78R9057 JRD-F


By:  Raymond                                                      H.B. No. 3498

Substitute the following for H.B. No. 3498:                                   

By:  Marchant                                                 C.S.H.B. No. 3498



A BILL TO BE ENTITLED

AN ACT

relating to a provision in certain contracts entered into by state 
agencies.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Subchapter A, Chapter 2262, Government Code, is 
amended by adding Section 2262.003 to read as follows:
	Sec. 2262.003.  REQUIRED CONTRACT PROVISION RELATING TO 
AUDITING.  (a)  Each state agency shall include in each of its 
contracts a term that provides that:
		(1)  the state auditor may conduct an audit or 
investigation of any entity receiving funds from the state directly 
under the contract or indirectly through a subcontract under the 
contract; and
		(2)  acceptance of funds directly under the contract or 
indirectly through a subcontract under the contract acts as 
acceptance of the authority of the state auditor, under the 
direction of the Legislative Audit Committee, to conduct an audit 
or investigation in connection with those funds.
	(b)  The state auditor shall provide assistance to a state 
agency in developing the contract provision.
	SECTION 2.  The change in law made by this Act:                                
		(1)  applies only in relation to a state contract 
entered into on or after the effective date of this Act; and
		(2)  does not affect any authority under other law to 
conduct an audit or investigation in relation to a state contract 
entered into before the effective date of this Act.
	SECTION 3.  This Act takes effect immediately if it receives 
a vote of two-thirds of all the members elected to each house, as 
provided by Section 39, Article III, Texas Constitution.  If this 
Act does not receive the vote necessary for immediate effect, this 
Act takes effect September 1, 2003.