LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 74th Regular Session April 24, 1995 TO: Honorable Ken Armbrister, Chair IN RE: Senate BillNo. 1321 Committee on State Affairs By: Armbrister Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on Senate Bill No. 1321 (Relating to the purchase of goods and services by the state and to purchasing services provided by the state to local governments.) this office has determined the following: The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill. The bill would make numerous revisions to Article 601b, Vernon's Texas Civil Statutes, specifically to the General Services Commission's (GSC) purchasing system. The General Services Commission could charge fees to recover costs for providing purchasing assistance to state agencies which have been delegated purchasing authority by the GSC or by statute. GSC estimates that recovered costs would be negligible. GSC would be required to establish and manage a central electronic procurement database which would contain information about vendors, products, and purchasing contracts. The database would be available to all state agencies and political subdivisions through the procurement marketplace system. GSC would be required to establish and administer a training and certification program for state agency purchasing personnel, including a continuing education program. The Commission would be required to set and collect fees to recover costs for the program. GSC would be required to establish purchasing partnerships between agencies and identify agencies where partnerships could be developed. The partnership would allow agencies with certified purchasers to make certain purchases for other state agencies. The bill would increase the threshold at which GSC may delegate purchasing authority to state agencies from $5,000 to $25,000 and increase the threshold for non-competitive bid requirements from $1,000 to $2,500. The bill would require the GSC to refer any suspected criminal violations by vendors in reporting required information to the appropriate legal authorities for investigation and prosecution. The bill would establish standards for determining the "best value" in making purchases for the state. The bill would allow the GSC to invite and accept bids from vendors electronically or by fax once information capabilities of the state and vendor community are sufficient. The bill would establish the Advisory Committee on Procurement which would recommend improvements to purchasing procedures, and review and comment on finding and recommendations by state auditors on purchasing matters. The bill would establish the Vendor Advisory Committee to represent the vendor community, provide information to vendors, and obtain vendor input on state procurement practices. The bill would require GSC to establish an electronic bulletin board posting of procurement notices for all purchasing exceeding $25,000. The bill would require GSC to establish an electronic procurement marketplace which would serve as a central source of procurement information for state agencies and political subdivisions. Fees could be charged to political subdivisions to recover the cost the service. The bill would require GSC to establish an electronic commerce network to allow state agencies to make electronic purchases with vendors and to electronically forward purchase orders to GSC. In addition, the bill would require the Council on Competitive Government to study the materials management functions of state agencies and determine operational efficiencies. The bill would require the state auditor and the advisory committee on procurement to study and determine appropriate salaries and career paths for certified state purchasers. The bill would require the Legislative Budget Board and the Governor's Office of Budget and Planning to study ways to gather planned state procurement information as part of the state's appropriation process and ways to increase the state's buying power. The bill would require the State Auditor to periodically conduct compliance audits of purchasing practices of state agencies and institutions of higher education, including compliance with state laws regarding HUBs. The state auditor would be required to consult with the GSC and comptroller in planning the audits. The bill would require internal auditors of state agencies to frequently audit state agency purchasing practices and report the findings to the agency administrator. The administrator would be required to report the results of the audit and any investigations and an administrator's response to the exceptions or issues raised to the state auditor, GSC and Comptroller. The bill would require the Comptroller to automatically submit duly owed interest payments to vendors with amounts due for goods and services. This section would take effect on September 1, 1997. The bill would repeal Section 2251.041, Government Code effective September 1, 1997, which requires a vendor to petition the state for payment of duly owed interest. The Act would take effect on September 1, 1995, unless provided otherwise. Although provisions of this bill do have potential fiscal implications for the State Auditor, no estimates are available at this time. The probable fiscal implication of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: