HBA-ALS H.B. 2602 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2602
By: Dukes
State Affairs
4/15/1999
Introduced



BACKGROUND AND PURPOSE 

There is a current trend in toward privatization of state operations and
services.  The purpose of this bill is to provide periodic review of the
performance of private commercial contractors who provide services
previously provided by state agencies. 

H.B. 2602 requires the State Council on Competitive Government to conduct
and consider the conclusions of a cost-benefit analysis comparing a state
agency's performance of a service versus a private contractor performing
the service.  This bill also sets forth audit requirements and contract
conditions in awarding a contract to a private contractor. 
 
RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 2162.103, Government Code, as follows:

Sec. 2162.103. COST COMPARISON AND CONTRACT CONSIDERATIONS. (a) Requires
the State Council on Competitive Government (council), in comparing the
cost of providing a service, to conduct and consider the conclusions of
cost-benefit analyses that compare the costs and benefits of supervising
the work of a private contractor; a state agency's performance of the
service; and improving the state agency's performance through the
implementation of specified recommendations by certain state entities.  
  
(b) Authorizes a state agency to submit a proposal to the council
describing a reorganized service delivery method to compete directly with
the performance of a private commercial contractor.  

(c) Redesignated from existing Subsection (b).

(d) Provides that cost-benefit analyses under Subsection (a) must include a
short-term analysis covering a period of not more than six months and a
long-term analysis covering a period of at least one and not more than five
years.  

SECTION 2. Amends Subchapter C, Chapter 2162, Government Code, by adding
Section 2162.1035, as follows: 

Sec. 2162.1035. AUDIT REQUIREMENTS AND CONTRACT CONDITIONS. (a) Provides
that a contract awarded to a private commercial contractor must include a
provision that the continuation of the contract for the entire contract
period is contingent on the outcome of audits conducted under this section.

(b)  Provides that a private commercial contractor to which a contract is
awarded must cooperate with a compliance audit conducted by the state
auditor. Requires the state auditor to conduct the audit no later than the
end of the sixth month after the month the  contract was awarded. Specifies
the required determinations and assessments to be made by the state auditor
in conducting the audit.   

(c)  Authorizes a commercial contractor to continue to perform under the
contract after the state auditor has concluded that the contractor has
performed satisfactorily, until the completion of a second audit by the
state auditor.  Requires the state auditor to conduct the second audit not
before the end of the sixth month after the completion of the first audit
under this section and not later than the 18th month after that audit is
completed.  

(d)  Provides that if the state auditor concludes after the initial or
second audit conducted under this section that the contractor has not
performed satisfactorily, the contract with the private commercial
contractor terminates immediately and the state agency that most recently
provided the service before the service was performed by a private
commercial contractor is required to provide the service.  

(e)  Requires a state agency, if a service obligation is returned to the
state agency, to immediately complete a performance evaluation to design a
program to improve the delivery of the service and implement the program
designed.  Prohibits the council, if a service obligation is returned to
the state agency, from requiring the service to be submitted to competitive
bidding or make a determination regarding the service under Section
2162.102(b) until the end of the sixth month after the month the contract
terminated under Subsection (d). 
   
SECTION 3.Effective date: September 1, 1999. 

SECTION 4.Emergency clause.