By: Otto, et al. (Senate Sponsor - Eltife) H.B. No. 15

(In the Senate - Received from the House May 6, 2015; May 7, 2015, read first time and referred to Committee on Finance; May 20, 2015, reported favorably by the following vote: Yeas 11, Nays 0; May 20, 2015, sent to printer.) Click here to see the committee vote

A BILL TO BE ENTITLED

AN ACT

relating to the management and oversight of state contracts, including contracts for information technology commodity items.

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

SECTION 1. Section 821.009(b), Government Code, is amended to read as follows:

(b) Notwithstanding any other law and in addition to the requirements of Subchapter E, Chapter 2262, before a contract described by Subsection (a) may be entered into by the retirement system, a representative of the office of the attorney general shall review the form and terms of the contract and may make recommendations to the retirement system for changes to the contract if the attorney general determines that the office of the attorney general has sufficient subject matter expertise and resources available to provide this service.

SECTION 2. Section 825.103(g), Government Code, is amended to read as follows:

(g) Notwithstanding any other law and except as provided by Section 2262.202, Chapters 2261 and 2262 do not apply to the retirement system. The Contract Management and Oversight [Advisory] Team shall assist the retirement system at the request of the retirement system. The retirement system may use the training program for contract management provided under Chapter 2262.

SECTION 3. Section 2054.065(a)(2), Government Code, is amended to read as follows:

(2) "Team" means the Contract Management and Oversight [Advisory] Team established under Subchapter E [C], Chapter 2262.

SECTION 4. Sections 2165.356(a) and (b), Government Code, are amended to read as follows:

(a) Not later than the 60th day before the date the commission is scheduled to vote on approval of a qualifying project contract, the commission must submit to the Contract Management and Oversight [Advisory] Team established under Subchapter E [C], Chapter 2262, documentation of the modifications to a proposed qualifying project made during the commission's evaluation and negotiation process for the project, including a copy of:

(1) the final draft of the contract;

(2) the detailed qualifying project proposal; and

(3) any executed interim or other agreement.

(b) The Contract Management and Oversight [Advisory] Team shall review the documentation submitted under Subsection (a) and provide written comments and recommendations to the commission. The review must focus on, but not be limited to, best practices for contract management and administration.

SECTION 5. Section 2166.2551, Government Code, is amended to read as follows:

Sec. 2166.2551. CONTRACT NOTIFICATION. The commission or an agency whose project is exempted from all or part of this chapter under Section 2166.003 shall provide written notice to the Legislative Budget Board of a contract for a construction project if the amount of the contract, including an amendment, modification, renewal, or extension of the contract, exceeds $50,000 [$14,000]. The notice must be on a form prescribed by the Legislative Budget Board and filed not later than the 10th day after the date the agency enters into the contract.

SECTION 6. Section 2254.006, Government Code, is amended to read as follows:

Sec. 2254.006. CONTRACT NOTIFICATION. A state agency, including an institution of higher education as defined by Section 61.003, Education Code, shall provide written notice to the Legislative Budget Board of a contract for professional services, other than a contract for physician or optometric services, if the amount of the contract, including an amendment, modification, renewal, or extension of the contract, exceeds $50,000 [$14,000]. The notice must be on a form prescribed by the Legislative Budget Board and filed not later than the 10th day after the date the agency enters into the contract.

SECTION 7. Section 2254.0301(a), Government Code, is amended to read as follows:

(a) A state agency shall provide written notice to the Legislative Budget Board of a contract for consulting services if the amount of the contract, including an amendment, modification, renewal, or extension of the contract, exceeds $50,000 [$14,000]. The notice must be on a form prescribed by the Legislative Budget Board and filed not later than the 10th day after the date the entity enters into the contract.

SECTION 8. Section 2262.001(1), Government Code, is amended to read as follows:

(1) "Team" means the Contract Management and Oversight [Advisory] Team created under Subchapter E [C].

SECTION 9. Section 2262.0015, Government Code, is amended to read as follows:

Sec. 2262.0015. APPLICABILITY TO CERTAIN CONTRACTS. (a) The comptroller by rule shall establish threshold requirements that exclude small or routine contracts, including purchase orders, from the application of Subchapters A, B, and D [this chapter].

(b) Subchapters A, B, and D do [This chapter does] not apply to an enrollment contract described by 1 T.A.C. Section 391.183 as that section existed on November 1, 2013.

SECTION 10. Section 2262.002(b), Government Code, is amended to read as follows:

(b) Except as otherwise provided by this chapter, this [This] chapter does not apply to contracts of the Texas Department of Transportation that:

(1) relate to highway construction or highway engineering; or

(2) are subject to Section 201.112, Transportation Code.

SECTION 11. Chapter 2262, Government Code, is amended by adding Subchapter E to read as follows:

SUBCHAPTER E. CONTRACT MANAGEMENT AND OVERSIGHT TEAM

Sec. 2262.201. DEFINITIONS. In this subchapter:

(1) "High-risk contract" means a state agency contract or purchase order that:

(A) has a value of at least $10 million;

(B) has a value of less than $10 million, but has high-risk factors as identified by the team;

(C) is entered into with an entity that is incorporated outside of the United States;

(D) is entered into with an entity that, during the five-year period preceding the date of the purchase or award of the contract, has had a contract with a state agency or federal governmental entity terminated or canceled for:

(i) a violation of, or noncompliance with, the terms of the contract;

(ii) delivery of an ineffective product, service, or system;

(iii) significant delays or cost overruns;

(iv) fraud;

(v) misconduct; or

(vi) any other event that resulted in the termination or cancellation of the contract for cause; or

(E) meets other criteria that may be established by the team, including that the contract or purchase order:

(i) is awarded by an agency with significant audit findings related to contracting in the previous two fiscal years;

(ii) is expected to cost more than 20 percent of the awarding agency's budget available from all sources;

(iii) outsources a program or key function of a program of the awarding agency;

(iv) has a value of more than $1 million and is awarded on an emergency basis or is a sole source contract; or

(v) has a value of more than $1 million and has change orders that increase the cost of the contract by more than 20 percent of the original contract cost, excluding routine contract renewals.

(2) "Major information resources project" has the meaning assigned by Section 2054.003(10).

(3) "Quality assurance team" means the quality assurance team established under Section 2054.158.

(4) "Solicitation" means a solicitation for bids, offers, qualifications, proposals, or similar expressions of interest for a high-risk contract.

Sec. 2262.202. APPLICABILITY OF SUBCHAPTER. (a) This subchapter applies to contracts of the Texas Department of Transportation that:

(1) do not relate to highway construction or highway engineering; or

(2) are not subject to Section 201.112, Transportation Code.

(b) This subchapter does not apply to a contract of the Employees Retirement System of Texas or the Teacher Retirement System of Texas except for a contract with a nongovernmental entity for claims administration of a group health benefit plan under Subtitle H, Title 8, Insurance Code.

Sec. 2262.203. ESTABLISHMENT; GENERAL DUTIES. The Legislative Budget Board shall establish a Contract Management and Oversight Team to:

(1) develop criteria for identifying high-risk factors in contracts;

(2) consult with state agencies on and review high-risk contracts as provided by Section 2262.204;

(3) provide recommendations and assistance to state agency personnel throughout the contract management process;

(4) coordinate and consult with the quality assurance team on all high-risk contracts relating to a major information resources project; and

(5) coordinate and consult with the comptroller to:

(A) develop criteria for high-risk contracts under Section 2262.201(1)(E);

(B) identify strategies to mitigate contract risks; and

(C) monitor contract activity using information from the centralized accounting and payroll system or any successor system used to implement the enterprise resource planning component of the uniform statewide accounting project developed under Sections 2101.035 and 2101.036.

Sec. 2262.204. NOTICE AND REVIEW; WAIVER. (a) Each state agency must provide written notice to the team not later than the 30th day before the date the agency publicly releases solicitation documents for a high-risk contract.

(b) A state agency must submit to the team information and documentation requested by the team that relate to a high-risk contract, including information on contract development, vendor selection, and ongoing contract oversight.

(c) The team shall review information and documentation submitted under Subsection (b) and make recommendations to ensure that potential risks related to the high-risk contract have been identified and mitigated.

(d) A state agency shall implement the team's recommendations and provide any additional documentation required by the team to demonstrate that risks related to the high-risk contract have been mitigated. If a recommendation made by the team is not implemented, the agency must provide written notice to the team before the 31st day after the date the agency received the recommendation.

(e) If, after receiving notice provided under Subsection (d), the team determines that significant risks related to the high-risk contract remain, the team shall provide written notice of that fact to the Legislative Budget Board, the governor, and the comptroller with a description of the risk and recommendations to mitigate the risk, including cancellation of the high-risk contract.

(f) The team may adopt criteria for waiving the consultation and review requirements of this section.

Sec. 2262.205. SOLICITATION AND CONTRACT CANCELLATION. After review of the written notice provided by the team under Section 2262.204(e), the Legislative Budget Board, the governor, or the comptroller may recommend that a state agency cancel a solicitation or a high-risk contract if:

(1) a proposed contract would place the state at an unacceptable risk if executed; or

(2) an executed contract is experiencing performance failure or payment irregularities.

SECTION 12. Subchapter C, Chapter 2262, Government Code, is repealed.

SECTION 13. (a) The Contract Advisory Team is abolished.

(b) The validity of an action taken by the Contract Advisory Team before the team was abolished by this Act is not affected by the abolition.

(c) All powers and duties of the Contract Advisory Team are transferred to the Contract Management and Oversight Team established by this Act.

(d) A rule, form, policy, procedure, or decision of the Contract Advisory Team continues in effect as a rule, form, policy, procedure, or decision of the Contract Management and Oversight Team until superseded by an act of the Contract Management and Oversight Team.

(e) A reference in law to the Contract Advisory Team means the Contract Management and Oversight Team.

(f) Any action or proceeding involving the Contract Advisory Team is transferred without change in status to the Contract Management and Oversight Team, and the Contract Management and Oversight Team assumes, without a change in status, the position of the Contract Advisory Team in a negotiation or proceeding to which the Contract Advisory Team is a party.

SECTION 14. Sections 2166.2551, 2254.006, and 2254.0301(a), Government Code, as amended by this Act, apply only to a state agency contract for which the agency is required to provide notice to the Legislative Budget Board that is entered into on or after the effective date of this Act.

SECTION 15. This Act takes effect September 1, 2015.

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