1-1     By:  Carter (Senate Sponsor - Fraser)                 H.B. No. 2277
 1-2           (In the Senate - Received from the House April 30, 2001;
 1-3     May 1, 2001, read first time and referred to Committee on State
 1-4     Affairs; May 9, 2001, reported favorably, as amended, by the
 1-5     following vote:  Yeas 8, Nays 0; May 9, 2001, sent to printer.)
 1-6     COMMITTEE AMENDMENT NO. 1                               By:  Fraser
 1-7           Amend H.B. 2277 as follows:
 1-8           On page 6, line 18, strike the line and replace with the
 1-9     following:
1-10     "A contract under this chapter may be let in accordance with".
1-11                            A BILL TO BE ENTITLED
1-12                                   AN ACT
1-13     relating to contracts by certain educational institutions, state
1-14     agencies, and local governments for energy conservation measures.
1-15           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-16           SECTION 1. Sections 44.901(b), (e), (g), (h), and (i),
1-17     Education Code, are amended to read as follows:
1-18           (b)  A contract to which this section applies includes a
1-19     contract for the installation or implementation of:
1-20                 (1)  insulation of the building structures and systems
1-21     within the building;
1-22                 (2)  storm windows or doors, caulking or
1-23     weatherstripping, multiglazed windows or doors, heat absorbing or
1-24     heat reflective glazed and coated window or door systems, or other
1-25     window or door system modifications that reduce energy consumption;
1-26                 (3)  automatic energy control systems, including
1-27     computer software and technical data licenses;
1-28                 (4)  heating, ventilating, or air-conditioning system
1-29     modifications or replacements;
1-30                 (5)  lighting fixtures that increase energy efficiency;
1-31                 (6)  energy recovery systems;
1-32                 (7)  electric systems improvements; or
1-33                 (8)  other energy conservation-related improvements or
1-34     equipment, [(]including improvements or equipment relating to
1-35     renewable energy[)].
1-36           (e)  Before entering into a contract for energy conservation
1-37     measures, the board shall require the provider of the energy
1-38     conservation measures to file with the board a payment and
1-39     performance bond relating to the installation of energy
1-40     conservation measures in accordance with Chapter 2253, Government
1-41     Code.  The board [that is in an amount the board finds reasonable
1-42     and necessary to protect the interests of the school district and
1-43     that] may also require a separate bond to cover the value of the
1-44     guaranteed savings on the contract [and is conditioned on the
1-45     faithful execution of the terms of the contract].
1-46           (g)  A contract for energy conservation measures shall
1-47     contain provisions pursuant to which the provider of the energy
1-48     conservation measures guarantees the amount of the savings to be
1-49     realized by the school district under the contract. If the term of
1-50     a contract for energy conservation measures exceeds one year, the
1-51     school district's contractual obligations in any one year during
1-52     the term of the contract beginning after the final date of
1-53     installation may not exceed the total energy and operating cost
1-54     savings, including but not limited to electrical, gas, or other
1-55     utility cost savings and operating cost savings resulting from the
1-56     measures [automatic monitoring and control] as determined by the
1-57     school district in this subsection, divided by the number of years
1-58     in the contract term.
1-59           (h)  A contract under this section shall [may] be let
1-60     according to the [under competitive proposal] procedures
1-61     established for professional services by Section 2254.004,
1-62     Government Code.  Notice of the request for qualifications
1-63     [proposals] shall be published in the manner provided for
 2-1     competitive bidding.  [Requests for proposals must solicit
 2-2     quotations and must specify the relative importance of guaranteed
 2-3     savings, price, return on investment, financial performance and
 2-4     stability, quality, technical ability, experience, and other
 2-5     evaluation factors. The contract shall be awarded to the
 2-6     responsible offeror whose proposal, following negotiations, is
 2-7     determined to be the most advantageous to the school district
 2-8     considering the guaranteed savings and other evaluation factors set
 2-9     forth in the request for proposals.]
2-10           [(i)  To obtain the best final offers, the school district
2-11     may allow proposal revisions after submissions and before the award
2-12     of the contract.]
2-13           SECTION 2. Sections 51.927(b), (e), (f), and (h)-(l),
2-14     Education Code, are amended to read as follows:
2-15           (b)  A contract to which this section applies includes a
2-16     contract for the installation or implementation of:
2-17                 (1)  insulation of a building structure and systems
2-18     within a building;
2-19                 (2)  storm windows or [of] doors, caulking or weather
2-20     stripping, multiglazed windows or doors, heat-absorbing or
2-21     heat-reflective glazed and coated window or door systems, or other
2-22     window or door system modifications that reduce energy consumption;
2-23                 (3)  automatic energy control systems, including
2-24     computer software and technical data licenses;
2-25                 (4)  heating, ventilating, or air conditioning system
2-26     modifications or replacements;
2-27                 (5)  lighting fixtures that increase energy efficiency;
2-28                 (6)  energy recovery systems;
2-29                 (7)  electric systems improvements; or
2-30                 (8)  other energy conservation-related improvements or
2-31     equipment, [(]including improvements or equipment related to
2-32     renewable energy[)].
2-33           (e)  Before entering into a contract for energy conservation
2-34     measures, the board shall require the provider of the energy
2-35     conservation measures to file with the board a payment and
2-36     performance bond in accordance with Chapter 2253, Government Code.
2-37     The board may also require a separate bond to cover the value of
2-38     the guaranteed savings on [that is in an amount the board finds
2-39     reasonable and necessary to protect the interests of the
2-40     institution and is conditioned on the faithful execution of the
2-41     terms of] the contract.
2-42           (f)  The board may enter into a contract for a period of more
2-43     than one year for energy conservation measures with an entity if
2-44     the board finds that the amount the institution would spend on the
2-45     energy conservation measures will not exceed the amount to be saved
2-46     in energy and operating costs over 15 years from the date of
2-47     installation. If the term of a contract for energy conservation
2-48     measures exceeds one year, the board's contractual obligation in
2-49     any year during the term of the contract beginning after the final
2-50     date of installation may not exceed the total energy and operating
2-51     cost savings, including but not limited to electrical, gas, or
2-52     other utility cost savings and operating cost savings resulting
2-53     from the measures [automatic monitoring and control], as determined
2-54     by the board in this subsection, divided by the number of years in
2-55     the contract term beginning after the final date of installation.
2-56     The board shall consider all costs of the energy conservation
2-57     measures, including costs of design, engineering, installation,
2-58     maintenance, repairs, and debt service.
2-59           (h)  A contract for energy conservation measures shall
2-60     contain provisions pursuant to which the provider of the energy
2-61     conservation measures guarantees the amount of the savings to be
2-62     realized by the institution of higher education under the contract.
2-63     The Master Equipment Lease Purchase Program operated by the Texas
2-64     Public Finance Authority may be utilized by an institution to fund
2-65     a contract for energy conservation measures so long as the costs of
2-66     the energy conservation measures, including costs of design,
2-67     engineering, installation, [maintenance, repairs,] and anticipated
2-68     debt service requirements of the Master Equipment Lease Purchase
2-69     Program, do not exceed the total energy and operating cost savings,
 3-1     as described in Subsection (f), beginning after the final date of
 3-2     installation.
 3-3           (i)  A contract under this section shall [may] be let
 3-4     according to the [under competitive sealed proposal] procedures
 3-5     established for professional services by Section 2254.004,
 3-6     Government Code. Notice of the request for qualifications
 3-7     [proposals] shall be given in the manner provided for under Section
 3-8     2156.002 [in Chapter 2156], Government Code.  The Texas Higher
 3-9     Education Coordinating Board, in consultation with the State Energy
3-10     Conservation Office [and the Texas Energy Coordination Council]
3-11     with regard to energy conservation measures, shall establish
3-12     guidelines and an approval process for contracts awarded under this
3-13     section.  The guidelines must require that the cost savings
3-14     projected by an offeror be reviewed by a licensed professional
3-15     engineer who is not an officer or employee of an offeror for the
3-16     contract under review or otherwise associated with the contract. An
3-17     engineer who reviews a contract shall maintain the confidentiality
3-18     of any proprietary information the engineer acquires while
3-19     reviewing the contract.  A contract is not required to be reviewed
3-20     or approved by the State Energy Conservation Office [or Texas
3-21     Energy Coordination Council]. Section 19, The Texas Engineering
3-22     Practice Act (Article 3271a, Vernon's Texas Civil Statutes),
3-23     applies to work performed under the contract.  [The contract shall
3-24     be awarded to the responsible offeror whose proposal, following
3-25     negotiations, is determined by the institution to be the most
3-26     advantageous to the institution considering the guaranteed savings
3-27     and other evaluation factors set forth in the request for
3-28     proposals, except that if the institution finds that no offer is
3-29     acceptable, it shall refuse all offers.]
3-30           (j)  [In accordance with regulations adopted by the
3-31     institution, the institution may conduct discussions with offerors
3-32     who submit proposals and who are determined to be reasonably
3-33     qualified for the award of the contract. Offerors shall be treated
3-34     fairly and equally with respect to any opportunity for discussion
3-35     and revision of proposals.  To obtain the best final offers, the
3-36     institution may allow proposal revisions after submissions and
3-37     before the award of the contract.]
3-38           [(k)  If provided in a request for proposals under Subsection
3-39     (i), proposals shall be opened in a manner that avoids disclosure
3-40     of the contents to competing offerors and keeps the proposals
3-41     secret during negotiations. All proposals are open for public
3-42     inspection after a contract is awarded unless the information is
3-43     excepted from disclosure under Chapter 552, Government Code.]
3-44           [(l)]  The legislature shall base an institution's
3-45     appropriation for energy costs during a fiscal year on the sum of:
3-46                 (1)  the institution's estimated energy costs for that
3-47     fiscal year; and
3-48                 (2)  if a contract under this section is in effect, the
3-49     institution's estimated net savings resulting from the contract
3-50     during the contract term, divided by the number of years in the
3-51     contract term.
3-52           SECTION 3. Sections 2166.406(b), (e), and (g)-(m), Government
3-53     Code, are amended to read as follows:
3-54           (b)  A contract authorized under this section includes a
3-55     contract for the installation or implementation of:
3-56                 (1)  insulation of the building structure and systems
3-57     within the building;
3-58                 (2)  storm windows or doors, caulking or weather
3-59     stripping, multiglazed windows or doors, heat absorbing or heat
3-60     reflective glazed and coated window or door systems, or other
3-61     window or door system modifications that reduce energy consumption;
3-62                 (3)  automatic energy control systems, including
3-63     computer software and technical data licenses;
3-64                 (4)  heating, ventilating, or air-conditioning system
3-65     modifications or replacements;
3-66                 (5)  lighting fixtures that increase energy efficiency;
3-67                 (6)  energy recovery systems;
3-68                 (7)  electric systems improvements; or
3-69                 (8)  other energy conservation-related improvements or
 4-1     equipment, [(]including improvements or equipment related to
 4-2     renewable energy[)].
 4-3           (e)  Before entering into a contract for energy conservation
 4-4     measures, the governing body of the state agency shall require the
 4-5     provider of the energy conservation measures to file with the
 4-6     governing body a payment and performance bond in accordance with
 4-7     Chapter 2253.  The governing body may also require a separate bond
 4-8     to cover the value of the guaranteed savings on [that is in an
 4-9     amount the governing body finds reasonable and necessary to protect
4-10     the interests of the state agency and that is conditioned on the
4-11     faithful execution of the terms of] the contract.
4-12           (g)  Energy conservation measures with respect to existing
4-13     buildings or facilities may be financed:
4-14                 (1)  under a lease/purchase contract that has a term
4-15     not to exceed 15 years from the final date of installation and that
4-16     meets federal tax requirements for tax-free municipal leasing or
4-17     long-term financing, including a lease/purchase contract under the
4-18     Master Equipment Lease Purchase Program administered by the Texas
4-19     Public Finance Authority;
4-20                 (2)  with the proceeds of bonds; or
4-21                 (3)  under a contract with the provider of the energy
4-22     conservation measures that has a term not to exceed 15 years from
4-23     the final date of installation.
4-24           (h)  A contract for energy conservation measures shall
4-25     contain provisions pursuant to which the provider of the energy
4-26     conservation measures guarantees the amount of the savings to be
4-27     realized by the state agency under the contract. If the term of a
4-28     contract for energy conservation measures exceeds one year, the
4-29     agency's contractual obligation, including costs of design,
4-30     engineering, installation, and anticipated debt service, in any
4-31     year during the term of the contract beginning after the final date
4-32     of installation may not exceed the total energy and operating cost
4-33     savings, including but not limited to electrical, gas, or other
4-34     utility cost savings and operating cost savings resulting from the
4-35     measures [automatic monitoring and control], as determined by the
4-36     state agency in this subsection, divided by the number of years in
4-37     the contract term.
4-38           (i)  A contract under this section shall [may] be let
4-39     according to the [under competitive sealed proposal] procedures
4-40     established for professional services by Section 2254.004.  Notice
4-41     of the request for qualifications [proposals] shall be given in the
4-42     manner provided for under Section 2156.002 [in Chapter 2156].  The
4-43     State Energy Conservation Office shall establish guidelines and an
4-44     approval process for contracts awarded under this section.  The
4-45     guidelines adopted under this subsection must require that the cost
4-46     savings projected by an offeror be reviewed by a licensed
4-47     professional engineer who is not an officer or employee of an
4-48     offeror for the contract under review or otherwise associated with
4-49     the contract.  An engineer who reviews a contract shall maintain
4-50     the confidentiality of any proprietary information the engineer
4-51     acquires while reviewing the contract.  Section 19, The Texas
4-52     Engineering Practice Act (Article 3271a, Vernon's Texas Civil
4-53     Statutes), applies to work performed under the contract.  [Before
4-54     awarding the contract, the state agency shall submit the selected
4-55     proposal to the State Energy Conservation Office and the Texas
4-56     Energy Coordination Council for review and comment before awarding
4-57     the contract.  The State Energy Conservation Office and the Texas
4-58     Energy Coordination Council will provide a cost-benefit analysis of
4-59     the proposals and an analysis of the guaranteed savings projected
4-60     by offerors and may charge a fee for this service.  The contract
4-61     shall be awarded to the responsible offeror whose proposal,
4-62     following negotiations, is determined to be the most advantageous
4-63     to the state agency considering the savings and other evaluation
4-64     factors set forth in the request for proposals except that if the
4-65     state agency finds that no offer is acceptable, it shall refuse all
4-66     offers.]
4-67           (j)  [In accordance with regulations adopted by the state
4-68     agency, the state agency may conduct discussions with offerors who
4-69     submit proposals and who are determined to be reasonably qualified
 5-1     for the award of the contract. Offerors shall be treated fairly and
 5-2     equally with respect to any opportunity for discussion and revision
 5-3     of proposals.]
 5-4           [(k)  If provided in a request for proposals, proposals shall
 5-5     be opened in a manner that avoids disclosure of the contents to
 5-6     competing offerors and keeps the proposals secret during
 5-7     negotiations. All proposals are open for public inspection after a
 5-8     contract is awarded unless the information is excepted from
 5-9     disclosure under Chapter 552.]
5-10           [(l)  To obtain the best final offers, the state agency may
5-11     allow proposal revisions after submissions and before the award of
5-12     the contract. Final review and approval of the contract will be
5-13     provided by the State Energy Conservation Office.]
5-14           [(m)]  The legislature shall base an agency's appropriation
5-15     for energy costs during a fiscal year on the sum of:
5-16                 (1)  the agency's estimated energy costs for that
5-17     fiscal year; and
5-18                 (2)  if a contract under this section is in effect, the
5-19     agency's estimated net savings resulting from the contract during
5-20     the contract term, divided by the number of years in the contract
5-21     term.
5-22           SECTION 4. Section 302.002(b), Local Government Code, is
5-23     amended to read as follows:
5-24           (b)  A contract authorized under this chapter includes a
5-25     contract for the installation or implementation of:
5-26                 (1)  insulation of the building structure and systems
5-27     within the building;
5-28                 (2)  storm windows or doors, caulking or weather
5-29     stripping, multiglazed windows or doors, heat-absorbing or
5-30     heat-reflective glazed and coated window or door systems, or other
5-31     window or door system modifications that reduce energy consumption;
5-32                 (3)  automatic energy control systems, including
5-33     computer software and technical data licenses;
5-34                 (4)  heating, ventilating, or air conditioning system
5-35     modifications or replacements;
5-36                 (5)  lighting fixtures that increase energy efficiency;
5-37                 (6)  energy recovery systems;
5-38                 (7)  electric systems improvements; or
5-39                 (8)  other energy-conservation-related improvements or
5-40     equipment, [(]including improvements or equipment related to
5-41     renewable energy[)].
5-42           SECTION 5. Section 302.003, Local Government Code, is amended
5-43     to read as follows:
5-44           Sec. 302.003.  PAYMENT AND PERFORMANCE BOND. Notwithstanding
5-45     any other law to the contrary, before entering into a contract for
5-46     energy conservation measures, the governing body of the local
5-47     government shall [may, at its option:]
5-48                 [(1)]  require the provider of the energy conservation
5-49     measures to file with the governing body a payment and performance
5-50     bond relating to the installation of energy conservation measures
5-51     in accordance with Chapter 2253, Government Code. The governing
5-52     body may also require a separate bond to [that is in an amount the
5-53     governing body finds reasonable and necessary to protect the
5-54     interests of the local government and that may also] cover the
5-55     value of the guaranteed savings on the contract [and is conditioned
5-56     on the faithful execution of the terms of the contract; or]
5-57                 [(2)  choose not to require a payment and performance
5-58     bond in connection with the contract].
5-59           SECTION 6. Section 302.004, Local Government Code, is amended
5-60     to read as follows:
5-61           Sec. 302.004.  METHOD OF FINANCING; TERMS OF CONTRACT. (a)
5-62     Energy conservation measures with respect to [existing] buildings
5-63     or facilities may be financed:
5-64                 (1)  under a lease-purchase contract that has a term
5-65     not to exceed 15 years from the final date of installation and that
5-66     meets federal tax requirements for tax-free municipal leasing or
5-67     long-term financing;
5-68                 (2)  with the proceeds of bonds; or
5-69                 (3)  under a contract with the provider of the energy
 6-1     conservation measures that has a term not to exceed 15 years from
 6-2     the final date of installation.
 6-3           (b)  The contract shall contain provisions pursuant to which
 6-4     the provider of the energy conservation measures guarantees the
 6-5     amount of the savings to be realized by the local government under
 6-6     the contract.  If the term of a contract for energy conservation
 6-7     measures exceeds one year, the local government's contractual
 6-8     obligations in any one year during the term of the contract
 6-9     beginning after the final date of installation may not exceed the
6-10     total energy and operating cost savings, including but not limited
6-11     to electrical, gas, or other utility cost savings and operating
6-12     cost savings resulting from the measures [automatic monitoring and
6-13     control] as determined by the local government in this subsection,
6-14     divided by the number of years in the contract term.
6-15           SECTION 7. Section 302.005, Local Government Code, is amended
6-16     to read as follows:
6-17           Sec. 302.005.  BIDDING PROCEDURES; AWARD OF CONTRACT. [(a)]
6-18     A contract under this chapter shall [may] be let in accordance with
6-19     the [under competitive proposal] procedures established for
6-20     professional services by Section 2254.004, Government Code.  Notice
6-21     of the request for qualifications [proposals] shall be published in
6-22     the manner provided for competitive bidding.  [Requests for
6-23     proposals must solicit quotations and must specify the relative
6-24     importance of guaranteed savings, price, return on investment,
6-25     financial performance and stability, quality, technical ability,
6-26     experience, and other evaluation factors.]
6-27           [(b)  The contract shall be awarded to the responsible
6-28     offeror whose proposal, following negotiations, is determined to be
6-29     the most advantageous to the local government considering the
6-30     guaranteed savings and other evaluation factors set forth in the
6-31     request for proposals.]
6-32           [(c)  To obtain the best final offers, the local government
6-33     may allow proposal revisions after submissions and before the award
6-34     of the contract.]
6-35           SECTION 8. This Act takes effect September 1, 2001, and
6-36     applies only to a contract entered into by an educational
6-37     institution, state agency, or local government on or after that
6-38     date. A contract entered into by an educational institution, state
6-39     agency, or local government before the effective date of this Act
6-40     is covered by the law in effect on the date the contract was
6-41     entered into, and the former law is continued in effect for that
6-42     purpose.
6-43                                  * * * * *