84(R) HB 15 - Introduced version

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 84TH LEGISLATIVE REGULAR SESSION


April 8, 2015

TO:	Honorable Gary Elkins, Chair, House Committee on Government Transparency & Operation

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.), As Introduced

Estimated Two-year Net Impact to General Revenue Related Funds for HB15, As Introduced: a negative impact of ($3,178,270) 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.

General Revenue-Related Funds, Five-Year Impact:

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2016	($1,616,448)
2017	($1,561,822)
2018	($1,769,810)
2019	($1,977,798)
2020	($2,185,786)

All Funds, Five-Year Impact:

Fiscal Year	Probable Savings/(Cost) from General Revenue Fund 1	Change in Number of State Employees from FY 2015
2016	($1,616,448)	14.0
2017	($1,561,822)	17.0
2018	($1,769,810)	19.0
2019	($1,977,798)	22.0
2020	($2,185,786)	25.0

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 and institutions of higher education would be required to provide written notice to the team at least 30 days before publication of the solicitation documents for high risk contracts. Additionally, state agencies and institutions of higher education would be required to receive approval from the team before spending money (1) under an executed high-risk contract; and (2) to make a payment or a series of payments that exceeds half of the high-risk contract value.

The bill would also eliminate the use of multiple award contracts for information technology (IT) related services at the Department of Information Resources (DIR).

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 100 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 14 in fiscal year 2016 to 25 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.

DIR anticipates a loss of revenue out of appropriated receipts generated from administrative fees charged to customers of DIR's cooperative contracts program due to the elimination of IT service contracts offered through the program. The agency anticipates that administrative fees would be increased to offset the loss of revenue from purchases for IT services through the program. To the extent administrative fees are not increased, there would likely be a reduction in FTEs at DIR.

It is assumed that any potential workload increase to the CPA for managing IT service contracts previously awarded by DIR could be absorbed within existing resources and/or offset by a reduction in workload associated with the elimination of the Contract Advisory Team.

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

Local Government Impact

The bill would eliminate the use of multiple award contracts for services at DIR. Local
governments currently procure services through these programs. The changes in the bill could
result in a fiscal impact for local government entities; the costs would vary depending on the
extent of purchasing in each local government.