AN ACT

 1-1     relating to procurement practices by health and human services

 1-2     agencies, by certain other agencies with programs related to health

 1-3     or human services, and by certain public and private local

 1-4     providers of health or human services.

 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-6           SECTION 1.  Subchapter C, Chapter 2155, Government Code, is

 1-7     amended by adding Section 2155.144 to read as follows:

 1-8           Sec. 2155.144.  PROCUREMENTS BY HEALTH AND HUMAN SERVICES

 1-9     AGENCIES.  (a)  This section applies only to the Health and Human

1-10     Services Commission and to each health and human services agency.

1-11           (b)  An agency to which this section applies is delegated the

1-12     authority to procure its goods and services, except as provided by

1-13     this section.

1-14           (c)  An agency to which this section applies shall acquire

1-15     goods or services by any procurement method approved by the Health

1-16     and Human Services Commission that provides the best value to the

1-17     agency.  The agency shall document that it considered all relevant

1-18     factors under Subsection (d) in making the acquisition.

1-19           (d)  Subject to Subsection (e), the agency may consider all

1-20     relevant factors in determining the best value, including:

1-21                 (1)  any installation costs;

1-22                 (2)  the delivery terms;

1-23                 (3)  the quality and reliability of the vendor's goods

 2-1     or services;

 2-2                 (4)  the extent to which the goods or services meet the

 2-3     agency's needs;

 2-4                 (5)  indicators of probable vendor performance under

 2-5     the contract such as past vendor performance, the vendor's

 2-6     financial resources and ability to perform, the vendor's experience

 2-7     and responsibility, and the vendor's ability to provide reliable

 2-8     maintenance agreements;

 2-9                 (6)  the impact on the ability of the agency to comply

2-10     with laws and rules relating to historically underutilized

2-11     businesses or relating to the procurement of goods and services

2-12     from persons with disabilities;

2-13                 (7)  the total long-term cost to the agency of

2-14     acquiring the vendor's goods or services;

2-15                 (8)  the cost of any employee training associated with

2-16     the acquisition;

2-17                 (9)  the effect of an acquisition on agency

2-18     productivity;

2-19                 (10)  the acquisition price; and

2-20                 (11)  any other factor relevant to determining the best

2-21     value for the agency in the context of a particular acquisition.

2-22           (e)  If an agency to which this section applies acquires

2-23     goods or services with a value that exceeds $100,000, the agency

2-24     shall notify the state auditor and shall consult with and receive

2-25     approval from the Health and Human Services Commission before

 3-1     considering factors other than price and meeting specifications.

 3-2           (f)  The state auditor may audit the agency's acquisitions of

 3-3     goods and services before or after a warrant is issued to pay for

 3-4     an acquisition.

 3-5           (g)  The agency may adopt rules and procedures for the

 3-6     acquisition of goods and services under this section.

 3-7           (h)  The Health and Human Services Commission shall adopt

 3-8     rules and procedures for the acquisition of goods and services

 3-9     under this section that apply to all health and human services

3-10     agencies, including rules adopted with the commission's assistance

3-11     that allow an agency to make purchases through a group purchasing

3-12     program except when a better value is available through another

3-13     procurement method.  The rules of the health and human services

3-14     agencies must be consistent with the rules of the Health and Human

3-15     Services Commission.

3-16           (i)  The Health and Human Services Commission shall

3-17     coordinate the procurement practices of all health and human

3-18     services agencies and encourage those agencies to use efficient

3-19     procurement practices such as the use of a group purchasing

3-20     program, combining maintenance contracts into one contract, and

3-21     obtaining prompt payment discounts.  The Health and Human Services

3-22     Commission may transfer the procurement functions of a health and

3-23     human services agency to another appropriate state agency if it

3-24     determines that transferring those functions would be advantageous

3-25     to the state.  Other state agencies and institutions with

 4-1     experience in acquiring goods and services using the procedures

 4-2     allowed under Subsections (c) and (d) shall on request assist the

 4-3     Health and Human Services Commission to perform its functions under

 4-4     this section.

 4-5           (j)  To the extent of any conflict, this section prevails

 4-6     over any other state law relating to the procurement of goods and

 4-7     services except a law relating to contracting with historically

 4-8     underutilized businesses or relating to the procurement of goods

 4-9     and services from persons with disabilities.

4-10           (k)  In this section, "health and human services agency" has

4-11     the meaning assigned by Section 531.001.

4-12           SECTION 2.  Subchapter B, Chapter 32, Human Resources Code,

4-13     is amended by adding Sections 32.043 and 32.044 to read as follows:

4-14           Sec. 32.043.  PROCUREMENT RULES FOR PUBLIC DISPROPORTIONATE

4-15     SHARE HOSPITALS.  (a)  A public hospital that is designated as a

4-16     disproportionate share hospital during a fiscal year may acquire

4-17     goods and services in accordance with this section during the

4-18     succeeding fiscal year.  A procurement of goods or services made in

4-19     accordance with this section is considered to satisfy any state law

4-20     requiring purchases by competitive bidding or competitive

4-21     proposals.

4-22           (b)  The public hospital shall acquire goods or services by

4-23     any procurement method approved by the Health and Human Services

4-24     Commission that provides the best value to the public hospital.

4-25     The public hospital shall document that it considered all relevant

 5-1     factors under Subsection (c) in making the acquisition.

 5-2           (c)  The public hospital may consider all relevant factors in

 5-3     determining the best value, including:

 5-4                 (1)  any installation costs;

 5-5                 (2)  the delivery terms;

 5-6                 (3)  the quality and reliability of the vendor's goods

 5-7     or services;

 5-8                 (4)  the extent to which the goods or services meet the

 5-9     public hospital's needs;

5-10                 (5)  indicators of probable vendor performance under

5-11     the contract such as past vendor performance, the vendor's

5-12     financial resources and ability to perform, the vendor's experience

5-13     and responsibility, and the vendor's ability to provide reliable

5-14     maintenance agreements;

5-15                 (6)  the impact on the ability of the public hospital

5-16     to comply with laws and rules relating to historically

5-17     underutilized businesses or relating to the procurement of goods

5-18     and services from persons with disabilities;

5-19                 (7)  the total long-term cost to the public hospital of

5-20     acquiring the vendor's goods or services;

5-21                 (8)  the cost of any employee training associated with

5-22     the acquisition;

5-23                 (9)  the effect of an acquisition on the public

5-24     hospital's productivity;

5-25                 (10)  the acquisition price; and

 6-1                 (11)  any other factor relevant to determining the best

 6-2     value for the public hospital in the context of a particular

 6-3     acquisition.

 6-4           (d)  The state auditor or the department may audit the public

 6-5     hospital's acquisitions of goods and services to the extent that

 6-6     state money or federal money appropriated by the state is used to

 6-7     acquire the goods and services.

 6-8           (e)  The public hospital may adopt rules and procedures for

 6-9     the acquisition of goods and services under this section.

6-10           Sec. 32.044.  GROUP PURCHASING FOR DISPROPORTIONATE SHARE

6-11     HOSPITALS.  (a)  A public or private hospital that is designated as

6-12     a disproportionate share hospital during a fiscal year may purchase

6-13     goods and services in accordance with this section during the

6-14     succeeding fiscal year.  A purchase of goods or services made in

6-15     accordance with this section is considered to satisfy any state law

6-16     requiring purchases by competitive bidding or competitive

6-17     proposals.

6-18           (b)  A state or local governmental entity may allow the

6-19     public or private hospital to purchase goods or services by

6-20     participating in one or more of the entity's contracts for the

6-21     purchase of goods or services.

6-22           (c)  The public or private hospital may purchase goods or

6-23     services in accordance with this section through a group purchasing

6-24     program that offers discount prices to hospitals or other providers

6-25     of health care services.

 7-1           (d)  The department with the assistance of the Health and

 7-2     Human Services Commission and the General Services Commission shall

 7-3     adopt rules under this section that allow the public or private

 7-4     hospital to make purchases through group purchasing programs except

 7-5     when the department has reason to believe that a better value is

 7-6     available through another procurement method.

 7-7           (e)  This section applies to private hospitals only to the

 7-8     extent it authorizes private hospitals to participate in purchasing

 7-9     contracts with governmental entities or to satisfy any state law

7-10     that may require goods and services the hospital purchases to be

7-11     competitively procured.  This section does not impose new

7-12     purchasing requirements on a private hospital, except to the extent

7-13     that the private hospital agrees to be bound by the terms of a

7-14     contract that is authorized by this section and that it chooses to

7-15     enter.  This section does not affect any explicit or implicit

7-16     authority that a private hospital has under other law to

7-17     participate in a group purchasing program or to participate in a

7-18     purchasing contract with a public entity.

7-19           SECTION 3.  Subsections (a) and (b), Section 12.052, Health

7-20     and Safety Code, are amended to read as follows:

7-21           (a)  The expenditure of funds received by local units of

7-22     government from the department is governed by Chapter 783,

7-23     Government Code, [the Uniform Grant and Contract Management Act of

7-24     1981 (Article 4413(32g), Vernon's Texas Civil Statutes)] and the

7-25     rules adopted under that law, except as provided by Section 12.055

 8-1     [Act].

 8-2           (b)  The expenditure of funds received by other state

 8-3     agencies from the department is governed by Subtitle D, Title 10,

 8-4     Government Code, [the State Purchasing and General Services Act

 8-5     (Article 601b, Vernon's Texas Civil Statutes)] and the rules

 8-6     adopted under that law, except as provided by Section 12.055 [Act].

 8-7           SECTION 4.  Subchapter E, Chapter 12, Health and Safety Code,

 8-8     is amended by adding Sections 12.055 and 12.056 to read as follows:

 8-9           Sec. 12.055.  CERTAIN PROCUREMENTS MADE WITH DEPARTMENT

8-10     FUNDS.  (a)  A state agency or local unit of government that

8-11     expends funds received from the department for the acquisition of

8-12     goods and services may satisfy the requirements of Section 12.052

8-13     or of another state law requiring procurements by competitive

8-14     bidding or competitive sealed proposals by procuring goods or

8-15     services with those funds in accordance with Section 12.056 or in

8-16     accordance with:

8-17                 (1)  Section 2155.144, Government Code, if the entity

8-18     is a state agency subject to that law;

8-19                 (2)  Section 32.043 or 32.044, Human Resources Code, if

8-20     the entity is a public hospital subject to those laws; or

8-21                 (3)  this section, if the entity is not covered by

8-22     Subdivision (1) or (2).

8-23           (b)  A state agency or local unit of government under

8-24     Subsection (a)(3) shall acquire goods or services by any

8-25     procurement method approved by the Health and Human Services

 9-1     Commission that provides the best value to the state agency or

 9-2     local unit of government.  The state agency or local unit of

 9-3     government shall document that the state agency or local unit of

 9-4     government considered all relevant factors under Subsection (c) in

 9-5     making the acquisition.

 9-6           (c)  Subject to Subsection (d), the state agency or local

 9-7     unit of government may consider all relevant factors in determining

 9-8     the best value, including:

 9-9                 (1)  any installation costs;

9-10                 (2)  the delivery terms;

9-11                 (3)  the quality and reliability of the vendor's goods

9-12     or services;

9-13                 (4)  the extent to which the goods or services meet the

9-14     state agency's or local unit of government's needs;

9-15                 (5)  indicators of probable vendor performance under

9-16     the contract such as past vendor performance, the vendor's

9-17     financial resources and ability to perform, the vendor's experience

9-18     and responsibility, and the vendor's ability to provide reliable

9-19     maintenance agreements;

9-20                 (6)  the impact on the ability of the state agency or

9-21     local unit of government to comply with laws and rules relating to

9-22     historically underutilized businesses or relating to the

9-23     procurement of goods and services from persons with disabilities;

9-24                 (7)  the total long-term cost to the state agency or

9-25     local unit of government of acquiring the vendor's goods or

 10-1    services;

 10-2                (8)  the cost of any employee training associated with

 10-3    the acquisition;

 10-4                (9)  the effect of an acquisition on the state agency's

 10-5    or local unit of government's productivity;

 10-6                (10)  the acquisition price; and

 10-7                (11)  any other factor relevant to determining the best

 10-8    value for the state agency or local unit of government in the

 10-9    context of a particular acquisition.

10-10          (d)  If a state agency to which this section applies acquires

10-11    goods or services with a value that exceeds $100,000, the state

10-12    agency shall consult with and receive approval from the Health and

10-13    Human Services Commission before considering factors other than

10-14    price and meeting specifications.

10-15          (e)  The state auditor or the department may audit the state

10-16    agency's or local unit of government's acquisitions of goods and

10-17    services under this section.

10-18          (f)  The state agency or local unit of government may adopt

10-19    rules and procedures for the acquisition of goods and services

10-20    under this section.

10-21          Sec. 12.056.  PARTICIPATION IN DEPARTMENT PURCHASING

10-22    CONTRACTS OR GROUP PURCHASING PROGRAM.  The department may allow a

10-23    state agency, local unit of government, or private entity that

10-24    expends funds received by the department to purchase goods or

10-25    services using those funds by participating in:

 11-1                (1)  a contract the department has made to purchase

 11-2    goods or services; or

 11-3                (2)  a group purchasing program established or

 11-4    designated by the department that offers discounts to providers of

 11-5    health services.

 11-6          SECTION 5.  Subchapter A, Chapter 533, Health and Safety

 11-7    Code, is amended by adding Sections 533.016 and 533.017 to read as

 11-8    follows:

 11-9          Sec. 533.016.  CERTAIN PROCUREMENTS OF GOODS AND SERVICES BY

11-10    SERVICE PROVIDERS.  (a)  A state agency, local agency, local mental

11-11    health authority, or local mental retardation authority that

11-12    expends public money to acquire goods or services in connection

11-13    with providing or coordinating the provision of mental health or

11-14    mental retardation services may satisfy the requirements of any

11-15    state law requiring procurements by competitive bidding or

11-16    competitive sealed proposals by procuring goods or services with

11-17    the public money in accordance with Section 533.017 or in

11-18    accordance with:

11-19                (1)  Section 2155.144, Government Code, if the entity

11-20    is a state agency subject to that law;

11-21                (2)  Section 32.043 or 32.044, Human Resources Code, if

11-22    the entity is a public hospital subject to those laws; or

11-23                (3)  this section, if the entity is not covered by

11-24    Subdivision (1) or (2).

11-25          (b)  An agency or authority under Subsection (a)(3) may

 12-1    acquire goods or services by any procurement method that provides

 12-2    the best value to the agency or authority.  The agency or authority

 12-3    shall document that the agency or authority considered all relevant

 12-4    factors under Subsection (c) in making the acquisition.

 12-5          (c)  Subject to Subsection (d), the agency or authority may

 12-6    consider all relevant factors in determining the best value,

 12-7    including:

 12-8                (1)  any installation costs;

 12-9                (2)  the delivery terms;

12-10                (3)  the quality and reliability of the vendor's goods

12-11    or services;

12-12                (4)  the extent to which the goods or services meet the

12-13    agency's or authority's needs;

12-14                (5)  indicators of probable vendor performance under

12-15    the contract such as past vendor performance, the vendor's

12-16    financial resources and ability to perform, the vendor's experience

12-17    and responsibility, and the vendor's ability to provide reliable

12-18    maintenance agreements;

12-19                (6)  the impact on the ability of the agency or

12-20    authority to comply with laws and rules relating to historically

12-21    underutilized businesses or relating to the procurement of goods

12-22    and services from persons with disabilities;

12-23                (7)  the total long-term cost to the agency or

12-24    authority of acquiring the vendor's goods or services;

12-25                (8)  the cost of any employee training associated with

 13-1    the acquisition;

 13-2                (9)  the effect of an acquisition on the agency's or

 13-3    authority's productivity;

 13-4                (10)  the acquisition price; and

 13-5                (11)  any other factor relevant to determining the best

 13-6    value for the agency or authority in the context of a particular

 13-7    acquisition.

 13-8          (d)  If a state agency to which this section applies acquires

 13-9    goods or services with a value that exceeds $100,000, the state

13-10    agency shall consult with and receive approval from the Health and

13-11    Human Services Commission before considering factors other than

13-12    price and meeting specifications.

13-13          (e)  The state auditor or the department may audit the

13-14    agency's or authority's acquisitions of goods and services under

13-15    this section to the extent state money or federal money

13-16    appropriated by the state is used to make the acquisitions.

13-17          (f)  The agency or authority may adopt rules and procedures

13-18    for the acquisition of goods and services under this section.

13-19          Sec. 533.017.  PARTICIPATION IN DEPARTMENT PURCHASING

13-20    CONTRACTS OR GROUP PURCHASING PROGRAM.  The department may allow a

13-21    state agency, local agency, local mental health authority, or local

13-22    mental retardation authority that expends public money to purchase

13-23    goods or services in connection with providing or coordinating the

13-24    provision of mental health or mental retardation services to

13-25    purchase goods or services with the public money by participating

 14-1    in:

 14-2                (1)  a contract the department has made to purchase

 14-3    goods or services; or

 14-4                (2)  a group purchasing program established or

 14-5    designated by the department that offers discounts to providers of

 14-6    mental health or mental retardation services.

 14-7          SECTION 6.  This Act takes effect September 1, 1997.

 14-8          SECTION 7.  The importance of this legislation and the

 14-9    crowded condition of the calendars in both houses create an

14-10    emergency and an imperative public necessity that the

14-11    constitutional rule requiring bills to be read on three several

14-12    days in each house be suspended, and this rule is hereby suspended.

         _______________________________     _______________________________

             President of the Senate              Speaker of the House

               I hereby certify that S.B. No. 1066 passed the Senate on

         May 5, 1997, by a viva-voce vote; and that the Senate concurred in

         House amendments on May 29, 1997, by a viva-voce vote.

                                             _______________________________

                                                 Secretary of the Senate

               I hereby certify that S.B. No. 1066 passed the House, with

         amendments, on May 28, 1997, by a non-record vote.

                                             _______________________________

                                                 Chief Clerk of the House

         Approved:

         _______________________________

                     Date

         _______________________________

                   Governor