LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 9, 2001
TO: Honorable Steven Wolens, Chair, House Committee on State
Affairs
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB3032 by Pitts (Relating to state agency use of
performance-based and contingency-based contracts.), As
Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB3032, As Introduced: positive impact of $1,960,000 through the *
* biennium ending August 31, 2003. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $0 *
* 2003 1,960,000 *
* 2004 1,960,000 *
* 2005 1,960,000 *
* 2006 1,960,000 *
****************************************************
All Funds, Five-Year Impact:
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*Fiscal Probable Probable Probable Probable *
* Year Savings/(Cost) Savings/(Cost) Savings/(Cost) Savings/(Cost) *
* from General from All from Federal from All Other *
* Revenue Fund General Revenue Funds - Federal Accounts *
* 0001 Dedicated 0555 *
* 2002 $0 $0 $0 $0 *
* 2003 1,960,000 245,000 980,000 315,000 *
* 2004 1,960,000 245,000 980,000 315,000 *
* 2005 1,960,000 245,000 980,000 315,000 *
* 2006 1,960,000 245,000 980,000 315,000 *
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Technology Impact
None.
Fiscal Analysis
This bill would require the General Services Commission (GSC) in
cooperation with the Comptroller of Public Account's office, to develop
sample contracts, recommend standard terms, and make then available
through GSC's website.
The bill would require the Texas Department of Health, the Texas
Department of Transportation, the Texas Department of Human Services, the
Texas Department of Mental Health and Mental Retardation, the Texas
Department of Criminal Justice, and the Department of Protective and
Regulatory Services to have at least 25 percent of their contracts for
goods and services to be performance-based or contingency-based contracts
by January 1, 2003.
The GSC and Comptroller's office would be authorized to conduct an
inventory of state agency contracts for services, and they would have to
perform an evaluation of the effects of performance-based and
contingency-based contracts and provide a report to the Legislature by
December 1, 2003.
Methodology
According to the Comptroller of Public Accounts office e-Texas report,
the federal government has achieved an overall savings of 15 percent in
its pilot study, but the Comptroller's office was unable to estimate the
fiscal impact of this bill. However, for the purpose of the State of
Texas an estimated savings of .25 percent is assumed on state contracts,
which are converted to performance-based or contingency-based contracts.
During fiscal year 2000, the State of Texas made over $14 billion in
vendor payments for services. Assuming that it takes 12 months to
develop and implement performance-based and contingency-based contracts,
fiscal year 2003 would be the earliest savings could be generated. Also,
assuming that Texas converts just 10 percent of these state contracts,
which includes converting 25 percent of the contracts for the Texas
Department of Health, the Texas Department of Transportation, the Texas
Department of Human Services, the Texas Department of Mental Health and
Mental Retardation, the Texas Department of Criminal Justice, and the
Department of Protective and Regulatory Services, to a performance basis
could eventually result in saving the state around $3,500,000 annually.
Approximately 56 percent of the State's vendor payments for goods and
services are financed out of General Revenue Funds, 7 percent from
General Revenue Dedicated Funds, 28 percent from Federal Funds, and 9
percent from Other Funds. Therefore, approximately $1,960,000 in General
Revenue Funds would be saved annually, $245,000 in General Revenue
Dedicated Funds would be saved annually, $980,000 in Federal Funds would
be saved annually, and $315,000 in Other Funds would be saved annually.
According to the General Services Commission, the agency has estimated
there would be cost to develop sample contracts, to complete an inventory
of state agency contracts, and analyze contracts, but these cost could
be absorbed within the existing agency resources.
The Department of Protective and Regulatory Services has estimated there
would be cost for legal support for the restructuring the contracts,
evaluating contractor performance, and designing performance measures
specific to the contract, but these cost could be absorbed within the
existing agency resources.
The Department of Health has estimated there would be cost for contract
management activities, but these cost could be absorbed within the
existing agency resources.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 601 Texas Department of Transportation, 655 TX
Dept. of Mental Health & Mental Retardation, 324
Texas Department of Human Services, 501 Texas
Department of Health, 530 Department of Protective
and Regulatory Services, 303 General Services
Commission, 304 Comptroller of Public Accounts,
696 Texas Department of Criminal Justice
LBB Staff: JK, RB, GS