SRC-JBJ S.B. 1528 76(R)   BILL ANALYSIS


Senate Research Center   S.B. 1528
76R7384 MXM-DBy: Carona
State Affairs
4/19/1999
As Filed


DIGEST 

Currently, equipment warranties are included in maintenance and repair
costs.  Since 1994, the state's maintenance and repair costs have increased
at 9 percent per year for a total of $35.5 million.  An agency typically
purchases  a traditional warranty at the time of purchasing equipment.  The
warranties, however, are costly, require up-front payment, and include a
high markup.  Although inflation and equipment upgrades contribute to
overall equipment costs, part of the costs result from traditional service
warranty contracts.  (The exact cost of the contracts cannot be determined
because no separate comptroller object code tracks the expenditures.)   

According to a comptroller study, the costs could be significantly
curtailed by converting existing purchasing methods.  If a state agencies
converted existing service warranty contracts to time-andmaterials
contracts and bid out future purchases of equipment maintenance insurance
or contracts to insurance companies, the state could save 20 to 50 percent
on repair and maintenance costs.  S.B. 1528 would require a state agency to
implement certain policies for purchasing equipment maintenance contracts. 

PURPOSE

As proposed, S.B. 1528 requires a state agency to implement certain
policies for purchasing equipment maintenance contracts. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 2158, Government Code, by adding Subchapter F,
as follows: 

SUBCHAPTER F.  EQUIPMENT MAINTENANCE

Sec. 2158.281.  EQUIPMENT MAINTENANCE PROGRAM.  Requires a state agency to
analyze the cost of the agency's service warranty contracts on equipment.
Requires an agency to seek to lower its equipment maintenance costs by
entering into new contracts that are more cost-effective.  Sets forth
cost-effective methods of equipment maintenance.  Requires an agency to
solicit bids or proposals using certain methods to maintain agency
equipment, and to accept the responsible bid or proposal that lowers costs
and offers the best value to the agency. Requires the accepted bid or
proposal to allow additional equipment to be added to the program at any
time. 

SECTION 2.Effective date: September 1, 1999.

SECTION 3.Emergency clause.