By: Nelson S.B. No. 20

A BILL TO BE ENTITLED

AN ACT

relating to state agency contracting.

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

SECTION 1. Subchapter L, Chapter 441, Government Code, is amended by adding Section 441.1855 to read as follows:

Sec. 441.1855. RETENTION OF CONTRACT AND RELATED DOCUMENTS BY STATE AGENCIES. Notwithstanding Section 441.185 or 441.187, a state agency:

(1) shall retain in its records each contract entered into by the state agency and all contract solicitation documents related to the contract; and

(2) may destroy the contract and documents only after the fourth anniversary of the date the contract is completed or expires.

SECTION 2. Section 2151.002, Government Code, is amended to read as follows:

Sec. 2151.002. DEFINITION. Except as otherwise provided by this subtitle, in this subtitle, "state agency" means:

(1) a department, commission, board, office, or other agency in the executive branch of state government created by the state constitution or a state statute;

(2) the supreme court, the court of criminal appeals, a court of appeals, or the Texas Judicial Council; or

(3) a university system or an institution of higher education as defined by Section 61.003, Education Code[, except a public junior college].

SECTION 3. Section 2155.078, Government Code, is amended by amending Subsections (a) and (b) and adding Subsection (a-1) to read as follows:

(a) The commission shall establish and administer a system of training, continuing education, and certification for state agency purchasing personnel. The training and continuing education for state agency purchasing personnel must include ethics training. The commission may establish and offer appropriate training to vendors on a cost recovery basis. The commission may adopt rules to administer this section, including rules relating to monitoring a certified purchaser's compliance with the continuing education requirements of this section.

(a-1) The training, continuing education, and certification required under Subsection (a) must include:

(1) training on the selection of an appropriate procurement method by project type; and

(2) training conducted by the Department of Information Resources on purchasing technologies.

(b) Notwithstanding [Except as provided by] Subsection (n), all state agency purchasing personnel, including agencies exempted from the purchasing authority of the commission, must receive the training and continuing education to the extent required by rule of the commission. The training and continuing education must include ethics training. A state agency employee who is required to receive the training may not participate in purchases by the employing agency unless the employee has received the required training or received equivalent training from a national association recognized by the commission. The equivalent training may count, as provided by Subsection (k), toward the continuing education requirements.

SECTION 4. Subchapter B, Chapter 2155, Government Code, is amended by adding Sections 2155.089 and 2155.090 to read as follows:

Sec. 2155.089. REPORTING VENDOR PERFORMANCE. (a) After a contract is completed or otherwise terminated, each state agency shall review the vendor's performance under the contract.

(b) The state agency shall report to the comptroller, using the tracking system described by Section 2155.090, on the results of the review regarding a vendor's performance under a contract.

Sec. 2155.090. VENDOR PERFORMANCE TRACKING SYSTEM. (a) The comptroller shall evaluate a vendor's performance based on the information reported under Section 2155.089 and criteria established by the comptroller.

(b) The comptroller shall establish an evaluation process that allows vendors who receive an unfavorable performance review to protest any classification given by the comptroller.

(c) The comptroller shall include the performance reviews in a vendor performance tracking system.

(d) A state agency shall use the vendor performance tracking system to determine whether to award a contract to a vendor reviewed in the database.

(e) The comptroller shall make the vendor performance tracking system accessible to the public on the comptroller's Internet website.

SECTION 5. Section 2155.502, Government Code, is amended by amending Subsection (c) and adding Subsection (c-1) to read as follows:

(c) The commission may not list a multiple award contract on a schedule developed under Subsection (a) if the goods [or services] provided by that contract:

(1) are available from only one vendor; or

(2) [are telecommunications services, facilities, or equipment;

[(3)] are commodity items as defined by Section 2157.068(a); or

(3) have a value that exceeds $1 million [(4) are engineering services as described by Section 1001.003, Occupations Code, or architectural services as described by Section 1051.001, Occupations Code].

(c-1) The list of multiple award contracts may not include more than 35 percent of the number of vendors that competitively bid to provide a particular good under a multiple award contract.

SECTION 6. Subchapter I, Chapter 2155, Government Code, is amended by adding Section 2155.5035 to read as follows:

Sec. 2155.5035. USE OF SCHEDULE BY STATE AGENCY. (a) A state agency purchasing goods under a contract listed on the schedule shall:

(1) for a purchase with a value of $50,000 or less, directly award a contract to a vendor included on the schedule without submission of a request for bids to other vendors on the list;

(2) for a purchase with a value of more than $50,000 but not more than $150,000, submit a request for proposals to at least three vendors included on the schedule in the category to which the purchase relates;

(3) for a purchase with a value of more than $150,000 but not more than $1 million, submit a request for proposals to at least six vendors included on the schedule in the category to which the purchase relates; and

(b) The price listed for a good under a multiple award contract is a maximum price. A state agency may negotiate a lower price for goods under a contract listed on a schedule developed under this chapter.

SECTION 7. Section 2155.504, Government Code, is amended to read as follows:

Sec. 2155.504. USE OF SCHEDULE BY GOVERNMENTAL ENTITIES. (a) A [state agency or] local government may purchase goods [or services] directly from a vendor under a contract listed on a schedule developed under this subchapter. A purchase authorized by this section satisfies any requirement of state law relating to competitive bids or proposals and satisfies any applicable requirements of Chapter 2157.

(b) The price listed for a good [or service] under a multiple award contract is a maximum price. A [An agency or] local government may negotiate a lower price for goods [or services] under a contract listed on a schedule developed under this subchapter.

SECTION 8. Section 2155.505(a)(3), Government Code, is amended to read as follows:

(3) "Veterans service agency" means a community-based organization that:

(A) is exempt from taxation under Section 501(a), Internal Revenue Code of 1986, as an organization described in Section 501(c)(3) of that code;

(B) has as its principal purpose to provide housing, substance abuse treatment, case management services, and employment training to low-income veterans, disabled veterans, and homeless veterans and their families; and

(C) employs veterans to provide at least 75 percent of the hours of direct labor by individuals required to produce goods [or provide services] required under a contract entered into under this section.

SECTION 9. Sections 2155.505(b) and (c), Government Code, are amended to read as follows:

(b) The commission shall strongly encourage each vendor with a contract listed on a schedule developed under this subchapter and who is not a historically underutilized business or small business to use historically underutilized or small businesses to sell goods [or provide a service] under the contract. If a vendor does not make a good faith effort to use historically underutilized and small businesses under the contract, the commission may exclude the vendor from being listed on a schedule developed under this subchapter.

(c) A historically underutilized business or small business may sell goods [or provide a service] under another vendor's contract listed on a schedule developed under this subchapter if:

(1) the contract is on a schedule developed under Section 2155.502;

(2) the vendor for the contract authorizes in writing the historically underutilized business or small business to sell goods [or provide a service] under that contract; and

(3) the historically underutilized business or small business provides that written authorization to the commission.

SECTION 10. Section 2157.068, Government Code, is amended by amending Subsection (a) and adding Subsections (e-1) and (e-2)to read as follows:

(a) In this section, "commodity items" means commercial software or[,] hardware[, or technology services, other than telecommunications services,] that is [are] generally available to businesses or the public and for which the department determines that a reasonable demand exists in two or more state agencies. The term includes seat management, through which a state agency transfers its personal computer equipment and service responsibilities to a private vendor to manage the personal computing needs for each desktop in the state agency, including all necessary hardware, software, and support services.

(e-1) A state agency contracting to purchase a commodity item shall use the list maintained as required by Subsection (e) as follows:

(1) for a contract with a value of $50,000 or less, the agency may directly award the contract to a vendor included on the list without submission of a request for bids to other vendors on the list;

(2) for a contract with a value of more than $50,000 but not more than $150,000, the agency must submit a request for proposals to at least three vendors included on the list in the category to which the contract relates;

(3) for a contract with a value of more than $150,000 but not more than $1 million, the agency must submit a request for proposals to at least six vendors included on the list in the category to which the contract relates; and

(e-2) A state agency may not enter into a contract to purchase a commodity item if the value of the contract exceeds $1 million.

SECTION 11. Subchapter Z, Chapter 2252, Government Code, is amended by adding Section 2252.9011 to read as follows:

Sec. 2252.9011. CONTRACTS WITH FORMER OR RETIRED PRIVATE VENDOR EMPLOYEES. A state agency may not enter into an employment contract, a professional services contract under Chapter 2254, or a consulting services contract under Chapter 2254 with an individual who is a former or retired employee of a private vendor under which the individual will perform services for the agency related to the individual's former duties for the vendor under a contract with the agency before the second anniversary of the last date on which the individual was employed by the private vendor.

SECTION 12. Section 2254.021(6), Government Code, is amended to read as follows:

(6) "State governmental entity" means a state department, commission, board, office, institution, facility, or other agency the jurisdiction of which is not limited to a geographical portion of the state. The term includes a university system and an institution of higher education[, other than a public junior college,] as defined by Section 61.003, Education Code. The term does not include a political subdivision.

SECTION 13. Section 2261.001(a), Government Code, is amended to read as follows:

(a) This chapter applies only to each procurement of goods or services made by a state agency that is neither made by the comptroller nor made under purchasing authority delegated to the agency [by or] under [Section 51.9335 or 73.115, Education Code, or] Section 2155.131 or 2155.132.

SECTION 14. Chapter 2261, Government Code, is amended by adding Subchapter F to read as follows:

SUBCHAPTER F. ETHICS, REPORTING, AND APPROVAL REQUIREMENTS FOR

CERTAIN CONTRACTS

Sec. 2261.251. APPLICABILITY OF SUBCHAPTER. Section 2261.001 does not apply to this subchapter.

Sec. 2261.252. DISCLOSURE OF POTENTIAL CONFLICTS OF INTEREST; CERTAIN CONTRACTS PROHIBITED. (a) Each state agency employee or official who is involved in procurement or in contract management for a state agency shall disclose to the agency any potential conflict of interest specified by state law or agency policy that is known by the employee or official with respect to any contract with a private vendor or bid for the purchase of goods or services from a private vendor by the agency.

(b) A state agency may not enter into a contract for the purchase of goods or services with a private vendor with whom any of the following agency employees or officials have a financial interest:

(1) a member of the agency's governing body;

(2) the governing official, executive director, general counsel, chief procurement officer, or procurement director of the agency; or

(3) a family member related to an employee or official described by Subdivision (1) or (2) within the second degree by affinity or consanguinity.

(c) A state agency employee or official has a financial interest in a person if the employee or official:

(1) owns or controls, directly or indirectly, an ownership interest of at least one percent in the person, including the right to share in profits, proceeds, or capital gains; or

(2) could reasonably foresee that a contract with the person could result in a financial benefit to the employee or official.

(d) A financial interest prohibited by this section does not include a retirement plan, blind trust, insurance coverage, or ownership interest of less than one percent in a corporation.

Sec. 2261.253. REQUIRED POSTING OF CERTAIN CONTRACTS; ENHANCED CONTRACT AND PERFORMANCE MONITORING. (a) For each contract for the purchase of goods or services from a private vendor, each state agency shall post on its Internet website a list of:

(1) each contract the agency enters into, including contracts entered into without inviting, advertising for, or otherwise requiring competitive bidding before selection of the contractor, until the contract expires or is completed;

(2) the statutory or other authority under which a contract that is not competitively bid under Subdivision (1) is entered into without compliance with competitive bidding procedures; and

(3) the request for proposals related to a competitively bid contract included under Subdivision (1) until the contract expires or is completed.

(b) A state agency monthly may post contracts described by Subsection (a) that are valued at less than $15,000.

(c) Each state agency by rule shall establish a procedure to identify each contract that requires enhanced contract or performance monitoring and submit information on the contract to the agency's governing body or, if the agency is not governed by a multimember governing body, the officer who governs the agency. The agency's contract management office or procurement director shall immediately notify the agency's governing body or governing official, as appropriate, of any serious issue or risk that is identified with respect to a contract monitored under this subsection.

Sec. 2261.254. CONTRACTS WITH VALUE EXCEEDING $1 MILLION. (a) For each contract for the purchase of goods or services that has a value exceeding $1 million, a state agency shall develop and implement contract reporting requirements that provide information on:

(1) compliance with financial provisions and delivery schedules under the contract;

(2) corrective action plans required under the contract and the status of any active corrective action plan; and

(3) any liquidated damages assessed or collected under the contract.

(b) Each state agency shall verify:

(1) the accuracy of any information reported under Subsection (a) that is based on information provided by a contractor; and

(2) the delivery time of goods or services scheduled for delivery under the contract.

(c) Except as provided by Subsection (d), a state agency may enter into a contract for the purchase of goods or services that has a value exceeding $1 million only if:

(1) the governing body of the state agency approves the contract and the approved contract is signed by the presiding officer of the governing body; or

(2) for a state agency that is not governed by a multimember governing body, the officer who governs the agency approves and signs the contract.

(d) The governing body or governing official of a state agency, as appropriate, may delegate to the executive director of the agency the approval and signature authority under Subsection (c).

Sec. 2261.255. CONTRACTS WITH VALUE EXCEEDING $5 MILLION. For each state agency contract for the purchase of goods or services that has a value exceeding $5 million, the contract management office or procurement director of the agency must:

(1) verify in writing that the solicitation and purchasing methods and contractor selection process comply with state law and agency policy; and

(2) submit to the governing body of the agency, or governing official of the agency if the agency is not governed by a multimember governing body, information on any potential issue that may arise in the solicitation, purchasing, or contractor selection process.

Sec. 2261.256. RISK ANALYSIS PROCEDURE; CONTRACT MANAGEMENT HANDBOOK; CONTRACT MANAGEMENT DATABASE. (a) Each state agency shall develop and comply with a risk analysis procedure. The procedure must provide for:

(1) assessing the risk of fraud, abuse, or waste in the contractor selection process, contract provisions, and payment and reimbursement rates and methods for the different types of goods and services for which the agency contracts; and

(2) identifying contracts that require enhanced contract monitoring.

(b) Each state agency shall publish a contract management handbook that establishes consistent contracting policies and practices to be followed by the agency and that is consistent with the comptroller's contract management guide. The agency handbook may include standard contract provisions and formats for the agency to incorporate in contracts.

(c) Each state agency shall establish a central contract management database that identifies each contract made with the agency.

SECTION 15. Section 2262.001(5), Government Code, is amended to read as follows:

(5) "State agency" has the meaning provided by Section 2056.001, except that the term includes a university system or an institution of higher education as defined by Section 61.003, Education Code.

SECTION 16. Sections 2262.101(a), (b), and (c), Government Code, as amended by Chapters 676 (H.B. 1965) and 1227 (S.B. 1681), Acts of the 83rd Legislature, Regular Session, 2013, are reenacted and amended to read as follows:

(a) The Contract Advisory Team is created to assist state agencies in improving contract management practices by:

(1) reviewing [and making recommendations on the] solicitation documents and contract documents for contracts of state agencies that have a value of at least $10 million, including the value of any amendment to or extension of the contract authorized in the contract that would increase the value of the contract;

(2) reviewing any findings or recommendations made by the state auditor, including those made under Section 2262.052(b), regarding a state agency's compliance with the contract management guide;

(3) providing recommendations to the comptroller regarding:

(A) the development of the contract management guide; and

(B) the training under Section 2262.053;

(4) providing recommendations and assistance to state agency personnel throughout the contract management process;

(5) coordinating and consulting with the quality assurance team established under Section 2054.158 on all contracts relating to a major information resources project; [and]

(6) [(4)] developing and recommending policies and procedures to improve state agency contract management practices;

(7) [(5)] developing and recommending procedures to improve state agency contracting practices by including consideration for best value; and

(8) [(6)] creating and periodically performing a risk assessment to determine the appropriate level of management and oversight of contracts by state agencies.

(b) The risk assessment created and performed [reviewed] under Subsection (a)(8) [(a)(6)] must include[, but is not limited to] the following criteria:

(1) the amount of appropriations to the agency;

(2) total contract value as a percentage of appropriations to the agency; and [or]

(3) the impact of the functions and duties of the state agency on the health, safety, and well-being of residents [citizens].

(c) The comptroller shall oversee the activities of the team, including ensuring that the team carries out its duties under Subsections (a)(1), [Subsection] (a)(5), and (a)(7).

SECTION 17. Section 2262.102(a), Government Code, is amended to read as follows:

Sec. 2262.102. MEMBERS. (a) The team consists of the following nine [six] members:

(1) one member from the Health and Human Services Commission;

(2) one member from the comptroller's office;

(3) one member from the Department of Information Resources;

(4) one member from the Texas Facilities Commission;

(5) one member from the governor's office; [and]

(6) one member from a small state agency;

(7) one member from the Texas Department of Transportation;

(8) one member from the Texas Education Agency; and

(9) one member from the Texas Commission on Environmental Quality.

SECTION 18. Subchapter C, Chapter 2262, Government Code, is amended by adding Section 2262.105 to read as follows:

Sec. 2262.105. QUARTERLY REPORT TO LEGISLATIVE BUDGET BOARD. The contract advisory team shall submit a quarterly report to the Legislative Budget Board on:

(1) the number of solicitation documents and contracts reviewed by the team in the preceding quarter;

(2) the number of documents and contracts reviewed under Subdivision (1) compared to the total number of contracts entered into by state agencies, expressed as a percentage; and

(3) whether state agencies accepted or rejected the team's recommendations and any reasons provided by the state agencies for rejecting the recommendations.

SECTION 19. The following provisions are repealed:

(1) Sections 51.9335(d) and 73.115(d), Education Code; and

(2) Sections 2155.448(d), 2155.502(d), 2261.001(d), and 2262.002(a), Government Code.

SECTION 20. (a) As soon as is practicable after the effective date of this Act, the executive directors of the Texas Department of Transportation, the Texas Education Agency, and the Texas Commission on Environmental Quality shall each appoint a member to the contract advisory team as required by Section 2262.102, Government Code, as amended by this Act.

(b) As soon as is practicable after the effective date of this Act, the comptroller of public accounts, and each affected state agency as necessary, shall adopt the rules and procedures and take the actions necessary to implement the changes in law made by this Act.

SECTION 21. To the extent of any conflict, this Act prevails over another Act of the 84th Legislature, Regular Session, 2015, relating to nonsubstantive additions to and corrections in enacted codes.

SECTION 22. The changes in law made by this Act apply only to a contract entered into on or after the effective date of this Act. A contract entered into before that date is governed by the law in effect immediately before the effective date of this Act, and the former law is continued in effect for that purpose.

SECTION 23. This Act takes effect September 1, 2015.