c)  The commission shall solicit proposals by a request for
   2-12  proposals.  The commission shall give public notice of a request
   2-13  for proposals in the manner provided for requests for bids under
   2-14  Section 3.12 of this article.
   2-15        (d) <(c)>  The commission shall open each proposal in a
   2-16  manner that does not disclose the contents of the proposal during
   2-17  the process of negotiating with competing offerors.  The commission
   2-18  shall file each proposal in a register of proposals, which shall be
   2-19  open for public inspection after a contract is awarded unless the
   2-20  register contains information that is excepted from disclosure <as
   2-21  an open record> under Subchapter C, Chapter 552, Government Code
   2-22  <Section 3, Chapter 424, Acts of the 63rd Legislature, Regular
   2-23  Session, 1973 (Article 6252-17a, Vernon's Texas Civil Statutes)>.
   2-24        (e) <(d)>  As provided in a request for proposals and under
   2-25  the rules adopted by the commission, the commission may discuss
   2-26  acceptable or potentially acceptable proposals with offerors in
   2-27  order to assess an offeror's ability to meet the solicitation
   2-28  requirements.  After the submission of a proposal but before making
   2-29  an award, the commission may permit the offeror to revise the
   2-30  proposal in order to obtain the best final offer.  The commission
   2-31  may not disclose any information derived from proposals submitted
   2-32  from competing offerors in conducting discussions under this
   2-33  subsection.  The commission shall provide each offeror with an
   2-34  equal opportunity for discussion and revision of proposals.
   2-35        (f) <(e)>  The commission shall invite a requisitioning
   2-36  agency to participate in discussions conducted under Subsection (e)
   2-37  <(d)> of this section.
   2-38        (g) <(f)>  The commission shall make a written award of a
   2-39  purchase or lease to the offeror whose proposal offers <is> the
   2-40  best value <most advantageous> to the state, considering price,
   2-41  past vendor performance, vendor reputation, and the evaluation
   2-42  factors in the request for proposals, except that if the commission
   2-43  finds that none of the offers is acceptable, it shall refuse all
   2-44  offers.  In determining which proposal offers the best value <is
   2-45  most advantageous> to the state, the commission shall, subject to
   2-46  Section 3.104 of this article, consider the factors listed in this
   2-47  subsection and in Section 3.103 of this article or, when
   2-48  applicable, the factors listed in this subsection and in Section
   2-49  1.02(5) of this Act <such as installation costs, the overall life
   2-50  of the system or equipment, the cost of acquisition, operation, and
   2-51  maintenance of hardware included with, associated with, or required
   2-52  for the system or equipment during the state's ownership or lease,
   2-53  the cost of acquisition, operation, and maintenance of software
   2-54  included with, associated with, or required for the system or
   2-55  equipment during the state's ownership or lease, the estimated cost
   2-56  of supplies, the estimated costs of employee training, the
   2-57  estimated cost of additional long-term staff needed, and the
   2-58  estimated increase in employee productivity.  The contract file
   2-59  must state in writing the basis on which the award is made>.
   2-60        (h) <(g)>  The commission shall adopt rules necessary or
   2-61  convenient to perform its responsibilities under this section and
   2-62  shall request assistance from other state agencies as needed.
   2-63        (i) <(h)>  A medical or dental unit as that term is defined
   2-64  in Section 61.003, Education Code, may purchase the following types
   2-65  of medical equipment by the use of competitive sealed proposals if
   2-66  it follows commission rules and procedures provided by this section
   2-67  regarding the use of competitive sealed proposals and submits to
   2-68  the commission a written finding that competitive sealed bidding or
   2-69  informal competitive bidding is not practical or is disadvantageous
   2-70  to the state for the proposed acquisition:
    3-1              (1)  prototypical medical equipment not yet available
    3-2  on the market;
    3-3              (2)  medical equipment so new to the market that its
    3-4  benefits are not fully known; or
    3-5              (3)  major medical equipment that is so technically
    3-6  complex that development of specifications for competitive bidding
    3-7  is not feasible.
    3-8        SECTION 4.  Article 3, State Purchasing and General Services
    3-9  Act (Article 601b, Vernon's Texas Civil Statutes), is amended by
   3-10  adding Section 3.045 to read as follows:
   3-11        Sec. 3.045.  COOPERATION WITH FEDERAL GOVERNMENT PURCHASING.
   3-12  (a)  In accordance with procedures prescribed by rules of the
   3-13  commission, agencies of the federal government may purchase goods
   3-14  and services through commission contracts that are established
   3-15  under Section 3.11 of this Act.
   3-16        (b)  To the extent permitted by federal law, the commission
   3-17  and other state agencies that are subject to this Act and local
   3-18  governments that are eligible to participate in the commission's
   3-19  purchasing program under Subchapter D, Chapter 271, Local
   3-20  Government Code, may purchase goods and services through federal
   3-21  supply contracts administered by the General Services
   3-22  Administration, to the extent permitted by federal law and, in the
   3-23  case of state agencies, as approved by the commission.
   3-24        SECTION 5.  Subsection (b), Section 3.061, State Purchasing
   3-25  and General Services Act (Article 601b, Vernon's Texas Civil
   3-26  Statutes), is amended to read as follows:
   3-27        (b)  The commission shall promulgate rules allowing purchases
   3-28  through group purchasing programs unless the commission determines
   3-29  within a reasonable period of time after receiving notification of
   3-30  a particular purchase that a better value <lower price> is
   3-31  available through the commission.
   3-32        SECTION 6.  Article 3, State Purchasing and General Services
   3-33  Act (Article 601b, Vernon's Texas Civil Statutes), is amended by
   3-34  adding Sections 3.062, 3.063, and 3.064 to read as follows:
   3-35        Sec. 3.062.  TRAINING AND CERTIFICATION OF STATE AGENCY
   3-36  PURCHASING PERSONNEL.  The commission in collaboration with the
   3-37  advisory committee on procurement shall establish and administer a
   3-38  program of training, continuing education, and certification for
   3-39  state agency purchasing personnel.  The program shall address
   3-40  training on purchasing methods and procedures acceptable within the
   3-41  State of Texas, including value-based purchasing, to ensure a total
   3-42  quality purchasing system for the state.  The commission may adopt
   3-43  rules to administer this section.
   3-44        Sec. 3.063.  PURCHASING PARTNERSHIPS BETWEEN AGENCIES.
   3-45  (a)  The commission shall manage a program that provides for
   3-46  establishing purchasing partnerships between state agencies under
   3-47  which one agency will make certain purchases for another agency.
   3-48  An agency is not required to enter into a purchasing partnership
   3-49  under this section.
   3-50        (b)  The commission shall identify agencies that are willing
   3-51  to enter into purchasing partnerships with another agency and
   3-52  attempt to appropriately match agencies for a purchasing
   3-53  partnership based on factors such as whether an agency employs a
   3-54  certified purchaser, the number and expertise of an agency's
   3-55  certified purchasers, the strategic mission of an agency, the
   3-56  existence or nature of an agency's automated purchasing tools, and
   3-57  the types of goods and services typically purchased by an agency.
   3-58        Sec. 3.064.  BUYING UNDER CONTRACT ESTABLISHED BY AGENCY
   3-59  OTHER THAN COMMISSION.  (a)  The commission shall adopt rules
   3-60  specifying the circumstances under which it is advantageous for the
   3-61  state to allow an agency to purchase goods or services under a
   3-62  contract made by another agency other than the commission.
   3-63        (b)  A state agency that is a party to a contract with a
   3-64  vendor who is able to supply goods or services to other agencies
   3-65  under the contract shall, if commission rules allow other agencies
   3-66  to make purchases under the contract:
   3-67              (1)  inform the commission of the terms of the contract
   3-68  and the capabilities of the vendor; and
   3-69              (2)  post notice of the existence and terms of the
   3-70  contract on the procurement marketplace.
    4-1        SECTION 7.  Section 3.08, State Purchasing and General
    4-2  Services Act (Article 601b, Vernon's Texas Civil Statutes), is
    4-3  amended to read as follows:
    4-4        Sec. 3.08.  PURCHASES LESS THAN A SPECIFIED MONETARY AMOUNT.
    4-5  (a)  State agencies are delegated the authority to purchase
    4-6  supplies, materials, and equipment if the purchase does not exceed
    4-7  $25,000 <$5,000, although an agency may continue to use the
    4-8  commission's services for those purchases>.  The commission by rule
    4-9  shall prescribe procedures for these purchases.
   4-10        (b)  The commission<, and> by rule may delegate to state
   4-11  agencies the authority to purchase supplies, materials, or
   4-12  equipment if the purchase exceeds $25,000 <$5,000>.  In delegating
   4-13  purchasing authority under this subsection or Section 3.06(b) of
   4-14  this article, the commission shall consider factors relevant to a
   4-15  state agency's ability to perform purchasing functions, including:
   4-16              (1)  the capabilities of the agency's purchasing staff;
   4-17              (2)  the certification levels held by the agency's
   4-18  purchasing personnel;
   4-19              (3)  the existence of recent satisfactory audits of the
   4-20  agency's purchasing practices; and
   4-21              (4)  the agency's compliance with the state's
   4-22  purchasing programs for historically underutilized businesses and
   4-23  the agency's good faith efforts to meet the state's purchasing
   4-24  goals for historically underutilized businesses.
   4-25        (c)  The commission shall monitor the purchasing practices of
   4-26  state agencies that are making delegated purchases under Subsection
   4-27  (b) of this section or Section 3.06(b) of this article.  The
   4-28  commission may revoke for cause all or part of the purchasing
   4-29  authority that the commission delegated to a state agency.  The
   4-30  commission in collaboration with the advisory committee on
   4-31  procurement shall adopt rules to administer this subsection.
   4-32        (d) <(b)>  The commission by rule may delegate to the
   4-33  comptroller the commission's authority under Section 3.15 to audit
   4-34  purchases and purchase data when the purchases do not exceed $500
   4-35  or a greater amount prescribed by the commission.
   4-36        (e) <(c)>  Competitive bidding, whether formal or informal,
   4-37  is not required for a purchase by a state agency if the purchase
   4-38  does not exceed $2,500 <$1,000>, or a greater amount prescribed by
   4-39  rule of the commission.
   4-40        (f) <(d)>  Supplies or materials purchased under this section
   4-41  may not include:
   4-42              (1)  items for which contracts have been awarded under
   4-43  the contract purchase procedure, unless the quantity purchased is
   4-44  less than the minimum quantity specified in the contract;
   4-45              (2)  any item required by statute to be purchased from
   4-46  a particular source; or
   4-47              (3)  scheduled items that have been designated for
   4-48  purchase by the commission.
   4-49        (g) <(e)>  Large purchases may not be divided into small lot
   4-50  purchases in order to meet the specified dollar limits.  The
   4-51  commission may not require that unrelated purchases be combined
   4-52  into one purchase order in order to exceed the specified dollar
   4-53  limits.
   4-54        (h) <(f)>  Agencies making purchases under this section for
   4-55  which competitive bidding is required must attempt to obtain at
   4-56  least three competitive bids from sources which normally offer for
   4-57  sale the merchandise being purchased and must comply with Section
   4-58  3.101 of this article.
   4-59        SECTION 8.  Section 3.101, State Purchasing and General
   4-60  Services Act (Article 601b, Vernon's Texas Civil Statutes), is
   4-61  amended by adding Subsections (k) and (l) to read as follows:
   4-62        (k)  The commission shall require information about an
   4-63  applicant's past history as a vendor with the state in the
   4-64  commission's uniform registration form, including information about
   4-65  the persons who own or control the applicant and information about
   4-66  any vendor history the applicant or the persons who own or control
   4-67  the applicant may have from doing business with the state under
   4-68  other names.
   4-69        (l)  The commission shall include in the commission's uniform
   4-70  registration form a statement about the applicability of relevant
    5-1  criminal law, including Section 37.10, Penal Code, to entering
    5-2  information on the form and to presenting documentation in
    5-3  connection with the form.  The commission shall refer any suspected
    5-4  violations of relevant criminal law, including Section 37.10, Penal
    5-5  Code, related to entering information on the form or presenting
    5-6  documentation in connection with the form to the appropriate legal
    5-7  authorities for investigation or prosecution.
    5-8        SECTION 9.  Article 3, State Purchasing and General Services
    5-9  Act (Article 601b, Vernon's Texas Civil Statutes), is amended by
   5-10  adding Sections 3.103 and 3.104 to read as follows:
   5-11        Sec. 3.103.  BEST VALUE STANDARD FOR PURCHASE OF GOODS OR
   5-12  SERVICES.  (a)  Each state agency, including the commission, shall
   5-13  purchase goods and services that provide the best value for the
   5-14  state.
   5-15        (b)  In determining the best value for the state, the
   5-16  commission or other state agency making a purchase is not
   5-17  restricted to considering the purchase price alone, but subject to
   5-18  Section 3.104 of this Act may also consider any other factor
   5-19  relevant to evaluating the value to the state of a good or service,
   5-20  including:
   5-21              (1)  installation costs;
   5-22              (2)  life-cycle costs;
   5-23              (3)  the quality, availability, adaptability, and
   5-24  reliability of the good or service;
   5-25              (4)  the delivery terms;
   5-26              (5)  indicators of probable vendor performance under
   5-27  the contract such as past vendor performance, the vendor's
   5-28  financial resources, skill, and ability to perform, the vendor's
   5-29  experience, responsibility, and reputation, the vendor's previous
   5-30  and existing compliance with laws that relate to providing the good
   5-31  or service, and the vendor's ability to provide reliable
   5-32  maintenance and support;
   5-33              (6)  the number and scope of conditions attached to a
   5-34  vendor's bid or proposal;
   5-35              (7)  the cost of any employee training associated with
   5-36  a purchase;
   5-37              (8)  the effect of a purchase on agency productivity;
   5-38  and
   5-39              (9)  factors relevant to determining the best value for
   5-40  the state in the context of a particular purchase.
   5-41        Sec. 3.104.  REQUIREMENT TO SPECIFY VALUE FACTORS IN REQUEST
   5-42  FOR BIDS OR PROPOSALS.  (a)  For a purchase made through
   5-43  competitive bidding, the commission or other state agency making
   5-44  the purchase must specify in the request for bids the factors other
   5-45  than price,  past vendor performance, or vendor reputation that the
   5-46  commission or agency will consider in determining which bid offers
   5-47  the best value for the state.
   5-48        (b)  For a purchase made through competitive sealed
   5-49  proposals, the commission or other state agency making the
   5-50  purchase:
   5-51              (1)  must specify in the request for proposals the
   5-52  known  factors other than price, past vendor performance, or vendor
   5-53  reputation that the commission or agency will consider in
   5-54  determining which proposal offers the best value for the state; and
   5-55              (2)  may concurrently inform each vendor that made a
   5-56  proposal on the contract of any additional factors the commission
   5-57  or agency will consider in determining which proposal offers the
   5-58  best value for the state if the commission or other agency
   5-59  determines after opening the proposals that additional factors not
   5-60  covered under Subdivision (1) of this subsection are relevant in
   5-61  determining which proposal offers the best value for the state.
   5-62        SECTION 10.  Subsections (b), (d), (e), (f), (g), and (h),
   5-63  Section 3.11, State Purchasing and General Services Act (Article
   5-64  601b, Vernon's Texas Civil Statutes), are amended to read as
   5-65  follows:
   5-66        (b)  Centralized Master Bidders List.  The commission shall
   5-67  maintain a centralized master bidders list and shall add or delete
   5-68  names from the list in accordance with Section 3.101 of this Act
   5-69  <by the application and utilization of applicable standards set
   5-70  forth in Subsection (e) of this section>.  Bid invitations under
    6-1  this section shall be sent only to those who have expressed a
    6-2  desire to bid on the particular types of items which are the
    6-3  subject of the bid invitation.  Use of the centralized master
    6-4  bidders list shall not be confined to contract purchases but it may
    6-5  be used by the commission in making any purchase.
    6-6        (d)  Bid Opening Procedure.  Bids shall be submitted to the
    6-7  commission, sealed, and identified as bids on the envelope, except
    6-8  that when the commission considers that the electronic information
    6-9  capabilities of the state and of the vendor community are
   6-10  sufficient, the commission may also allow facsimile or on-line
   6-11  transmission of bids.  Bids shall be opened at the time and place
   6-12  stated in the public notices and the invitation to bid.  The state
   6-13  auditor or a member of his staff may be present at any bid opening.
   6-14  A tabulation of all bids received shall be available for public
   6-15  inspection under regulations to be established by the commission.
   6-16        (e)  Award of Contract.  The commission shall award contracts
   6-17  to the bidder offering the best value for the state while
   6-18  <submitting the lowest and best bid> conforming to the
   6-19  specifications required.  Complying with the specified time limit
   6-20  for submission of written data, samples, or models on or before bid
   6-21  opening time is essential to the materiality of a bid, provided,
   6-22  however, that the commission shall have the authority to waive this
   6-23  provision if the failure to comply is beyond control of the bidder.
   6-24  In determining which <who is the lowest and best> bidder offers the
   6-25  best value for the state, the commission may take into account the
   6-26  safety record of the bidder, or the firm, corporation, partnership,
   6-27  or institution represented by the bidder, or anyone acting for such
   6-28  firm, corporation, partnership, or institution, provided, however,
   6-29  that the commission has adopted a written definition and criteria
   6-30  for accurately determining the safety record of a bidder and has
   6-31  given notice to prospective bidders, in the bid specifications,
   6-32  that the safety record of a bidder may be considered in determining
   6-33  the <lowest and best> bidder offering the best value for the state
   6-34  and, provided further, that such determinations are not arbitrary
   6-35  and capricious.  The <In determining who is the lowest and best
   6-36  bidder, in addition to price, the> commission shall determine which
   6-37  bidder offers the best value for the state in accordance with
   6-38  Sections 3.103 and 3.104 of this Act  <consider:>
   6-39              <(1)  the quality, availability, and adaptability of
   6-40  the supplies, materials, equipment, or contractual services, to the
   6-41  particular use required;>
   6-42              <(2)  the number and scope of conditions attached to
   6-43  the bid;>
   6-44              <(3)  the ability, capacity, and skill of the bidder to
   6-45  perform the contract or provide the service required;>
   6-46              <(4)  whether the bidder can perform the contract or
   6-47  provide the service promptly, or within the time required, without
   6-48  delay or interference;>
   6-49              <(5)  the character, responsibility, integrity,
   6-50  reputation, and experience of the bidder;>
   6-51              <(6)  the quality of performance of previous contracts
   6-52  or services;>
   6-53              <(7)  the previous and existing compliance by the
   6-54  bidder with laws relating to the contract or service;>
   6-55              <(8)  any previous or existing noncompliance by the
   6-56  bidder with specification requirements relating to time of
   6-57  submission of specified data such as samples, models, drawings,
   6-58  certificates, or other information;>
   6-59              <(9)  the sufficiency of the financial resources and
   6-60  ability of the bidder to perform the contract or provide the
   6-61  service; and>
   6-62              <(10)  the ability of the bidder to provide future
   6-63  maintenance, repair parts, and service for the use of the subject
   6-64  of the contract>.
   6-65        (f)  Rejection of Bids.  If a bid is submitted in which there
   6-66  is a material failure to comply with the specification
   6-67  requirements, such bid shall be rejected and the contract awarded
   6-68  to the bidder offering the best value for the state and <submitting
   6-69  the lowest and best bid> conforming to the specifications,
   6-70  provided, however, the commission shall in any event have the
    7-1  authority to reject all bids or parts of bids when the interest of
    7-2  the state will be served thereby.
    7-3        (g)  Bid Record.  When an award is made, a statement of the
    7-4  basis for placing the order with the successful bidder and the
    7-5  factors considered in determining which bidder offered the best
    7-6  value for the state <the lowest and best bid> shall be prepared by
    7-7  the purchasing division and filed with other papers relating to the
    7-8  transaction.
    7-9        (h)  Tie Bids.  In case of tie bids, the value to the state
   7-10  <quality and service> being equal, the contract shall be awarded
   7-11  under rules and regulations to be adopted by the commission.
   7-12        SECTION 11.  Subsections (b), (c), (e), and (f), Section
   7-13  3.12, State Purchasing and General Services Act (Article 601b,
   7-14  Vernon's Texas Civil Statutes), are amended to read as follows:
   7-15        (b)  Minimum Number of Bids.  All open market purchases
   7-16  shall, whenever possible, be based on at least three competitive
   7-17  bids, and shall be awarded to the <lowest and best> bidder offering
   7-18  the best value for the state in accordance with the standards set
   7-19  forth under this article.
   7-20        (c)  Notice Inviting Bids.  The commission shall solicit bids
   7-21  by:
   7-22              (1)  direct mail request to prospective vendors; <or>
   7-23              (2)  telephone or telegraph;
   7-24              (3)  facsimile transmission;
   7-25              (4)  on-line electronic transmission; or
   7-26              (5)  posting on an electronic bulletin board.
   7-27        (e)  Agency Review.  If a state agency requests that it be
   7-28  allowed to review the bids on a purchase request, the commission
   7-29  shall forward copies of the bids received or make the same
   7-30  available to the requesting agency along with the commission's
   7-31  recommended award.  If, after review of the bids and evaluation of
   7-32  the quality of products offered in the bids, the state agency
   7-33  determines that the bid selected by the commission does <is> not in
   7-34  its opinion offer the best value for the state <the lowest and best
   7-35  bid>, it may file with the commission a written recommendation,
   7-36  complete with justification, that the award be made to the bidder
   7-37  determined to offer the best value for the state <be the lowest and
   7-38  best bid>.  The commission shall give consideration to, but is not
   7-39  bound by, the agency recommendation in making the award.
   7-40        (f)  Statement of Award.  A statement of the basis for
   7-41  placing the order with the successful bidder and the factors
   7-42  considered in determining the <lowest and best> bid offering the
   7-43  best value for the state shall be prepared by the purchasing
   7-44  division and filed with other papers relating to the transaction.
   7-45        SECTION 12.  Section 3.16, State Purchasing and General
   7-46  Services Act (Article 601b, Vernon's Texas Civil Statutes), is
   7-47  amended by amending Subsection (a) and by adding Subsections (c)
   7-48  and (d) to read as follows:
   7-49        (a)  After the comptroller and the commission have approved
   7-50  financial data and purchase data, when such advance approval is
   7-51  required by the rules of the commission, the comptroller shall draw
   7-52  a warrant upon the state treasury for the amount due on the invoice
   7-53  or for so much thereof as has been allowed.  The comptroller may
   7-54  distribute the warrant directly to the vendor.  The comptroller,
   7-55  when appropriate, may combine into a single warrant payments that
   7-56  the state owes to a vendor under more than one invoice, including
   7-57  payments to the vendor made on behalf of more than one state
   7-58  agency.
   7-59        (c)  The comptroller may allow a state agency to schedule
   7-60  payments that the comptroller will make to a vendor.  The
   7-61  comptroller shall prescribe the circumstances under which advance
   7-62  scheduling of payments is appropriate.
   7-63        (d)  The comptroller may require vendors to provide payment
   7-64  addresses, vendor identification numbers, social security numbers
   7-65  to the extent allowed by federal law, federal employer
   7-66  identification numbers, and other account information directly to
   7-67  the comptroller.
   7-68        SECTION 13.  Subsection (a), Section 3.17, State Purchasing
   7-69  and General Services Act (Article 601b, Vernon's Texas Civil
   7-70  Statutes), is amended to read as follows:
    8-1        (a)  The commission shall have the authority to establish and
    8-2  maintain a specifications and standards program to coordinate the
    8-3  establishment and maintenance of uniform standards and
    8-4  specifications for materials, supplies, and equipment purchased by
    8-5  the commission.  The commission shall enlist the cooperation of
    8-6  other state agencies, the advisory committee on procurement, and
    8-7  the vendor advisory committee in the establishment, maintenance,
    8-8  and revision of uniform standards and specifications and shall
    8-9  encourage and foster the use of standard specifications in order
   8-10  that the most efficient purchase of materials, supplies, and
   8-11  equipment may be continuously accomplished.
   8-12        SECTION 14.  Section 3.20, State Purchasing and General
   8-13  Services Act (Article 601b, Vernon's Texas Civil Statutes), is
   8-14  amended to read as follows:
   8-15        Sec. 3.20.  PREFERENCE FOR PRODUCTS OF RETARDED OR
   8-16  HANDICAPPED PERSONS.  The products of workshops, organizations, or
   8-17  corporations whose primary purpose is training and employing
   8-18  mentally retarded or physically handicapped persons shall be given
   8-19  preference if they meet state specifications as to quantity,
   8-20  quality, delivery, and price.  The commission shall test the
   8-21  products in accordance with Section 3.17 of this Act to the extent
   8-22  necessary to ensure quality.  The commission shall consider product
   8-23  quality and delivery performance in agreeing to the price for
   8-24  products purchased under this section.
   8-25        SECTION 15.  Section 3.22, State Purchasing and General
   8-26  Services Act (Article 601b, Vernon's Texas Civil Statutes), is
   8-27  amended to read as follows:
   8-28        Sec. 3.22.  EXEMPTION OF GOODS OR SERVICES OF BLIND PERSONS.
   8-29  The provisions of this article with respect to competitive bids are
   8-30  not applicable to state purchases of blind-made goods or services
   8-31  offered for sale to state agencies as a result of efforts made by
   8-32  the Texas Committee on Purchases of Blind-Made Goods and Services
   8-33  acting in accordance with legislation applicable to the committee
   8-34  if the goods or services meet state specifications as to delivery,
   8-35  quantity, and quality and the cost is not in excess of the fair
   8-36  market price of like items.  The commission shall test the goods or
   8-37  services in accordance with Section 3.17 of this Act to the extent
   8-38  necessary to ensure quality.  The commission shall consider product
   8-39  or service quality and delivery performance in agreeing to the
   8-40  price for goods or services purchased under this section.
   8-41        SECTION 16.  Section 3.23, State Purchasing and General
   8-42  Services Act (Article 601b, Vernon's Texas Civil Statutes), is
   8-43  amended to read as follows:
   8-44        Sec. 3.23.  CONTRACTS WITH DEPARTMENT OF CRIMINAL JUSTICE.
   8-45  The commission is authorized to make contracts with the Texas
   8-46  Department of Criminal Justice for the purchase of supplies,
   8-47  equipment, services, and materials for use by other state agencies.
   8-48  The commission shall test the supplies, equipment, services, and
   8-49  materials in accordance with Section 3.17 of this Act to the extent
   8-50  necessary to ensure quality.  The commission shall consider product
   8-51  or service quality and delivery performance in agreeing to the
   8-52  price for supplies, equipment, services, and materials purchased
   8-53  under this section.
   8-54        SECTION 17.  Article 3, State Purchasing and General Services
   8-55  Act (Article 601b, Vernon's Texas Civil Statutes), is amended by
   8-56  adding Sections 3.34 and 3.35 to read as follows:
   8-57        Sec. 3.34.  ADVISORY COMMITTEE ON PROCUREMENT.  (a)  The
   8-58  commission shall establish an advisory committee on procurement.
   8-59  The purpose of the committee is to represent before the commission
   8-60  the state agency purchasing community and the political
   8-61  subdivisions that use the commission's purchasing services.
   8-62        (b)  The committee is composed of officers or employees of
   8-63  state agencies, including institutions of higher education, and
   8-64  political subdivisions who are invited by the commission to serve
   8-65  on the committee.  The commission shall invite officers and
   8-66  employees who are experienced in public purchasing or in public
   8-67  finance or who possess other appropriate expertise to serve on the
   8-68  committee.  Service on the committee is an additional duty of the
   8-69  member's public office or employment.  A member's employer shall
   8-70  pay the member's travel expenses incurred because of the member's
    9-1  service on the committee.  Article 6252-33, Revised Statutes, does
    9-2  not apply to the size or composition of the committee.  The
    9-3  commission shall set staggered terms for the members of the
    9-4  committee.
    9-5        (c)  The committee may establish its own rules of operation.
    9-6        (d)  The committee shall recommend to the commission
    9-7  improvements in commission or state agency purchasing practices.
    9-8  The committee shall review and comment on findings and
    9-9  recommendations related to purchasing that are made by state agency
   9-10  internal auditors or by the state auditor.
   9-11        Sec. 3.35.  VENDOR ADVISORY COMMITTEE.  (a)  The commission
   9-12  shall establish a vendor advisory committee.  The purpose of the
   9-13  committee is to represent before the commission the vendor
   9-14  community, to provide information to vendors, and to obtain vendor
   9-15  input on state procurement practices.
   9-16        (b)  The committee is composed of vendors who have done
   9-17  business with the state who are invited by the commission to serve
   9-18  on the committee.  The commission shall invite a cross-section of
   9-19  the vendor community to serve on the committee, inviting both large
   9-20  and small businesses, both historically underutilized businesses
   9-21  and businesses that are not historically underutilized businesses,
   9-22  and vendors who provide a variety of different goods and services
   9-23  to the state.  Article 6252-33, Revised Statutes, does not apply to
   9-24  the size or composition of the committee.  The commission shall set
   9-25  staggered terms for the members of the committee.
   9-26        (c)  The committee may establish its own rules of operation,
   9-27  but shall post notice of and hold its meetings in accordance with
   9-28  the open meetings law, Chapter 551, Government Code.
   9-29        SECTION 18.  Article 11, State Purchasing and General
   9-30  Services Act (Article 601b, Vernon's Texas Civil Statutes), is
   9-31  amended by adding Sections 11.08, 11.09, 11.10, and 11.11 to read
   9-32  as follows:
   9-33        Sec. 11.08.  ELECTRONIC BULLETIN BOARD POSTING OF NOTICE FOR
   9-34  PROCUREMENTS EXCEEDING $25,000.  (a)  This section applies to each
   9-35  state agency seeking bids, proposals, or professional service
   9-36  contracts that will exceed $25,000 in value:
   9-37              (1)  without regard to the source of funds the agency
   9-38  will use for the procurement; and
   9-39              (2)  including a procurement that:
   9-40                    (A)  is a procurement by a state agency but is
   9-41  otherwise exempt from the commission's purchasing authority or the
   9-42  application of this Act;
   9-43                    (B)  is made under delegated purchasing
   9-44  authority;
   9-45                    (C)  is related to a construction project; or
   9-46                    (D)  is a procurement of  professional or
   9-47  consulting services.
   9-48        (b)  The commission shall send to the comptroller for posting
   9-49  on the comptroller's Window on State Government electronic bulletin
   9-50  board information as prescribed by this section about commission or
   9-51  other state agency procurements that will exceed $25,000 in value.
   9-52  The commission may also send to the comptroller for posting on the
   9-53  electronic bulletin board other information relating to the
   9-54  business activity of the state that the commission considers to be
   9-55  of interest to the public.  The commission shall send the
   9-56  information in a format agreed to by the comptroller.
   9-57        (c)  The commission shall include in the information sent to
   9-58  the comptroller, to the extent it is feasible and cost-effective,
   9-59  the following information for each procurement that the commission
   9-60  or another state agency will make that is estimated to exceed
   9-61  $25,000 in value:
   9-62              (1)  a description of the goods or services to be
   9-63  procured;
   9-64              (2)  the estimated quantity of goods or services to be
   9-65  procured;
   9-66              (3)  the bid or proposal opening date; and
   9-67              (4)  the name, business mailing address, and business
   9-68  telephone number of the commission employee or other state agency
   9-69  employee a person can contact to obtain all necessary information
   9-70  related to making a bid or proposal or other applicable expression
   10-1  of interest for the procurement contract.
   10-2        (d)  Each state agency that will award a procurement contract
   10-3  estimated to exceed $25,000 in value shall send to the commission
   10-4  the information the commission requires for posting on the
   10-5  comptroller's electronic bulletin board under this section.
   10-6        (e)  The commission may adopt rules, prescribe forms, and
   10-7  require information to administer this section.  The commission's
   10-8  rules, forms, and requirements must be consistent with the
   10-9  comptroller's requirements relating to the comptroller's electronic
  10-10  bulletin board.
  10-11        Sec. 11.09.  ELECTRONIC PROCUREMENT DATABASE.  (a) The
  10-12  commission shall establish and manage an electronic procurement
  10-13  database.  The commission may enter into contracts with private or
  10-14  public entities to establish or maintain all or part of the
  10-15  database.  The commission shall base its decision to enter into a
  10-16  contract under this subsection on an analysis that uses the State
  10-17  Council on Competitive Government's cost methodology.
  10-18        (b)  The commission may maintain in the database information
  10-19  related to state procurement that the commission considers to be
  10-20  useful.  The database must contain:
  10-21              (1)  information about vendors, including information
  10-22  from the centralized master bidders list and vendor performance
  10-23  information;
  10-24              (2)  information about products, including product
  10-25  testing results; and
  10-26              (3)  information that relates to commission and other
  10-27  state agency purchasing contracts and that can be entered into the
  10-28  database electronically without the need for duplicate data entry.
  10-29        (c)  The commission may require information from a state
  10-30  agency for inclusion in the database.
  10-31        (d)  The commission shall make the database available to
  10-32  state agencies and political subdivisions through the procurement
  10-33  marketplace.
  10-34        Sec. 11.10.  ELECTRONIC PROCUREMENT MARKETPLACE.  (a) The
  10-35  commission shall establish and manage an electronic procurement
  10-36  marketplace through which the commission and state agencies may:
  10-37              (1)  communicate information relevant to the state's
  10-38  procurement of goods and services; and
  10-39              (2)  conduct elements of purchasing transactions within
  10-40  state government electronically to the extent that it is feasible
  10-41  and cost-effective to do so.
  10-42        (b)  The commission shall design the procurement marketplace
  10-43  as an interactive gateway between all state databases that relate
  10-44  to procurement, including databases that contain information about
  10-45  the availability of surplus property.  The commission shall define
  10-46  standards, including keyword and product code standards, for the
  10-47  procurement marketplace.
  10-48        (c)  The commission may adopt rules relating to the design
  10-49  and use of the procurement marketplace, including rules that
  10-50  require state agencies to provide information for or receive
  10-51  information from the procurement marketplace.
  10-52        (d)  The commission shall make state procurement information
  10-53  available to political subdivisions through the procurement
  10-54  marketplace on a fee-for-service basis.  The commission shall set
  10-55  the fees in an amount that recovers the state's costs in providing
  10-56  the access to a political subdivision.
  10-57        Sec. 11.11.  ELECTRONIC COMMERCE NETWORK USING ELECTRONIC
  10-58  DATA INTERCHANGE.  (a)  The commission shall establish and manage
  10-59  an  electronic commerce network under which the state's purchasing
  10-60  transactions with vendors can be accomplished electronically by
  10-61  means of facsimile transmissions and on-line transmission of
  10-62  necessary information.  The commission shall base the network on
  10-63  the standard data protocol developed by the American National
  10-64  Standards Institute known as electronic data interchange.  The
  10-65  commission is the electronic data interchange coordinator for state
  10-66  government.
  10-67        (b)  The commission may enter into contracts with one or more
  10-68  public or private entities to establish or support various elements
  10-69  of the network.  The commission may provide for a gateway between
  10-70  the procurement marketplace and the electronic commerce network so
   11-1  that the elements of a procurement transaction that are within
   11-2  state government and the elements of a procurement transaction that
   11-3  involve communication with a vendor may all be accomplished
   11-4  electronically.
   11-5        (c)  Each state agency that is capable of participating in
   11-6  the electronic commerce network must participate in the network and
   11-7  participate in contracts entered into by the commission for the
   11-8  establishment or support of the network.  The commission shall
   11-9  charge an agency a fee for network services provided to the agency
  11-10  by the commission and require an agency to pay a fee to a
  11-11  contractor for network services provided to the agency by the
  11-12  contractor, so that the cost of providing network services to an
  11-13  agency is paid by the agency.
  11-14        (d)  The commission may allow political subdivisions and
  11-15  other public entities to participate in the electronic commerce
  11-16  network.  The commission shall provide that a participating
  11-17  political subdivision is charged fees for network services provided
  11-18  to the political subdivision in the same manner that participating
  11-19  state agencies are charged fees under Subsection (c) of this
  11-20  section.
  11-21        (e)  The commission may:
  11-22              (1)  adopt rules to administer this section;
  11-23              (2)  promote and enhance the use of electronic
  11-24  commerce; and
  11-25              (3)  require participating state agencies, political
  11-26  subdivisions, and other public entities to designate a network
  11-27  coordinator.
  11-28        SECTION 19.  Article 15, State Purchasing and General
  11-29  Services Act (Article 601b, Vernon's Texas Civil Statutes), is
  11-30  amended by adding Section 15.11 to read as follows:
  11-31        Sec. 15.11.  CONSOLIDATING OR CONTRACTING FOR MATERIALS
  11-32  MANAGEMENT FUNCTIONS.  (a)  The council shall study the materials
  11-33  management functions of state agencies and examine opportunities to
  11-34  consolidate materials management functions.  When the council
  11-35  determines a course of action that will more effectively or
  11-36  efficiently accomplish an agency's materials management functions,
  11-37  the council may:
  11-38              (1)  order two or more state agencies to consolidate
  11-39  between them warehousing, inventory control, or other materials
  11-40  management functions;
  11-41              (2)  order a state agency to obtain under a contract
  11-42  with another state agency or a private commercial source the
  11-43  agency's warehousing, inventory control, or other materials
  11-44  management functions; or
  11-45              (3)  order one or more state agencies to take a
  11-46  combination of actions described under Subdivisions (1) and (2) of
  11-47  this subsection.
  11-48        (b)  State agencies shall consolidate or contract for
  11-49  materials management functions, or both consolidate and contract
  11-50  for materials management functions, in the manner directed by the
  11-51  council.
  11-52        SECTION 20.  Chapter 2102, Government Code, is amended by
  11-53  adding Section 2102.013 to read as follows:
  11-54        Sec. 2102.013.  AUDITING OF AGENCY PURCHASING PRACTICES.  The
  11-55  internal auditor shall include the audit of the purchasing
  11-56  practices of a state agency in audits required under this chapter.
  11-57        SECTION 21.  (a) Section 2251.026, Government Code, is
  11-58  amended to read as follows:
  11-59        Sec. 2251.026.  PAYMENT OF INTEREST BY STATE AGENCY.  (a)  If
  11-60  the warrant for a payment the originating state agency owes is not
  11-61  mailed or electronically transmitted before the payment is overdue,
  11-62  the agency is liable for an interest payment that accrues under
  11-63  this chapter.
  11-64        (b)  The comptroller shall compute interest imposed on the
  11-65  state agency under this chapter.
  11-66        (c)  The comptroller shall pay the interest at the time
  11-67  payment is made on the principal.
  11-68        (d)  The comptroller shall submit the interest payment with
  11-69  the net amount due for goods and services.
  11-70        (e)  The comptroller and the state agency may not require a
   12-1  vendor to petition, bill, or wait an additional day to receive the
   12-2  interest due.
   12-3        (f)  The comptroller may require necessary and timely
   12-4  information and adopt rules to administer this section.
   12-5        (g)  Any system changes that are necessary for the
   12-6  comptroller's implementation of this section must be compatible
   12-7  with the uniform statewide accounting system.
   12-8        (b)  This section takes effect September 1, 1997.  The change
   12-9  in law made by this section applies only to interest on a payment
  12-10  by a state agency that becomes overdue under Chapter 2251,
  12-11  Government Code, on or after that date.  Interest on a payment by a
  12-12  state agency that becomes overdue under Chapter 2251, Government
  12-13  Code, before that date is governed by Section 2251.026, Government
  12-14  Code, as it exists on the date the payment becomes overdue, and the
  12-15  prior law is continued in effect for this purpose.
  12-16        SECTION 22.  Subsection (a), Section 271.083, Local
  12-17  Government Code, is amended to read as follows:
  12-18        (a)  A local government may participate in the purchasing
  12-19  program of the commission by filing with the commission a
  12-20  resolution adopted by the governing body of the local government
  12-21  requesting that the local government be allowed to participate on a
  12-22  voluntary basis, and to the extent the commission deems feasible,
  12-23  and stating that the local government will:
  12-24              (1)  designate an official to act for the local
  12-25  government in all matters relating to the program, including the
  12-26  purchase of items from the vendor under any contract, and that the
  12-27  governing body will direct the decisions of the representative;
  12-28              (2)  be responsible for:
  12-29                    (A)  submitting requisitions to the commission
  12-30  under any contract; or
  12-31                    (B)  electronically sending purchase orders
  12-32  directly to vendors and electronically sending to the commission
  12-33  reports on actual purchases made under this paragraph that provide
  12-34  the information and are sent at the times required by the
  12-35  commission;
  12-36              (3)  be responsible <and> for making payment directly
  12-37  to the vendor; and
  12-38              (4) <(3)>  be responsible for the vendor's compliance
  12-39  with all conditions of delivery and quality of the purchased item.
  12-40        SECTION 23.  (a)  The state auditor and the advisory
  12-41  committee on procurement established by this Act shall study how
  12-42  the classification levels of state agency purchasing personnel
  12-43  should be revised to reflect the increased levels of responsibility
  12-44  and accountability given to state agency purchasing personnel under
  12-45  the changes in law made by this Act.  The state auditor and the
  12-46  committee should consider how best to provide purchasing personnel
  12-47  with a pay scale and a career path, including goals, incentives,
  12-48  and initiatives, commensurate with a purchaser's knowledge,
  12-49  authority, and responsibility.
  12-50        (b)  The state auditor and the advisory committee on
  12-51  procurement shall present their written recommendations and the
  12-52  results of their study to the legislature not later than January 1,
  12-53  1997.
  12-54        SECTION 24.  The General Services Commission may conduct
  12-55  pilot studies of regional contracts and no-stock contracts.
  12-56        SECTION 25.  The Legislative Budget Board and the division of
  12-57  the governor's office that works with budget and planning issues
  12-58  shall study and consider:
  12-59              (1)  ways to obtain information about planned state
  12-60  procurements as part of the reporting and information gathering
  12-61  functions of the state's appropriations process; and
  12-62              (2)  ways to use that information to increase the
  12-63  state's buying power.
  12-64        SECTION 26.  The General Services Commission shall gradually
  12-65  phase in, in the most cost-effective manner and in accordance with
  12-66  available appropriations, the changes in law made by this Act that
  12-67  require the establishment of electronic or automated marketplaces,
  12-68  networks, or databases.
  12-69        SECTION 27.  Section 3.0221 and Subsection (d), Section 3.09,
  12-70  State Purchasing and General Services Act (Article 601b, Vernon's
   13-1  Texas Civil Statutes), are repealed.
   13-2        SECTION 28.  (a) Section 2251.041, Government Code, is
   13-3  repealed.
   13-4        (b)  This section takes effect September 1, 1997.  The change
   13-5  in law made by this section applies only to interest on a payment
   13-6  by a state agency that becomes overdue under Chapter 2251,
   13-7  Government Code, on or after that date.  Interest on a payment by a
   13-8  state agency that becomes overdue under Chapter 2251, Government
   13-9  Code, before that date is governed by Section 2251.041, Government
  13-10  Code, as it exists on the date the payment becomes overdue, and the
  13-11  prior law is continued in effect for this purpose.
  13-12        SECTION 29.  Except as otherwise provided by this Act, this
  13-13  Act takes effect September 1, 1995.
  13-14        SECTION 30.  The importance of this legislation and the
  13-15  crowded condition of the calendars in both houses create an
  13-16  emergency and an imperative public necessity that the
  13-17  constitutional rule requiring bills to be read on three several
  13-18  days in each house be suspended, and this rule is hereby suspended.
  13-19                               * * * * *