| TO: | Honorable Carlos Uresti, Chair, House Committee on Government Reform |
| FROM: | John S. O'Brien, Deputy Director, Legislative Budget Board |
| IN RE: | HB314 by Dukes (Relating to the performance of a private commercial contractor that provides a service of a state agency.), As Introduced |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2006 | ($2,243,500) |
| 2007 | ($1,925,000) |
| 2008 | ($1,666,000) |
| 2009 | ($1,402,000) |
| 2010 | ($1,402,000) |
| Fiscal Year | Probable (Cost) from GENERAL REVENUE FUND 1 |
Change in Number of State Employees from FY 2005 |
|---|---|---|
| 2006 | ($2,243,500) | 21.1 |
| 2007 | ($1,925,000) | 18.1 |
| 2008 | ($1,666,000) | 15.6 |
| 2009 | ($1,402,000) | 13.1 |
| 2010 | ($1,402,000) | 13.1 |
This bill requires the Council on Competitive Government to conduct a cost-benefit analysis when comparing the cost of providing a state service. The cost benefit analysis should include a private contractor’s performance of the service, services provided by other support agencies for the state, and improving a state agency’s performance through an organizational model and implementing recommendations by state oversight agencies and the agency’s governing body.
This bill also requires that a contract awarded by the State Council on Competitive Government to a private contractor shall include a provision stipulating that the continuation of the entire contract period is contingent on the outcome of two audits conducted by the State Auditor.
It should also be noted that all additional duties and responsibilities would be proposed in the State Auditor’s annual audit plan, which is subject to approval by the Legislative Audit Committee.
Section 1 of this bill requires the Council on Competitive Government to conduct a cost-benefit analysis when comparing the cost of providing a state service. The cost benefit analysis should include a private contractor’s performance of the service, services provided by other support agencies for the state, and improving a state agency’s performance through an organizational model and implementing recommendations by state oversight agencies and the agency’s governing body. The Council on Competitive Government currently provides these types of analysis and there should be no fiscal impact for the provisions mentioned.
Section 2 of this bill would require the State Auditor to perform two audits of each contract awarded by the State Council on Competitive Government to a private contractor. At least eight contracts have been identified as being subject to the audit provision for fiscal year 2006. The total number of hours to perform these contract audits has been estimated to be 33,750. The State Auditor’s current billing rate is $66 per hour resulting in a cost of $2,227,500. In addition, travel costs for staff total $16,000.
Nine contracts, which include follow-up audits from fiscal year 2006, have been identified as being subject to the audit provision for fiscal year 2007. The total number of hours to perform these contract audits has been estimated to be 29,000. At the State Auditor’s current billing rate of $66 per hour, this would result in a cost of $1,914,000. In addition, travel costs for staff total $11,000.
For fiscal year 2008, approximately five new contacts would be awarded with an estimated 25,000 staff hours to perform at the billing rate of $66 totaling $1,650,000. Travel costs for staff would add an additional $16,000. For fiscal years 2009 and 2010, approximately 21,000 staff hours would be utilized at a billing rate of $66 totaling $1,386,000 a year. Travel costs for staff would total an additional $16,000 per year.
As a result of performing the contract audits, an additional 21.1 FTEs in fiscal year 2006 would be required to perform these duties. An additional 18.1 FTEs would be required in fiscal year 2007 and 15.6 FTEs would be required in fiscal year 2008. For fiscal years 2009 and 2010 and additional 13.1 FTEs would be required. The costs for the increased FTEs are included in the amounts above.
| Source Agencies: | 303 Building and Procurement Commission, 308 State Auditor's Office
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| LBB Staff: | JOB, LB, MS, JM
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