LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 6, 2001
TO: Honorable Florence Shapiro, Chair, Senate Committee on
State Affairs
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB1518 by Lucio (Relating to state purchasing using the
reverse auction procedure.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB1518, As Introduced: 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. *
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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 *
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All Funds, Five-Year Impact:
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*Fiscal Probable Savings/(Cost) from Probable Savings/(Cost) from *
* Year General Revenue Fund State Highway Fund *
* 0001 0006 *
* 2002 $3,400,000 $252,000 *
* 2003 3,400,000 504,000 *
* 2004 3,400,000 756,000 *
* 2005 3,400,000 1,008,000 *
* 2006 3,400,000 1,260,000 *
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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.
This bill would also specify which commodities purchased for, or by, the
Texas Department of Transportation would have to be purchased using
reverse auctions. The bill would establish the percentage of those
commodities, ranging from 10 to 50 percent, that would be purchased
using reverse auctions in fiscal year 2002 through fiscal year 2006.
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.
Also, in the Comptroller's report, Paving the Way: A Performance Review
of the Texas Department of Transportation, the Comptroller's office
estimates reverse auctions could be expected to generate savings for
items such as cement, fuel, paint, furniture, and drainage materials.
Using the material categories and dollar purchases for fiscal 1999,
approximately $42 million, and subjecting 10 percent of these purchase
or about $4.2 million to reverse auctions in fiscal year 2002, and using
a midpoint of 6 percent as potential savings, it is estimated that
$252,000 could be saved. Using reverse auctions to purchase 20 percent
of these commodities, or about $8.4 million, in fiscal year 2003, would
result in savings of about $504,000. By 2006, when at least 50 percent
of these commodities, or about $21 million, would be purchased using
reverse auctions, the savings would be $1,260,000.
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, 601 Texas Department of
Transportation
LBB Staff: JK, RB, GS