By Gallego                                               H.B. No. 3
         76R545 JRD-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the state's procurement of certain goods and services
 1-3     and to the state's contract management activities.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Subtitle F, Title 10, Government Code, is amended
 1-6     by adding Chapter 2259 to read as follows:
 1-7          CHAPTER 2259.  STATE CONTRACTING STANDARDS AND OVERSIGHT 
 1-8                      SUBCHAPTER A.  GENERAL PROVISIONS
 1-9           Sec. 2259.001.  APPLICABILITY.  (a)  This chapter applies
1-10     only to each procurement of goods or services made by a state
1-11     agency that is neither made by the General Services Commission nor
1-12     made under purchasing authority delegated to the agency by or under
1-13     Section 2155.131, 2155.132, or 2155.133.
1-14           (b)  This chapter applies to contracts and to contract
1-15     management activities that are related to the procurements to which
1-16     it applies.
1-17           (c)  Examples of procurements to which this chapter applies
1-18     include procurements described by Subsection (a) that:
1-19                 (1)  involve the procurement under one or more
1-20     contracts of a variety of goods and services, such as obtaining or
1-21     paying for all or part of the cost of acute or long-term medical or
1-22     nursing care for residents of this state;
1-23                 (2)  are made with federal money, to the extent that
1-24     the application of this chapter is not prohibited by federal law;
 2-1     and
 2-2                 (3)  are procurements of professional or consulting
 2-3     services, to the extent that the application of this chapter is
 2-4     consistent with Chapter 2254.
 2-5           (d)  The identity of the contractor and the source of funds
 2-6     an agency will use to make a procurement are not relevant in
 2-7     determining whether this chapter applies to a procurement and to
 2-8     activities related to the procurement.
 2-9           (e)  The General Services Commission on request shall
2-10     determine whether a procurement or type of procurement:
2-11                 (1)  is made under purchasing authority delegated to an
2-12     agency by or under Section 2155.131, 2155.132, or 2155.133; or
2-13                 (2)  is made under some other source of purchasing
2-14     authority.
2-15           Sec. 2259.002.  DEFINITIONS.  In this chapter:
2-16                 (1)  "Contract" includes a grant, other than a grant
2-17     made to a school district or a grant made for other academic
2-18     purposes, under which the recipient of the grant is required to
2-19     perform a specific act or service, supply a specific type of
2-20     product, or both.
2-21                 (2)  "State agency" has the meaning assigned by Section
2-22     2151.002.
2-23           Sec. 2259.003.  OPEN MARKET PURCHASES.  This chapter does not
2-24     require a state agency to purchase a good or service under contract
2-25     if the agency is authorized under other law to purchase the good or
2-26     service on the open market.
 3-1             (Sections 2259.004-2259.050 reserved for expansion
 3-2                    SUBCHAPTER B.  DUTIES OF COMPTROLLER
 3-3           Sec. 2259.051.  CONTRACT MANAGEMENT STANDARDS SET BY
 3-4     COMPTROLLER.  (a)  The comptroller shall develop in accordance with
 3-5     this chapter and adopt by rule standards to govern state agency
 3-6     contract management activities in relation to procurements to which
 3-7     this chapter applies, including standards to promote or establish
 3-8     efficient and effective contract monitoring, contractor selection
 3-9     processes, standard contract provisions for different types of
3-10     contracts, subcontractor performance, contract management training
3-11     for state agency personnel involved in procurement and for members
3-12     of state agency governing bodies,  and payment or reimbursement
3-13     rates and methods.
3-14           (b)  Each state agency shall comply with the applicable
3-15     standards that the comptroller establishes by rule under this
3-16     chapter. In the course of its regular audits of state agencies, the
3-17     state auditor shall:
3-18                 (1)  audit for compliance with the comptroller's
3-19     contract management rules; and
3-20                 (2)  report instances of noncompliance to the
3-21     comptroller and to the Legislative Audit Committee.
3-22           (c)  The comptroller may assess sanctions against a state
3-23     agency if the comptroller finds that the agency has violated the
3-24     comptroller's contract management rules. The severity of the
3-25     sanction imposed shall depend on the seriousness of the violation,
3-26     the circumstances of the violation, and the number of violations.
3-27     After notifying the agency of the finding of a violation, the
 4-1     comptroller may choose to impose one of the following sanctions on
 4-2     the agency:
 4-3                 (1)  withholding from the agency all or part of the
 4-4     agency's money for the travel expenses of agency officers and
 4-5     employees;
 4-6                 (2)  assessing an administrative penalty against the
 4-7     agency's appropriation, not to exceed $2,000 per violation, and
 4-8     transferring the amount of the penalty to the undedicated portion
 4-9     of the general revenue fund;
4-10                 (3)  withholding from the agency not more than 15
4-11     percent of the money appropriated to the agency for administrative
4-12     expenses;
4-13                 (4)  revoking purchasing authority that has been
4-14     delegated to the agency and transferring the purchasing authority
4-15     as appropriate to the General Services Commission or the Health and
4-16     Human Services Commission; or
4-17                 (5)  withholding all program funds from the agency.
4-18           Sec. 2259.052.  CONTRACT MANAGEMENT HANDBOOK.  (a)  The
4-19     comptroller shall publish a contract management handbook.
4-20           (b)  The handbook must include:
4-21                 (1)  common terms and definitions;
4-22                 (2)  models for selecting contractors in different
4-23     types of circumstances;
4-24                 (3)  ways to manage a contract for which there is a
4-25     lack of competition in the contractor selection process that are
4-26     designed to compensate for the lack of competition;
4-27                 (4)  ways to assess the degree of risk in a contract;
 5-1                 (5)  standard contract provisions for state agencies to
 5-2     incorporate as applicable in their contracts, and other sample
 5-3     contract provisions for agencies to consider;
 5-4                 (6)  methods for creating and establishing by contract
 5-5     a remedies schedule and a sanctions plan;
 5-6                 (7)  sample contract monitoring programs; and
 5-7                 (8)  other matters relating to the comptroller's
 5-8     contract management and procurement authority under this chapter as
 5-9     determined by the comptroller.
5-10           Sec. 2259.053.  COORDINATION OF CONTRACT MONITORING.  The
5-11     comptroller shall coordinate contract monitoring activities within
5-12     and among state agencies in relation to procurements to which this
5-13     chapter applies.
5-14           Sec. 2259.054.  CONTRACT MANAGEMENT DATABASE.  (a)  The
5-15     comptroller shall establish a central contract management database
5-16     for the use of all state agencies.  To the extent possible, the
5-17     comptroller shall make the database a part of the uniform statewide
5-18     accounting system.
5-19           (b)  A state agency shall send to the comptroller in the
5-20     manner prescribed by the comptroller the information that the
5-21     agency possesses that the comptroller requires for inclusion in the
5-22     database.  The comptroller may require information about
5-23     procurements that are not otherwise subject to this chapter if the
5-24     comptroller considers it advantageous to the state.
5-25           (c)  The comptroller shall include in the database:
5-26                 (1)  information that will allow state agencies to
5-27     identify businesses that have previously contracted with the state
 6-1     and businesses that have previously served as subcontractors under
 6-2     contracts with the state; and
 6-3                 (2)  information that will describe the nature of the
 6-4     state's experience with those businesses.
 6-5           (d)  The comptroller shall include in the database at least
 6-6     the following information for each contractor who has done business
 6-7     with the state and for each subcontractor who has worked under a
 6-8     state contract:
 6-9                 (1)  its legal name and address;
6-10                 (2)  its Texas Identification Number;
6-11                 (3)  the type of organization or entity it is, such as
6-12     a corporation, partnership, nonprofit organization, or political
6-13     subdivision;
6-14                 (4)  any other names under which it has operated in the
6-15     previous three years;
6-16                 (5)  the names of state agencies for which it has
6-17     directly or indirectly supplied goods or services in the previous
6-18     three years;
6-19                 (6)  the unit prices it charges, if applicable; and
6-20                 (7)  the dollar amounts involved in the contracts under
6-21     which it has supplied goods or services to the state in the
6-22     previous three years.
6-23           (e)  A state agency shall use the database for contract
6-24     management purposes that include:
6-25                 (1)  coordinating fiscal and program monitoring;
6-26                 (2)  sharing the results of fiscal and program
6-27     monitoring of contractors and subcontractors;
 7-1                 (3)  using information in the database as an aid to
 7-2     making decisions about contractor selection and contract renewals;
 7-3                 (4)  detecting double-billing by contractors; and
 7-4                 (5)  evaluating whether the state is paying comparable
 7-5     costs for comparable goods and services.
 7-6           Sec. 2259.055.  DEBARMENT.  (a)  As part of its contract
 7-7     management rules, the comptroller shall establish standards and
 7-8     procedures under which a state agency may debar a contractor from
 7-9     contracting with the agency or subcontracting under an agency
7-10     contract in relation to procurements to which this chapter applies.
7-11           (b)  The comptroller's standards must clearly specify the
7-12     types of conduct that may subject a contractor or subcontractor to
7-13     debarment. The standards and procedures must provide for a range in
7-14     terms of time for which and types of contracts from which a
7-15     contractor or subcontractor may be debarred, based on the
7-16     seriousness of the breach of contract or substandard contract
7-17     performance and the extent to which the state's interests were
7-18     damaged by the conduct.
7-19           (c)  All state agency proceedings to debar a contractor or
7-20     subcontractor in relation to procurements to which this chapter
7-21     applies, including procurements subject to Section 2155.144, as
7-22     added by Section 1, Chapter 1045, Acts of the 75th Legislature,
7-23     Regular Session, 1997, are governed by the comptroller's standards
7-24     and procedures.
7-25           (d)  A proceeding to debar a contractor or subcontractor
7-26     under this section is a contested case under Chapter 2001. The
7-27     contractor or subcontractor is entitled to a hearing on request.
 8-1     An administrative law judge of the State Office of Administrative
 8-2     Hearings shall preside over any hearing in the case. The state
 8-3     agency seeking to debar a contractor or subcontractor from
 8-4     contracting directly or indirectly with the agency shall make the
 8-5     final administrative determination in the case based on the
 8-6     administrative law judge's proposal for decision, if a hearing was
 8-7     conducted, and on the comptroller's rules.
 8-8           (e)  A contractor or subcontractor who is the subject of a
 8-9     debarment proceeding under this section and who is aggrieved by the
8-10     final administrative decision is entitled to judicial review of the
8-11     decision.
8-12           Sec. 2259.056.  RECOVERY OF COMPTROLLER'S COSTS.  The
8-13     comptroller may, to the extent feasible, establish a system of
8-14     billings and charges that allows the comptroller to recover from
8-15     affected state agencies the comptroller's costs in implementing
8-16     this chapter.  The Legislative Budget Board or the director of the
8-17     board must approve the reasonableness of the comptroller's bill or
8-18     charge before the state agency pays it.
8-19           Sec. 2259.057.  COORDINATION WITH GENERAL SERVICES
8-20     COMMISSION.  The comptroller and the General Services Commission
8-21     shall adopt a memorandum of understanding under which the
8-22     comptroller and the commission coordinate, to the extent feasible,
8-23     their respective duties related to procurement.
8-24           Sec. 2259.058.  REPORT BY COMPTROLLER.  The comptroller shall
8-25     report the findings and activities of that office under this
8-26     chapter semiannually to the Legislative Budget Board, the
8-27     Legislative Audit Committee, the House Appropriations Committee,
 9-1     the Senate Finance Committee, the House General Investigating
 9-2     Committee, and the Senate General Investigating Committee.
 9-3             (Sections 2259.059-2259.100 reserved for expansion
 9-4       SUBCHAPTER C.  GENERAL STATE AGENCY CONTRACT MANAGEMENT DUTIES
 9-5           Sec. 2259.101.  AGENCY CONTRACT MANAGEMENT GUIDELINES.
 9-6     (a)  Each state agency that makes procurements to which this
 9-7     chapter applies shall establish and adopt by rule clearly stated
 9-8     and comprehensive written contract management guidelines.
 9-9           (b)  The guidelines must be consistent with the comptroller's
9-10     contract management handbook and must clearly reflect the state's
9-11     expectations to state agency staff and to potential contractors
9-12     with the agency.
9-13           (c)  State agency management shall comply with the guidelines
9-14     and enforce the guidelines within and on behalf of the agency.
9-15           (d)  The guidelines must at least:
9-16                 (1)  provide for the review of financial performance
9-17     and compliance records relating to performance under the agency's
9-18     contracts;
9-19                 (2)  establish standards and procedures consistent with
9-20     the comptroller's standards and procedures to debar breaching or
9-21     poorly performing contractors and subcontractors from future
9-22     contracting with the state agency or subcontracting under agency
9-23     contracts in relation to procurements to which this chapter
9-24     applies;
9-25                 (3)  establish contract management training
9-26     requirements that include a review of contract management
9-27     responsibilities;
 10-1                (4)  take into account the need for a reasonable degree
 10-2    of uniformity in measuring contractor performance; and
 10-3                (5)  take into account the need to continue service to
 10-4    state agency clients when contractor performance problems are being
 10-5    addressed.
 10-6          Sec. 2259.102.  CONTRACT MANAGEMENT TRAINING.  (a)  Each
 10-7    member of the governing body of a state agency that makes
 10-8    procurements to which this chapter applies and each employee of the
 10-9    agency whose duties include contract management or other
10-10    procurement responsibilities shall obtain training in contract
10-11    management. The training must include review of the comptroller's
10-12    statewide contract management standards.
10-13          (b)  A state agency shall ensure that the training required
10-14    by this section is obtained.
10-15          (c)  The General Services Commission shall coordinate
10-16    training under this section.
10-17          Sec. 2259.103.  AGENCY PERFORMANCE MEASURES.  The Legislative
10-18    Budget Board may develop performance measures relating to contract
10-19    management functions and require information from state agencies
10-20    that will allow the legislature to assess state agency progress in
10-21    effective contract management.
10-22          Sec. 2259.104.  ANNUAL RISK ASSESSMENT.  Each state agency
10-23    shall perform annually a risk assessment of its contracts and
10-24    submit a report of its findings to the Legislative Audit Committee
10-25    and the Legislative Budget Board not later than January 15.
 11-1            (Sections 2259.105-2259.150 reserved for expansion
 11-2                    SUBCHAPTER D.  CONTRACTOR SELECTION
 11-3          Sec. 2259.151.  COMPETITIVE CONTRACTOR SELECTION PROCEDURES.
 11-4    Each state agency shall assess its contractor selection procedures
 11-5    and shall use competitive selection procedures  to the greatest
 11-6    extent possible when selecting its contractors.
 11-7          Sec. 2259.152.  DETERMINING THE LOWEST AND BEST BID OR
 11-8    PROPOSAL.  (a)  In determining the lowest and best bid or proposal,
 11-9    a state agency shall consider:
11-10                (1)  the vendor's price to provide the good or service;
11-11                (2)  the probable quality of the offered good or
11-12    service; and
11-13                (3)  the quality of the vendor's past performance in
11-14    contracting with the agency, with other state entities, or with
11-15    private sector entities.
11-16          (b)  This section does not apply to a procurement covered by
11-17    Section 2155.144, as added by Section 1, Chapter 1045, Acts of the
11-18    75th Legislature, Regular Session, 1997.
11-19          Sec. 2259.153.  DISCLOSURE OF POTENTIAL CONTRACTOR AND
11-20    SUBCONTRACTOR INFORMATION.  (a)  To aid in evaluating a potential
11-21    contractor's past performance and probable performance in the
11-22    future, a state agency making a procurement to which this chapter
11-23    applies shall require:
11-24                (1)  that each potential contractor disclose in the
11-25    bid, proposal, or other applicable expression of interest the
11-26    identity of subcontractors it has recently used on similar
11-27    contracts and the identity of subcontractors it intends to use if
 12-1    it is awarded the contract;
 12-2                (2)  that each potential contractor and each intended
 12-3    subcontractor of a potential contractor disclose in the bid,
 12-4    proposal, or other applicable expression of interest the names and
 12-5    addresses of its directors, its principal stockholders, and any
 12-6    other beneficiaries of the company;
 12-7                (3)  that each potential contractor and each intended
 12-8    subcontractor of a potential contractor disclose in the bid,
 12-9    proposal, or other applicable expression of interest:
12-10                      (A)  its previous or current contracts with any
12-11    state agency, including a description of the goods or services it
12-12    provides or provided under the other contracts and the amount of
12-13    money it receives or received under the contracts;
12-14                      (B)  previous or current contracts with any state
12-15    agency under which it was a subcontractor, including a description
12-16    of the goods or services it provides or provided under the other
12-17    contracts and the amount of money it receives or received under the
12-18    contracts; and
12-19                      (C)  any lawsuits, sanctions, or other negative
12-20    actions taken against it by the contracting agency, a contractor,
12-21    or a subcontractor in connection with a previous or current
12-22    contract with a state agency; and
12-23                (4)  that each potential contractor and each intended
12-24    subcontractor of a potential contractor:
12-25                      (A)  disclose in the bid, proposal, or other
12-26    applicable expression of interest the current status of any
12-27    license, certificate, or other permit the potential contractor or
 13-1    subcontractor is required to have to perform under the contract;
 13-2    and
 13-3                      (B)  certify, if true, in the bid, proposal, or
 13-4    other applicable expression of interest that the license,
 13-5    certificate, or other permit has not expired or been suspended or
 13-6    revoked.
 13-7          (b)  A state agency shall include in its requests for bids,
 13-8    proposals, or other applicable expression of interest a statement
 13-9    about the applicability of relevant criminal law, including Section
13-10    37.10, Penal Code, to presenting information and documentation to
13-11    the agency in connection with a bid, proposal, or other applicable
13-12    expression of interest.  A state agency shall refer to the
13-13    appropriate authorities for investigation or prosecution any
13-14    suspected violation of relevant criminal law, including Section
13-15    37.10, Penal Code, related to presenting information and
13-16    documentation to the agency in connection with a bid, proposal,
13-17    other applicable expression of interest, or contract.
13-18          Sec. 2259.154.  CLARITY IN REQUESTS FOR BIDS OR PROPOSALS.
13-19    Before soliciting bids or proposals for a new contract or a
13-20    contract renewal, a state agency shall make a formal assessment of
13-21    the type of good or service to be solicited and shall provide a
13-22    clear definition of that good or service in the request for bids or
13-23    proposals.
13-24            (Sections 2259.155-2259.200 reserved for expansion
13-25                    SUBCHAPTER E.  CONTRACT PROVISIONS
13-26          Sec. 2259.201.  PERFORMANCE MEASURES REQUIRED.  (a)  Each
13-27    state agency shall incorporate performance measures in each of its
 14-1    contracts for goods or services that are subject to this chapter
 14-2    that will allow the agency and state oversight agencies to assess
 14-3    the quality of performance of contractors and subcontractors.
 14-4          (b)  The performance measures must include a schedule for
 14-5    performance measurement. Performance must be measured more
 14-6    frequently under contracts that present more risks.
 14-7          Sec. 2259.202.  CONTRACT OVERSIGHT PROVISIONS.  (a)  Each
 14-8    state agency shall include contract oversight provisions in each of
 14-9    its contracts for goods or services that are subject to this
14-10    chapter that reflect the amount of risk associated with the
14-11    contract.
14-12          (b)  The contract oversight provisions must be designed to
14-13    ensure at a minimum that the fiscal performance and compliance
14-14    requirements of the contract are met.
14-15          (c)  The contract oversight provisions must include a
14-16    provision that requires the contractor and subcontractors under the
14-17    contract to allow the state  agency and state oversight entities
14-18    timely access to the records of the contractor or subcontractors
14-19    that may be needed to assess fiscal and compliance performance
14-20    under the contract. The contract provision must also provide that
14-21    the agency may cancel the contract or suspend payments under the
14-22    contract if the agency or a state oversight entity is not allowed
14-23    timely access to the records.
14-24          (d)  The contract oversight provisions must include a
14-25    provision that requires the contractor and subcontractors under the
14-26    contract to promptly inform the state agency during the term of the
14-27    contract:
 15-1                (1)  of any proposed or final action to revoke,
 15-2    suspend, or take any other disciplinary action in connection with,
 15-3    a license, certificate, or other permit that the contractor or
 15-4    subcontractor is required to have to perform under the contract;
 15-5    and
 15-6                (2)  whether the license, certificate, or other permit
 15-7    has expired.
 15-8          Sec. 2259.203.  REMEDIES AND SANCTIONS SCHEDULES.  (a)  Each
 15-9    state agency shall create and incorporate in each of its contracts
15-10    for goods or services that are subject to this chapter a remedies
15-11    schedule, a graduated sanctions schedule, or both, for breach of
15-12    the contract or substandard performance under the contract. The
15-13    remedies and sanctions provisions must be consistent with the
15-14    comptroller's statewide standards.
15-15          (b)  The comptroller and other state agencies shall design
15-16    fair and feasible standards that will hold contractors accountable
15-17    for breach of contract or substandard performance under a contract
15-18    without diminishing the number of able providers who are willing to
15-19    contract with the state.
15-20          Sec. 2259.204.  CONTRACT PROVISIONS APPLICABLE TO
15-21    SUBCONTRACTORS; INFORMATION ABOUT SUBCONTRACTORS; SUBSTITUTION OF
15-22    SUBCONTRACTORS.  (a)  Each state agency shall include provisions in
15-23    each of its contracts for goods or services that are subject to
15-24    this chapter that ensure that all contract provisions that are
15-25    relevant to or affected by subcontractor performance are applied to
15-26    subcontractors.  The agency may require in its contract with the
15-27    contractor:
 16-1                (1)  that certain subcontractors must contract directly
 16-2    with the agency; or
 16-3                (2)  that the contractor must include specified
 16-4    provisions in its written contracts with subcontractors.
 16-5          (b)  Each state agency shall include provisions in each of
 16-6    its contracts for goods or services that are subject to this
 16-7    chapter that require the primary contractor to report relevant
 16-8    subcontractor information to the agency.
 16-9          (c)  Each state agency may include a provision in its
16-10    contracts for goods or services that are subject to this chapter
16-11    that requires the primary contractor to obtain the prior permission
16-12    of the agency before the primary contractor may substitute one
16-13    subcontractor for another to perform work under the contract, and
16-14    that specifies appropriate sanctions or remedies for a breach of
16-15    this provision.  Each state agency shall include a provision in
16-16    each of its contracts for goods or services that are subject to
16-17    this chapter that requires the primary contractor to timely notify
16-18    the agency of a subcontractor substitution, and that allows the
16-19    agency to suspend payments under the contract for a breach of this
16-20    provision.
16-21          Sec. 2259.205.  LIABILITY INSURANCE COVERAGE REQUIRED.  Each
16-22    state agency shall, when feasible, include provisions in each of
16-23    its contracts for goods or services that are subject to this
16-24    chapter that require the contractor to carry director or officer
16-25    liability insurance coverage in an amount not less than the value
16-26    of the contract that is sufficient to protect the interests of the
16-27    state in the event an actionable act or omission by a director or
 17-1    officer of the contractor damages the state's interests.
 17-2            (Sections 2259.206-2259.250 reserved for expansion
 17-3             SUBCHAPTER F.  PAYMENT AND REIMBURSEMENT METHODS
 17-4          Sec. 2259.251.  PAYMENT METHODS AND CONTRACTOR SELECTION.
 17-5    (a)  In developing contract policies, the comptroller and other
 17-6    state agencies shall consider the interaction of contractor
 17-7    selection methods and payment methods.
 17-8          (b)  A state agency shall compensate for the risks inherent
 17-9    in a lack of competition in the contractor selection process and in
17-10    the use of certain payment or reimbursement methods by including
17-11    appropriate provisions in the affected contracts and by
17-12    appropriately increasing its contract monitoring activities for
17-13    those contracts.
17-14          Sec. 2259.252.  REEVALUATION OF PAYMENT AND REIMBURSEMENT
17-15    RATES.  (a)  To ensure that its payment and reimbursement methods
17-16    and rates are appropriate, each state agency that makes
17-17    procurements to which this chapter applies shall reevaluate at
17-18    least biennially its payment and reimbursement methods and rates,
17-19    especially methods and rates based on historical funding levels or
17-20    on a formula established by agency rule rather than being based on
17-21    reasonable and necessary actual costs incurred.
17-22          (b)  A state agency shall submit formal rate reevaluation
17-23    information to the Legislative Budget Board and the comptroller as
17-24    part of the agency's legislative appropriations request.
17-25            (Sections 2259.253-2259.300 reserved for expansion
17-26                    SUBCHAPTER G.  CONTRACTOR OVERSIGHT
17-27          Sec. 2259.301.  ANNUAL ASSESSMENT OF RISK.  Under the
 18-1    comptroller's direction, the management of each state agency that
 18-2    makes procurements to which this chapter applies shall assess
 18-3    annually the risk of fraud, abuse, or waste in its  contractor
 18-4    selection process, contract provisions, and payment and
 18-5    reimbursement rates and methods and for the different types of
 18-6    goods and services for which it contracts that are subject to this
 18-7    chapter and submit a report of its findings to the Legislative
 18-8    Audit Committee and the Legislative Budget Board not later than
 18-9    January 15.
18-10          Sec. 2259.302.  COSTS MUST BE REASONABLE AND NECESSARY.  Each
18-11    state agency shall ensure through contract management activities
18-12    that all costs paid or reimbursed under a contract are reasonable
18-13    and necessary.
18-14          Sec. 2259.303.  RESPONSIBILITY FOR MONITORING SUBCONTRACTORS.
18-15    (a)  Each state agency shall establish clear guidelines in its
18-16    contracts that are subject to this chapter that establish the
18-17    extent to which the agency and the extent to which the primary
18-18    contractor is responsible for monitoring subcontractors.
18-19          (b)  The state agency shall monitor the subcontractor's
18-20    performance if the subcontractor:
18-21                (1)  is performing a significant percentage of the work
18-22    under the contract;
18-23                (2)  receives from the agency, the contractor, or
18-24    another subcontractor a significant percentage of the contract
18-25    funds; or
18-26                (3)  is responsible for performing a key component of
18-27    the work under the contract.
 19-1          Sec. 2259.304.  INFORMATION SHARING; COORDINATING OVERSIGHT.
 19-2    (a)  Each state agency shall make use of information from other
 19-3    agencies in planning and executing fiscal and program monitoring of
 19-4    its contractors and subcontractors.
 19-5          (b)  If a contractor has a contract with more than one
 19-6    division of a state agency or more than one agency, the divisions
 19-7    or agencies shall coordinate their contract monitoring activities
 19-8    and share the results of their contract monitoring activities.
 19-9          (c)  The comptroller shall coordinate and manage activities
19-10    under this section.
19-11          Sec. 2259.305.  DOUBLE-BILLING.  (a)  Each state agency that
19-12    makes procurements to which this chapter applies shall design and
19-13    implement procedures to detect and report double-billing by
19-14    contractors.
19-15          (b)  Each state agency shall send reports of each
19-16    double-billing incident to the state auditor, the comptroller, the
19-17    legislature, and to any other state agency that paid the contractor
19-18    involved in the double-billing incident.
19-19          Sec. 2259.306.  FRAUD DETECTION TECHNOLOGIES.  With the
19-20    assistance of the comptroller and the state auditor, each state
19-21    agency that makes procurements to which this chapter applies shall
19-22    evaluate the costs and benefits of implementing new technologies in
19-23    fraud detection.
19-24          Sec. 2259.307.  CONTRACT MONITORING RESPONSIBILITIES.  As one
19-25    of its contract management policies, each state agency that makes
19-26    procurements to which this chapter applies shall establish and
19-27    adopt by rule a policy that clearly defines the contract monitoring
 20-1    roles and responsibilities, if any, of internal audit staff and
 20-2    other inspection, investigative, or audit staff.
 20-3          Sec. 2259.308.  ADDRESSING DEFICIENCIES IN PERFORMANCE.
 20-4    (a)  Each state agency that makes procurements to which this
 20-5    chapter applies shall establish specific schedules for addressing
 20-6    deficiencies in performance the agency identifies during its
 20-7    contract  monitoring activities. An agency shall address identified
 20-8    deficiencies in accordance with its schedule.
 20-9          (b)  As part of its regular auditing of state agency
20-10    activities, the state auditor shall audit for compliance with this
20-11    section and report a failure to comply to the Legislative Budget
20-12    Board, the House Appropriations Committee, and the Senate Finance
20-13    Committee.
20-14          Sec. 2259.309.  COMPARABLE COSTS.  (a)  Each state agency
20-15    that makes procurements to which this chapter applies shall monitor
20-16    performance under a contract to verify that comparable costs are
20-17    being charged for comparable goods and services.
20-18          (b)  The state auditor on request shall assist a state
20-19    agency's monitoring efforts under this section.
20-20          SECTION 2.  Section 321.013, Government Code, is amended by
20-21    adding Subsection (k) to read as follows:
20-22          (k)  The Legislative Budget Board shall inform the State
20-23    Auditor when a state agency has received a large increase in
20-24    appropriations, including a large increase in federal or other
20-25    money passed through to the agency. The State Auditor shall
20-26    consider this information in devising the audit plan.
20-27          SECTION 3.  Chapter 555, Government Code, is amended by
 21-1    adding Subchapter C to read as follows:
 21-2        SUBCHAPTER C.  LICENSE RECORDS REQUESTED BY ANOTHER AGENCY
 21-3          Sec. 555.051.  DEFINITION.  In this subchapter, "state
 21-4    agency" means any board, commission, department, or other agency in
 21-5    the executive, legislative, or judicial branch of state government.
 21-6          Sec. 555.052.  STATE AGENCY RIGHT OF ACCESS TO LICENSING
 21-7    INFORMATION.  (a)  Notwithstanding other law, a state agency shall
 21-8    on request provide another state agency with all relevant
 21-9    information about the status of a license held or formerly held by
21-10    one of its licensees, if the requesting state agency states that
21-11    the information is needed to evaluate a bid or proposal or the
21-12    status of a contract. The requesting state agency may request the
21-13    information about its contractors or subcontractors or its
21-14    potential contractors or subcontractors.
21-15          (b)  The requesting state agency may not disclose the
21-16    information outside the agency if the information is confidential
21-17    or excepted from required disclosure under other law.
21-18          SECTION 4.  Section 555.003, Government Code, is amended to
21-19    read as follows:
21-20          Sec. 555.003.  EXCEPTION.  Subchapter B [This chapter] does
21-21    not apply to files that relate to drivers of motor vehicles and
21-22    that are maintained by the Department of Public Safety under
21-23    Subchapter C, Chapter 521, Transportation Code.
21-24          SECTION 5.  The comptroller shall conduct an in-depth study
21-25    of the comparative costs and benefits of different standard payment
21-26    methods, such as the cost reimbursement method and the unit rate
21-27    method.  State agencies shall cooperate with the comptroller in the
 22-1    study.  The comptroller shall report the results of the study to
 22-2    the governor and to the presiding officer of each house of the
 22-3    legislature not later than December 15, 2000.
 22-4          SECTION 6.  This Act takes effect September 1, 1999.
 22-5          SECTION 7.  The importance of this legislation and the
 22-6    crowded condition of the calendars in both houses create an
 22-7    emergency and an imperative public necessity that the
 22-8    constitutional rule requiring bills to be read on three several
 22-9    days in each house be suspended, and this rule is hereby suspended.