83(R) HB 2472 - Committee Report (Unamended) version

BILL ANALYSIS

H.B. 2472

By: Cook

State Affairs

Committee Report (Unamended)

BACKGROUND AND PURPOSE

House Bill 2472 contains the results of the Sunset Commission’s review of two separate but related agencies: the Department of Information Resources (DIR) and the Comptroller’s procurement division (known as TPASS, the Texas Procurement and Support Services Division). DIR provides information technology and telecommunications products and services to state agencies, primarily by establishing and managing statewide contracts for commodity items such as computer hardware and major programs such as data center consolidation. The Comptroller’s office performs a similar statewide procurement function, but for non-IT commodities and services such as office supplies and food for the prison system.

DIR is subject to the Sunset Act, and will be abolished on September 1, 2013, unless continued by the Legislature. The programs and functions within the Comptroller’s procurement Division are not subject to abolishment, but without legislative action, they will transfer to the Texas Facilities Commission on September 1, 2013. The Sunset Commission determined the State has a continuing need for the procurement, support, and information technology functions performed by both DIR and the Division, and that no major organizational change is needed at this time. However, the Sunset Advisory Commission recommended several statutory modifications to improve the coordination and implementation of these functions that are included in this legislation.

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the Department of Information Resources in SECTION 13 of this bill.

ANALYSIS

Continues DIR and retains statewide procurement and other support services duties at the Comptroller of Public Accounts for eight years.

H.B. 2472 continues DIR for eight years, until 2021. The bill also continues the Comptroller’s authority to perform statewide procurement functions for eight years, rather than allowing these functions to transfer back to the Texas Facilities Commission on September 1, 2013. The bill also repeals language requiring the 2013 Sunset reviews of DIR and the Comptroller’s procurement division functions.

Requires formalized coordination and improved data collection between DIR and the Comptroller’s procurement division

H.B. 2472 requires DIR and the Comptroller to establish a procurement coordination committee made up of essential personnel of DIR and the Comptroller. The bill requires the committee to perform specific tasks, such as identifying areas of overlap in procurement functions, and developing a standardized method for collecting and analyzing spending data and measuring cost savings. The bill requires DIR and the Comptroller to enter into a memorandum of understanding to facilitate the implementation of the committee by March 1, 2014. The bill authorizes the committee to appoint advisory members.

H.B. 2472 requires the committee to report its findings to the Sunset Advisory Commission by September 1, 2015 and again by September 1, 2017, and requires the Comptroller and DIR to publish these reports on their websites. The bill also requires each agency to provide an additional report regarding these duties as part of the self-evaluation reports submitted as part of their next Sunset reviews.

Requires a Sunset review of state procurement and contracting in eight years

H.B. 2472 requires the Sunset Advisory Commission to evaluate the state’s overall procurement system, including any provision in state law relating to procurement and contracting for goods and services. The bill requires the Commission to present a report to the Legislature on its evaluation and recommendations related to the report’s findings by January 1, 2021. The bill also authorizes the Commission to request the assistance of the Legislative Budget Board, State Auditor, and each standing committee of the Legislature with primary jurisdiction over state procurement in conducting the evaluation.

Requires a customer advisory committee at DIR

H.B. 2472 requires DIR’s Board appoint a customer advisory committee composed of representatives of customers who receive services from each of DIR’s key programs, including state agencies with fewer than 100 employees and the public. The bill requires DIR’s Board, to the extent practicable, to ensure the advisory committee includes a cross-section of DIR’s customers, including institutions of higher education, and the public. The bill requires the advisory committee to report to and advise the DIR Board on the status of DIR’s delivery of critical statewide services.

Establishes certain DIR accounts in statute and requires clear procedures for setting and reporting administrative fees

H.B. 2472 establishes in statute the Statewide Technology Account, related to data center services consolidation, and the Clearing Fund Account, related to the DIR’s cooperative contracts program. The bill limits uses of money in the accounts for the administration of each program’s purposes or for any other purposes specified by the Legislature.

H.B. 2472 requires DIR to adopt a process to determine the amount of the administrative fee the department charges to administer any of its programs. The process must require the fee amounts to directly relate to the amount necessary to recover the cost of DIR’s operations. The bill requires DIR to develop clear procedures for determining the amount of the fees and requires the procedures to require review and approval of all administrative fees by DIR’s board, executive director, and chief financial officer, H.B. 2472 requires DIR to report all administrative fees it sets and the methodology used to set them to the Legislative Budget Board each fiscal year, and post all fee information on its website. The bill requires DIR to update this information when a contract or other action results in a major change to the costs incurred or the price paid by DIR or a customer.

Requires criteria for use of consultants and outside staff at DIR

H.B. 2472 requires DIR to develop clear criteria for the appropriate use of consultants and outside staff, and to perform an annual analysis, including an analysis of DIR’s staffing needs and the need for and cost-effectiveness of contracting for consultants and outside staff. The bill requires DIR to provide the analysis to its Board for approval in conjunction with the budget process. The bill also prohibits DIR from hiring or training any consultants or outside staff unless it has been approved during this budget process.

Requires an internal auditor and an audit subcommittee at DIR

H.B. 2472 requires the DIR Board to appoint an internal auditor who reports directly to and serves at the will of the Board. The bill requires the Board to provide staff and other resources to the internal auditor as appropriate. The bill requires the DIR Board to maintain an audit subcommittee to oversee the internal auditor and other appropriate audit issues, and to evaluate whether the internal auditor has sufficient resources. The bill requires the internal auditor to prepare an annual risk-based audit plan and to submit it to the Board for consideration and approval. The bill authorizes the Board to change the plan as necessary or advisable. H.B. 2472 authorizes the internal auditor to bring before the Board an issue outside the annual audit plan that requires the immediate attention of the Board. The bill specifies the internal auditor may not be assigned any operational or management responsibilities that impair the internal auditor’s independence. The bill also authorizes the internal auditor to provide guidance or other advice before an operational or management decision is made, but specifies the internal auditor may not make or approve the decision. The bill requires DIR to give the internal auditor unrestricted access to DIR’s activities and records unless restricted by other law. The bill also exempts a meeting between the Board and internal auditor to discuss fraud, waste, or abuse from the Open Meetings Act.

Strengthens oversight of and customer involvement in DIR’s contracting functions

H.B. 2472 requires the DIR Board to define in rule what constitutes a major outsourced contract and specifies the definition must include outsourced contracts for the state electronic internet portal project (Texas.gov), statewide technology centers, and telecommunications services, as well as other major outsourced contracts exceeding a monetary threshold. The bill requires DIR Board approval for entering into or amending a major outsourced contract if the amendment has statewide impact. H.B. 2472 also requires the Board to establish one or more subcommittees to monitor the major outsourced contracts. The bill continues existing law relating to contracts for which a solicitation of bids or proposals or similar expressions of interest is published before the effective date of the Act.

H.B. 2472 requires the Board to adopt a policy describing the Board’s role in setting a strategic direction for the department and developing new initiatives and services offered by the department, and to regularly evaluate department operations. The bill also requires the Board to regularly evaluate the extent to which the department meets its information resources technology mission. H.B. 2472 also requires DIR to establish formal procedures to ensure customer involvement in decision making for each of DIR’s major outsourced contracts that affect those customers. The bill also adds contract management training to required Board member training.

For any solicitation of a major contract DIR is required to submit to the Contract Advisory Team for review, H.B. 2472 requires DIR to implement any Contract Advisory Team recommendations regarding the solicitation, or provide a written explanation of why the recommendations cannot be implemented.

Improves DIR’s contract management functions

H.B. 2472 requires DIR to develop and revise a management plan for each of its major outsourced contracts, and requires the management plans to specify procedures for administering, monitoring, and overseeing each major outsourced contract. The bill specifies department staff shall jointly develop the management plans with input from executive management and the Board, and requires the executive director to approve each plan.

H.B. 2472 requires DIR to develop and periodically update a contract management guide to provide an overall, consistent approach to procuring and managing major outsourced contracts and other contracts. The bill requires DIR to make changes based on contract experiences and account for changing conditions to guide the updates. The bill requires DIR to coordinate with its internal auditor as needed in developing procedures for monitoring contracts and individual contractors, and authorizes the Board to adopt rules to develop or update the contract management guide. The bill specifies information, procedures, and other requirements the contract management guide must include, such as customer input and involvement, and clear lines of accountability and authority. The bill also requires DIR to develop a policy for training staff in contract management, including establishing contract management training requirements for all staff involved in contract management.

Requires DIR to use certain information when negotiating commodity contracts

H.B. 2472 requires DIR to use information related to the state’s historical spending levels on particular commodity items to secure the best value when negotiating with a vendor. The bill requires DIR to negotiate a specific price for commonly purchased commodity items, to the greatest extent practicable. The bill provides that if DIR selects a vendor based on the vendor’s offer of a percentage discount from list price, DIR shall document in writing how this arrangement obtains the best value for the state. The bill continues existing law relating to contracts for which a solicitation of bids or proposals or similar expressions of interest is published before the effective date of the bill.

Requires DIR to evaluate information resources technology consolidation

H.B. 2472 requires DIR to work with any entity involved in an information resources technology consolidation to develop an agreed on methodology for collecting and validating data to determine a baseline assessment of costs. The bill requires DIR to use the data in initial cost projections and any later cost comparison. The bill requires DIR to coordinate with the internal auditor for guidance on developing the methodology, and to use the methodology to evaluate actual costs and cost savings related to the consolidation. H.B. 2472 requires DIR to evaluate the progress of its information resources consolidation projects compared to initially projected timelines for implementation. The bill also requires DIR to annually report its evaluation results to the DIR Board, Legislative Budget Board, and customers involved in the consolidation, and to post the results on DIR’s website.

Applies stricter conflict of interest provisions to DIR employees

H.B. 2472 prohibits DIR employees from having any interest in or connection with a contract or bid for department purchases, or accepting or receiving anything of value or future reward or compensation from potential contractors. The bill requires the DIR Board to adopt rules to implement these provisions and specifies an employee who violates these provisions is subject to dismissal. The bill also requires the department to train staff in the requirements and incorporate them in the Department’s contract management guide and internal policies, including employee manuals. The bill makes related conforming changes, and continues existing law relating to contracts for a solicitation of bids or proposals or similar expressions of interest that is published before the effective date of this bill.

Modifies DIR and Comptroller reporting requirements

H.B. 2472 changes the due date for DIR’s Texas.gov reports from September 1 of each even-numbered year to November 15 of each even-numbered year. H.B. 2472 also changes the due dates of the Comptroller’s Semi-Annual and Annual reports on contracts with Historically Underutilized Businesses (HUBs) from April 15 and October 15 to May 15 and November 15 of each year, respectively. H.B. 2472 changes the due date for the Comptroller’s HUB Education and Outreach report from September 1 of each year to October 15. The bill also specifies that the Comptroller shall send both the Semi-Annual and Annual HUB reports to the Speaker of the House of Representatives and the Lieutenant Governor, and eliminates a requirement that these reports be sent to a no longer existing joint committee. The bill repeals the Comptroller’s report on Texas Correctional Industries products sold and makes a conforming change relating to the HUB Semi-Annual and Annual reports. The bill also continues existing law for reports due before the effective date of this bill.

Applies a standard Sunset across-the-board recommendation

H.B. 2472 adds standard Sunset language requiring the DIR Board to develop a policy that encourages the use of negotiated rulemaking and alternative dispute resolution.

Repeals the following statutory provisions:

Government Code, Section 497.030
Government Code, Section 2054.005(b)
Government Code, Sections 2151.0041(b) and (c)
Government Code, Section 2161.121(e)

EFFECTIVE DATE

September 1, 2013.