LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                              April 11, 2001
  
  
          TO:  Honorable Florence Shapiro, Chair, Senate Committee on
               State Affairs
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB221  by Staples (Relating to government purchasing
               using the reverse auction procedure.), Committee Report
               1st House, Substituted
  
**************************************************************************
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  SB221, Committee Report 1st House, Substituted:  positive impact      *
*  of $6,800,000 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.                                                             *
**************************************************************************
  
General Revenue-Related Funds, Five-Year Impact:
  
          ****************************************************
          *  Fiscal Year  Probable Net Positive/(Negative)   *
          *               Impact to General Revenue Related  *
          *                             Funds                *
          *       2002                           $3,400,000  *
          *       2003                            3,400,000  *
          *       2004                            3,400,000  *
          *       2005                            3,400,000  *
          *       2006                            3,400,000  *
          ****************************************************
  
All Funds, Five-Year Impact:
  
         *****************************************************
         * Fiscal Year      Probable Savings/(Cost) from      *
         *                      General Revenue Fund          *
         *                              0001                  *
         *      2002                               $3,400,000 *
         *      2003                                3,400,000 *
         *      2004                                3,400,000 *
         *      2005                                3,400,000 *
         *      2006                                3,400,000 *
         *****************************************************
  
Technology Impact
  
None.
  
  
Fiscal Analysis
  
This bill would amend the Government Code to authorize the General
Services Commission to use a reverse auction procedure to procure goods
and services for the state.
  
  
Methodology
  
In the e-Texas report, the Comptroller of Public Accounts estimates
potential savings generated by reverse auctions at anywhere from 2
percent to 10 percent.  In fiscal year 1999 approximately $70 million
was expended on such items as fuel, office furniture, paper, reflective
sheeting, salt, and tires and tubes.  Using a midpoint of 6 percent as
potential savings, less vendor payment of 20 percent, it is estimated
that approximately $3.4 million could be saved using reverse auctions.
  
  
Local Government Impact
  
No significant fiscal implication to units of local government is
anticipated.
  
  
Source Agencies:   303   General Services Commission, 304   Comptroller
                   of Public Accounts
LBB Staff:         JK, RB, GS, DW