81R3841 JJT-F

By: Dukes H.B. No. 581

A BILL TO BE ENTITLED

AN ACT

relating to outsourcing a service performed by a state agency to a private commercial contractor.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 2162.103, Government Code, is amended to read as follows:

Sec. 2162.103. COST COMPARISON AND CONTRACT CONSIDERATIONS. (a) In comparing the cost of providing a service, the council shall conduct and consider the conclusions of cost-benefit analyses that compare the costs and benefits of [consider the]:

(1) a private contractor's performance of the service, including considering the cost of supervising the work of a private contractor; [and]

(2) [cost of] a state agency's performance of the service, including considering the cost of:

(A) services provided by [the costs of] the comptroller, attorney general, and other support agencies; and

(B) other indirect expenses [costs] related to the agency's performance of the service; and

(3) improving the state agency's performance by:

(A) developing and implementing a most efficient organization model or a similar model developed by the council;

(B) implementing recommendations of state oversight agencies such as the Legislative Budget Board, the state auditor, and the Sunset Advisory Commission; and

(C) implementing the recommendations of the agency's governing body intended to improve the agency's provision of a service the council identifies under Section 2162.102(a).

(b) The state agency may submit a proposal to the council describing a reorganized service delivery method to compete directly with the performance of a private commercial contractor.

(c) In comparing the cost of providing a service, the council in conjunction with the state agency shall prepare and consider an estimate of the costs of returning the performance of the service from the contractor to the state agency in the event that it proves necessary to do so. The estimate must include a reasonable proposed timetable for actions necessary to return the service to the state agency.

(d) [(b)] A bid or contract must include an analysis of health care benefits, retirement, and workers' compensation insurance for a contractor's employees that are reasonably comparable to the health care benefits, retirement, and workers' compensation insurance of the state.

(e) Cost-benefit analyses used for an evaluation under Subsection (a) must include a short-term analysis covering a period of not more than six months and a long-term analysis covering a period of at least one and not more than five years.

SECTION 2. Chapter 2162, Government Code, is amended by adding Subchapter D to read as follows:

SUBCHAPTER D. OUTSOURCING MAJOR FUNCTIONS

Sec. 2162.151. APPLICABILITY. This subchapter applies in relation to a contract, contract amendment, or contract extension made or proposed to be made between a state agency and a private commercial contractor only if:

(1) a service performed by the agency at the time the contract is awarded, amended, or extended will be outsourced under the contract, contract amendment, or contract extension; and

(2) the contract, contract amendment, or contract extension, as applicable:

(A) will lead to the loss of 100 or more state employee positions; or

(B) has a value of $10 million or more.

Sec. 2162.152. DETERMINATION BY COUNCIL REQUIRED. (a) In circumstances under which this subchapter applies, a state agency may not award a contract to, amend a contract with, or extend a contract with a private commercial contractor unless the council determines that the service that will be outsourced under the contract, contract amendment, or contract extension is a service that may be better provided by selecting the provider of the service through competition with other state agencies and private commercial contractors that can provide the service.

(b) A state agency may not award a new contract to which this subchapter applies unless the council has made the determination required by Subsection (a) and the provider of the service under the contract is selected through competition with other state agencies and private commercial contractors. A state agency may amend or extend an existing contract under circumstances in which this subchapter applies after the council makes the determination required by Subsection (a).

Sec. 2162.153. CONTINUATION OF OUTSOURCING CONTRACT; COMPLIANCE AUDIT. (a) The state auditor shall conduct a compliance audit with regard to the outsourced service not later than the end of the sixth month after the month the service was outsourced under the contract, contract amendment, or contract extension. The contractor shall pay the costs of the audit. In conducting the audit, the state auditor shall:

(1) determine whether the contractor has:

(A) met the conditions of the contract with regard to the outsourced service; and

(B) cooperated with the audit as required by Subsection (c);

(2) assess whether the contractor has provided a level of service delivery comparable to that provided by the state agency that most recently provided the service before the service was performed by the contractor; and

(3) assess whether the cost savings presented in the contractor's contract bid or proposal with regard to the outsourced service are being realized.

(b) Subject to Subsection (e), the contractor may continue to perform under the contract until the state auditor completes a second compliance audit. The state auditor shall conduct the second audit beginning not earlier than the end of the sixth month after the month in which the first audit is completed under this section and not later than the 18th month after the month in which the first audit is completed.

(c) The private commercial contractor shall cooperate with an audit conducted by the state auditor under this subchapter or Chapter 321.

(d) After the initial and second audits conducted under this section, the state auditor shall issue an audit report to the contractor, the state agency, the governor, the lieutenant governor, the speaker of the house of representatives, and the presiding officer of each standing committee of the legislature with jurisdiction over the state agency and the subject matter of the contract. The report must explain the auditor's conclusions regarding whether the contractor:

(1) cooperated satisfactorily with the audit; and

(2) performed satisfactorily under the contract.

(e) If the governing body of the state agency, after reviewing the auditor's report and any response by the contractor, concludes that the contractor did not cooperate with the audit or did not perform satisfactorily under the contract, the governing body shall terminate the contract as soon as practicable.

(f) A state agency that enters into a contract or agrees to a contract amendment or extension that is subject to this subchapter shall notify the state auditor of the existence of the contract not later than the date the contract, contract amendment, or contract extension takes effect.

Sec. 2162.154. ACTIONS FOLLOWING RETURN OF SERVICE. If a service obligation is returned to the state agency after a contract is terminated under Section 2162.153(e):

(1) the state agency immediately shall complete a performance evaluation to design a program to improve the delivery of the service and implement the program designed; and

(2) until the end of the sixth month after the month the contract is terminated under Section 2162.153(e), with respect to the service, the council may not:

(A) require the service to be submitted to competitive bidding; or

(B) make a determination regarding the service under Section 2162.102(b).

Sec. 2162.155. RECOVERY AUDIT. If, in the performance of a compliance audit under this subchapter, the state auditor notes an irregularity that may indicate that the state has overpaid the contractor or has made a payment for a service not performed, the state auditor shall conduct a recovery audit designed to identify any amounts overpaid or amounts paid for unperformed services. The state auditor shall report the results of the recovery audit to the attorney general and the affected state agency. The attorney general and affected state agency shall cooperate in taking action to recover the amounts owed to the state.

SECTION 3. The changes in law made by this Act apply only to:

(1) the activities of the State Council on Competitive Government or a state agency concerning a proposal to contract with a commercial source to provide services being performed by a state agency, on or after the effective date of this Act; and

(2) the evaluation of the services performed by a contractor under a contract, contract amendment, or contract extension made on or after the effective date of this Act.

SECTION 4. This Act takes effect September 1, 2009.