84(R) HB 15 - Enrolled version

TO:	Honorable Dan Patrick, Lieutenant Governor, Senate Honorable Joe Straus, Speaker of the House, House of Representatives

FROM:	Ursula Parks, Director, Legislative Budget Board

IN RE:	HB15 by Otto (Relating to the management and oversight of state contracts, including contracts for information technology commodity items.), Conference Committee Report

Estimated Two-year Net Impact to General Revenue Related Funds for HB15, Conference Committee Report: a negative impact of ($2,644,021) through the biennium ending August 31, 2017.

The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.

The bill would repeal and amend portions of the Government Code to replace the interagency Contract Advisory Team with a contract management team at the Legislative Budget Board (LBB) to review high risk contracts and solicitations. The team would review contracts with a value of at least $10 million as well as contracts below this threshold that meet certain high risk factors. State agencies would be required to provide written notice to the team at least 30 days before publication of the solicitation documents for high risk contracts. The team would review information and documentation to make recommendations to ensure that potential risks related to high-risk contracts have been identified and communicated to the affected agency. If unresolved, the risks would be reported to the Legislative Budget Board, the Governor, and the Comptroller.

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2016	($1,346,616)
2017	($1,297,405)
2018	($1,462,607)
2019	($1,627,809)
2020	($1,793,011)

Fiscal Year	Probable Savings/(Cost) from General Revenue Fund 1	Change in Number of State Employees from FY 2015
2016	($1,346,616)	11.0
2017	($1,297,405)	14.0
2018	($1,462,607)	16.0
2019	($1,627,809)	18.0
2020	($1,793,011)	20.0

Based on the number of new contracts currently reported to the LBB that are in excess of $10 million, it is estimated that the contract management team created by the bill would review approximately 60 new contracts each year for contracts with a value over $10 million. It is also estimated that the team would review an additional 175 high risk contracts below this monetary threshold. The volume of contract reviews would be dependent on the criteria developed by the team, and therefore, could be greater or less than this estimate.

After initial review of contracts by the team, it is assumed that a certain number of contracts would be subject to ongoing review past the initial solicitation process. The total number of contracts subject to ongoing monitoring after initial review would increase each year as the team completes reviews of contracts and continues to monitor existing contracts through their completion. As a result, it is estimated that the number of FTEs at the LBB would increase from 11 in fiscal year 2016 to 20 in fiscal year 2020. Some of the work load associated with reviewing contracts could be absorbed by existing staff; new FTEs would include a team manager and a mix of contract specialists, attorneys, and staff with IT expertise. Additionally, the LBB would incur one time expenses in the first year for start-up costs associated with the function.

It is also assumed, based on a sample of state agencies, that any workload impacts to state agencies could be absorbed within existing resources.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 84TH LEGISLATIVE REGULAR SESSION


May 30, 2015